Battery Energy Storage System addressing power shortages in India

The Lithium-ion family (LFP) is advancing, enhancing BESS efficiency, while grid-edge technologies like DER, V2G, and smart IBRs drive flexible, decarbonised energy ecosystems.

Due to rapid electricity demand growth, India is likely to experience significant power shortages by 2027, especially in non-solar evening and night hours—mainly due to increasing cooling demand. This is expected even if all the thermal and hydro capacity currently under construction comes online as planned, considering a pattern of growing demand.

We have seen a slew of standalone storage tenders by SECI, NVVN and state discoms/ STUs like GUVNL, Maharashtra, UP, and Delhi discoms in the recent past with very encouraging levelised Cost of Storage (LCOS) in terms of capacity charges (INR/MW/Month). We also have a solar + BESS tender successfully bid out by SECI with a price discovery of INR 3.41/kWh – paving the way for more such opportunities. During the last two years, over 9 GWh BESS tenders have been floated in India, out of which about 2.5 GWH capacity has been awarded or is under execution with discovered LCOS plummeting to INR 3.72 Lakhs/MW/month (GUVNL) from a high of INR 10.83/MW/month (SECI) in 2022.

The lithium-ion family (LFP) has achieved a considerable degree of maturity. Continuous research in Battery Energy Storage System (BESS) design, including Cathode Active Material (CAM), has led to higher efficiencies and longer duration at optimal price points. The specific energy density (Wh/kg) is expected to increase significantly by 2030, especially in the Li-ion family.

Rapid decarbonisation requires a flexible energy ecosystem, and smart grids, especially grid-edge technologies, are pivotal with storage. Demand flexibility (which can be realised by Distributed Energy Storage, e.g., RTSPV, BESS, DR, etc.) is essential for grid planning and system operation. We will see regulations and technology innovations like smart IBRs (inverter-based resources), grid-responsive appliances and advanced Building Management systems, bidirectional EV charging—V2G, DERMS.

Authored by:

Abhishek Ranjan, Partner- EY Parthenon

Abhishek leads EY Parthenon’s renewable, energy storage, and power markets practice.