About 11% of the solar power generated in India during the hottest summer months this year was wasted due to grid curtailment. This happened even as electricity demand remained at record highs. India is now betting on growing investments in battery storage to reduce this solar power waste. Let’s break down India’s battery storage push and see whether this theme could present a major opportunity for investors.
What’s Happening?
As India’s renewable energy capacity continues to expand, solar power has become the dominant source of new additions. However, during the daytime, especially in summer when solar radiation is high, electricity supply is exceeding demand. This is increasing power curtailment, where available electricity cannot be fully absorbed by the grid.
Between April and June, the transmission system was unable to absorb more than 8 billion kWh of electricity out of 63 billion kWh of available power. Curtailment peaked in May, when electricity demand reached a record high due to intense summer heat.
The issue could also affect new renewable energy projects. According to Moneycontrol, Renewable Energy Secretary Santosh Kumar Sarangi said projects without battery storage could struggle to find buyers. Around 42 GW of planned capacity does not yet have offtake contracts. This includes 18 GW of solar-only projects and 14-15 GW of capacity awarded at high prices, which face the highest risk.
In addition, around 21 GW of renewable energy projects have only part-time grid access. Grid development in northern and western states has lagged behind the expansion of solar capacity. Without stronger transmission infrastructure and battery storage, this could slow the pace of India’s renewable energy expansion.
What is the Government’s Green Energy Storage Strategy?
The government is taking a long-term approach with a comprehensive strategy for large-scale energy storage infrastructure. It combines policy reforms, financial incentives, market design and technological innovation. The focus areas include battery storage systems, pumped storage projects (PSPs), green hydrogen, regulatory reforms and the PLI scheme.
The Viability Gap Funding (VGF) scheme aims to reduce the capital cost of large-scale battery storage projects. The government has also introduced energy storage obligations, requiring discoms to procure power from storage-backed renewable projects. The government launched the National Green Hydrogen Mission with an outlay of around Rs 19,744 crore. The PLI scheme is also expected to support domestic manufacturing of advanced chemistry cells.
Electricity demand is expected to more than double by 2047. Without storage, the grid could face greater curtailment and frequency fluctuations. The government is therefore pushing for Round-the-Clock (RTC) renewable power by combining solar, wind, hydro, batteries and pumped storage to provide electricity throughout the day. The Green Energy Corridor programme is also being used to strengthen the transmission network.
The Truth About Manufacturing and Import Dependency
Wood Mackenzie’s report says India’s commissioned cell manufacturing capacity in 2026 is just 2 GWh. China’s total capacity, by comparison, stands at 2,695 GWh. China controls 85% to 98% of global capacity across major parts of the battery supply chain, including cathodes, anodes, separators and electrolytes.
India’s domestic battery manufacturing capacity in 2026 accounts for less than 1% of an estimated ~260 GWh demand pipeline. This leaves the country structurally dependent on imports. Companies have announced more than 226 GWh of cell manufacturing capacity by 2035. However, execution delays and dependence on Chinese and Korean technology licensors could mean it takes 10-15 years for India to build a self-sufficient industry.
Locally manufactured cells could cost 25-40% more than imported cells because of limited scale and high financing costs. However, India’s underlying cost base is 154% better than Japan’s and 9% better than South Korea’s. New tenders have introduced a 20% domestic content requirement for grid-scale BESS projects. This could encourage greater localisation of downstream components such as containers and battery packs.
What Does This Mean for Investors?
Rising curtailment and grid connectivity issues in the renewable energy sector could affect the revenue and profitability of solar companies. Projects without battery storage account for a significant portion of the 42 GW of planned capacity that is yet to secure offtake contracts. Meanwhile, curtailment risks for projects with part-time grid access could put pressure on companies’ revenue and returns.
For retail investors, this makes it important to look beyond companies that are simply adding renewable capacity and focus on businesses linked to energy storage, grid infrastructure and advanced battery technologies. Segments such as battery containers, battery packs, EMS and SCADA could benefit as India expands its energy storage infrastructure.
What’s Next?
Wood Mackenzie says India needs 10-15 years to build a self-sufficient cell industry. However, the next 2-3 years are expected to focus on localising downstream components. Within 2-5 years, cell manufacturing is expected to grow using imported inputs. Full-scale refining capabilities could still be more than a decade away. This means import dependence is likely to continue in the medium term.
The Green Energy Corridor and Round-the-Clock (RTC) power plan will be important for meeting the expected doubling of electricity demand by 2047. International Solar Alliance (ISA) partnerships and bilateral agreements could also help with technology transfer. Investors should understand that the battery storage boom is largely policy-driven. Delays in execution or challenges to financial viability could lead to short-term volatility.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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