Regional spotlight: Long-duration energy storage (LDES) in India — what's different and why it matters

India's electricity grid faces a storage challenge fundamentally different from those in Europe or North America. The country added 18.5 GW of solar capacity in 2025 alone, pushing total renewable capacity past 200 GW, yet the grid remains structurally dependent on coal for evening and monsoon-season baseload. The Central Electricity Authority (CEA) estimates that India will need 47 GW/236 GWh of battery energy storage by 2032 to integrate its renewable targets, but lithium-ion batteries, which dominate global storage deployments, face cost, supply chain, and climate suitability constraints that make India's path to long-duration energy storage (LDES) distinctly its own. Understanding these differences matters for procurement professionals, project developers, and investors because the technologies, business models, and policy frameworks that succeed in India will diverge significantly from those proven in temperate, wealthier markets.

Why It Matters

India's electricity demand is growing faster than any other major economy. The Ministry of Power projects peak demand reaching 335 GW by 2030, up from 243 GW recorded in September 2025. Simultaneously, the government has committed to 500 GW of non-fossil fuel capacity by 2030 under its updated Nationally Determined Contribution. The gap between variable renewable generation and demand creates a storage requirement that is both larger in absolute terms and more complex in its duration profile than comparable markets.

The duration profile is critical. India's solar generation peaks between 11:00 and 15:00, but demand peaks between 18:00 and 22:00, creating a daily storage need of four to eight hours. However, India also faces multi-day and seasonal storage challenges that shorter-duration batteries cannot address. The monsoon season (June through September) reduces solar generation by 30-50% across much of the country while simultaneously increasing hydropower output in northern regions. Wind generation in southern India peaks during the monsoon, creating geographic and temporal mismatches that require storage solutions capable of dispatching energy over 8-100+ hours.

The economic context amplifies these challenges. India's average power purchase cost remains among the lowest globally at approximately INR 4.50-5.00 per kWh (USD 0.054-0.060), constraining the revenue available to storage projects. Levelised cost of storage (LCOS) must compete with this benchmark, ruling out many technologies viable in markets with higher electricity prices. Coal-fired generation, which provided 73% of India's electricity in 2024-2025, sets the marginal cost floor at INR 3.50-4.00 per kWh, meaning LDES must approach coal economics to achieve meaningful deployment without indefinite subsidy support.

Key Concepts

Pumped Storage Hydropower (PSH) remains the most mature LDES technology globally and holds particular relevance for India. PSH stores energy by pumping water to an elevated reservoir during periods of excess generation and releasing it through turbines during demand peaks. India has approximately 4.7 GW of operational PSH capacity, with the CEA identifying 96.5 GW of technically feasible sites across the country. PSH offers storage durations of 6-12 hours (and potentially longer with larger reservoirs) at an LCOS of INR 5-7 per kWh over 40-60 year asset lives, making it cost-competitive with alternatives at longer durations.

Compressed Air Energy Storage (CAES) uses excess electricity to compress air into underground caverns or above-ground tanks, releasing it through turbines to generate electricity on demand. India's Deccan Plateau basalt formations and depleted gas fields in Rajasthan and Gujarat offer potential geological storage sites. Adiabatic CAES systems, which capture and reuse compression heat, can achieve round-trip efficiencies of 60-70%, though no utility-scale project has been commissioned in India to date.

Iron-air and Metal-air Batteries represent an emerging class of LDES technologies using abundant, low-cost materials. Form Energy's iron-air battery, designed for 100-hour discharge durations, uses iron, water, and air as primary inputs, all of which are domestically available in India at scale. The theoretical cost target of USD 20 per kWh of storage capacity, if achieved, would fundamentally alter LDES economics in the Indian context.

Thermal Energy Storage (TES) stores energy as heat in materials such as molite salts, concrete, or sand. India's concentrated solar power (CSP) installations at Bhadla Solar Park and Gujarat Solar Park already incorporate molten salt TES for 4-6 hours of storage. Emerging systems using crushed rock or sand can potentially provide storage at very low cost for industrial heat applications, leveraging India's abundant solar thermal resource.

India-Specific Regulatory and Market Dynamics

Policy Framework

The Ministry of Power's Energy Storage Obligation (ESO), notified in March 2024, mandates that distribution companies (DISCOMs) and open-access consumers procure a minimum percentage of electricity from storage-coupled renewable projects. The obligation starts at 1% of total consumption in 2025-2026, rising to 4% by 2029-2030. This creates a guaranteed demand signal, but the obligation percentages translate to relatively modest absolute volumes in the early years, limiting the scale economies needed to drive down costs.

The Viability Gap Funding (VGF) scheme for battery energy storage systems, announced in the Union Budget 2023-2024, allocated INR 3,760 crore (approximately USD 450 million) to support 4 GWh of battery storage capacity. The scheme covers up to 40% of capital costs for projects meeting specified technical criteria. However, the VGF is technology-neutral, and its competitive bidding structure has overwhelmingly favoured lithium-ion projects, which offer the lowest upfront capital costs despite higher lifecycle costs at longer durations.

State-level policies vary significantly. Rajasthan and Gujarat, with abundant solar resources and available land, have been most aggressive in issuing storage-coupled renewable tenders. Tamil Nadu and Karnataka, facing grid congestion from existing wind and solar capacity, have prioritised storage for grid stability. Maharashtra and Uttar Pradesh, with large demand centres but less renewable capacity, focus on storage for peak demand management.

Grid Infrastructure Realities

India's transmission infrastructure creates constraints that shape LDES requirements differently from Western markets. Inter-regional transmission capacity reached 112 GW in 2025, but congestion on key corridors (particularly the west-to-north and south-to-north routes) limits the ability to balance renewable generation across regions. This congestion increases the value of storage located near demand centres in northern and eastern India, even where local renewable resources are weaker.

Distribution company financial health remains a persistent challenge. Aggregate technical and commercial (AT&C) losses across Indian DISCOMs averaged 15.4% in 2024-2025, and many state utilities carry accumulated losses exceeding INR 5 lakh crore collectively. Financially stressed DISCOMs are reluctant to sign long-term power purchase agreements (PPAs) at rates that fully compensate storage investments, creating a bankability gap that limits private investment in LDES projects.

What's Working

Pumped Storage Hydropower Revival

After decades of neglect, India's PSH pipeline has accelerated dramatically. Greenko Group's 1,680 MW Pinnapuram integrated renewable energy storage project in Andhra Pradesh, expected to commission in 2026, combines solar, wind, and PSH in a single facility designed to deliver round-the-clock dispatchable renewable power. The project secured a PPA at INR 4.04 per kWh, demonstrating that PSH-coupled renewables can approach coal parity. NHPC Limited, India's largest hydropower company, has 12 PSH projects totalling 10,780 MW under various stages of development. The combination of long asset life (50+ years), proven technology, and domestic manufacturing capability makes PSH the most viable near-term LDES pathway for India.

Grid-Scale Battery Storage Tenders

The Solar Energy Corporation of India (SECI) has emerged as the primary tendering agency for grid-scale storage. SECI's 2024-2025 tender programme procured 5 GWh of standalone battery storage at tariffs declining from INR 10.44 per kWh in initial rounds to INR 7.80 per kWh in the most recent auctions. While these tariffs remain above coal-fired generation costs, they represent a 25% decline over 18 months, tracking global lithium-ion price reductions. Tata Power, NTPC, and ReNew Energy have been the most active participants, deploying systems ranging from 50 MW to 500 MW across Rajasthan, Gujarat, and Karnataka.

Domestic Manufacturing Push

India's Production-Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) battery manufacturing, with an approved outlay of INR 18,100 crore, has attracted commitments from Reliance New Energy, Ola Electric, Amara Raja, and Exide Industries. Reliance's 30 GWh gigafactory in Jamnagar, Gujarat, is expected to begin production in late 2026. Domestic manufacturing addresses both cost and supply chain security concerns, reducing dependence on Chinese cell imports that currently account for over 80% of India's lithium-ion supply.

What's Not Working

Lithium-Ion Supply Chain Vulnerability

India possesses minimal domestic lithium reserves, with the Geological Survey of India's 2023 discovery in Jammu and Kashmir's Reasi district estimated at 5.9 million tonnes of inferred resources, but extraction timelines extend well beyond 2030. Meanwhile, global lithium carbonate prices, while down from 2022 peaks, remain volatile and subject to supply concentration risks in Australia, Chile, and China. For a country planning 47 GW of storage deployment, reliance on imported lithium-ion cells creates a strategic vulnerability that policy makers have not yet adequately addressed.

Thermal Degradation in Extreme Climates

Lithium-ion battery performance degrades significantly at ambient temperatures exceeding 40 degrees Celsius, a threshold regularly exceeded across much of India from March through June. Thermal management systems (active cooling via HVAC or liquid cooling) add 15-25% to system costs and consume 5-10% of stored energy, eroding round-trip efficiency. Projects in Rajasthan and Gujarat, where summer temperatures routinely reach 45-48 degrees Celsius, face particularly challenging economics. Alternative chemistries such as sodium-ion and iron-air, which tolerate higher operating temperatures, could offer meaningful advantages in these conditions but remain pre-commercial in India.

Regulatory Fragmentation

The absence of a unified national storage policy creates uncertainty for developers and investors. Storage classification varies across states: some treat it as a generation asset, others as a transmission asset, and still others as a demand-side resource. This classification determines applicable regulations, tariff structures, grid access rights, and tax treatment. The Electricity (Amendment) Bill, pending since 2022, proposes to establish storage as a distinct asset class, but legislative delays have left the regulatory framework incomplete. Projects spanning multiple states face compounding complexity from differing state-level rules.

LDES Technology Comparison: India Context

Technology	Duration	LCOS (INR/kWh)	Maturity in India	Key Advantage	Key Barrier
Pumped Storage Hydro	6-12 hrs	5-7	Operational (4.7 GW)	Proven, long life, low LCOS	Land/water requirements, 5-7 year build time
Lithium-ion Battery	2-4 hrs	7-10	Deploying (2+ GWh)	Fast response, modular	Import dependence, thermal degradation
Compressed Air (CAES)	8-24 hrs	6-9 (estimated)	Pre-commercial	Geological potential exists	No operational projects, site-specific
Iron-air Battery	24-100 hrs	4-6 (target)	R&D/pilot	Ultra-low cost materials	Unproven at scale
Thermal (Molten Salt)	4-8 hrs	8-12	Operational (CSP)	Leverages solar thermal	Limited to thermal applications

Action Checklist

• Assess project site temperature profiles to determine thermal management requirements and chemistry suitability
• Evaluate PSH opportunities for projects requiring storage durations exceeding four hours
• Monitor SECI and state-level storage tender announcements for procurement opportunities
• Engage with domestic battery manufacturers under the PLI scheme to secure supply agreements
• Structure PPAs with duration-specific pricing that reflects the full value of long-duration storage
• Track the Electricity (Amendment) Bill for storage classification and regulatory clarity
• Conduct site-specific geological assessments for CAES potential in basalt and depleted gas formations
• Include technology-neutral specifications in storage procurement to enable evaluation of emerging alternatives
• Model lifecycle costs including thermal management, degradation, and replacement cycles for climate-adjusted LCOS
• Build relationships with state DISCOM leadership to understand local storage procurement priorities and timelines

FAQ

Q: What is the most cost-effective LDES technology for India today? A: Pumped storage hydropower offers the lowest levelised cost of storage at INR 5-7 per kWh for durations of 6-12 hours, with asset lives of 40-60 years. However, PSH requires suitable topography, water availability, and 5-7 year construction timelines. For shorter-duration applications (2-4 hours), lithium-ion remains most cost-effective despite thermal management requirements. For durations exceeding 12 hours, no commercially proven technology is yet available in India at competitive costs.

Q: How does India's climate affect battery storage economics? A: Ambient temperatures exceeding 40 degrees Celsius, common across western and central India for three to four months annually, accelerate lithium-ion degradation and require active cooling systems. These factors add 15-25% to system capital costs and reduce usable energy output by 5-10%. Projects in temperature-extreme regions should model degradation-adjusted LCOS rather than relying on nameplate specifications. Sodium-ion and iron-air chemistries, designed for wider temperature tolerances, may offer advantages as they mature.

Q: What role does the Viability Gap Funding scheme play in LDES deployment? A: The VGF scheme covers up to 40% of capital costs for qualifying battery storage projects, significantly improving project economics. However, competitive bidding has favoured lithium-ion projects due to their lower upfront costs, inadvertently disadvantaging technologies with lower lifecycle costs but higher capital requirements. Procurement teams should advocate for duration-weighted evaluation criteria that recognise the full-lifecycle value of longer-duration technologies.

Q: How should procurement professionals evaluate LDES proposals in India? A: Evaluate proposals on lifecycle cost rather than capital cost alone. Request climate-adjusted performance guarantees that account for local temperature conditions. Require suppliers to specify degradation curves, thermal management energy consumption, and replacement schedules. For durations exceeding four hours, compare storage-coupled renewable PPAs against standalone renewable plus storage alternatives. Include domestic content and supply chain resilience as evaluation criteria given import dependence risks.

Sources

• Central Electricity Authority. (2025). National Electricity Plan: Storage Requirements and Technology Assessment. New Delhi: CEA, Ministry of Power.
• Ministry of New and Renewable Energy. (2025). Annual Report 2024-2025: Renewable Energy Deployment and Storage. New Delhi: MNRE.
• NITI Aayog and Rocky Mountain Institute. (2024). India's Energy Storage Mission: Technology Roadmap and Implementation Strategy. New Delhi: NITI Aayog.
• Solar Energy Corporation of India. (2025). Battery Energy Storage System Tender Results and Analysis: FY 2024-2025. New Delhi: SECI.
• BloombergNEF. (2025). India Energy Storage Market Outlook: Q4 2024 Update. London: Bloomberg LP.
• Long Duration Energy Storage Council. (2024). LDES in Emerging Markets: India Country Assessment. Geneva: LDES Council.
• WRAP and Ellen MacArthur Foundation. (2024). The Role of Storage in India's Energy Transition. Available at: https://www.ldescouncil.com/insights