India's Energy Storage Scheme: The Cabinet Moves — But Are We Ready?
A follow-up to years of writing on battery storage as India's renewable bottleneck
The Union Cabinet has approved a comprehensive energy storage scheme, as reported by Ashwini Vaishnaw this week. Moneycontrol - Union Cabinet Approves Energy Storage Scheme
For anyone who has tracked India's renewable ambitions — as I have for nearly a decade — this is both encouraging and incomplete. Let me explain why.
The Familiar Problem: We've Been Here Before
I've argued repeatedly that storage is not optional in India's energy transition; it is foundational. Back in 2018, I noted that despite India's 300 days of annual sunshine and the desert regions' staggering potential to generate 315.7 GW of solar power, the bottleneck was clear: "But how to 'Store' all that huge amount of Solar generated electricity and use it round the clock when Sun is not shining?" Blog - "National Energy Storage Mission" - February 19, 2018
That question has haunted every energy policy discussion since. A decade ago, Elon Musk installed a 100 MW / 129 MWh lithium-ion battery facility in Australia for $50 million in just 100 days, and Australia's blackouts stopped. India, by contrast, could have generated 315.7 GW from its deserts alone but couldn't store it.
The Cabinet approval is a signal that someone finally recognizes storage as what it is: a strategic, not peripheral, piece of India's energy architecture.
What Changed? And What Hasn't
The 2023 SECI tender for a first-of-its-kind standalone battery power bank envisaged Rs 2,000 crore for 1,000 MWh of storage capacity in Rajasthan. The government set a target of 4,000 MWh as part of the plan to increase renewable energy penetration in the grid — with the Central Electricity Authority projecting a need for 27,000 MW (or 108,000 MWh) of storage capacity by 2029-30. Email - "Grid Storage Battery: 4 Years – and Counting!" - October 25, 2023
Now, with Cabinet approval, those targets have moved from debate to policy.
But here is what still needs to be solved:
1. Lithium costs remain a barrier. The 2023 tender noted that a 500% spike in lithium prices made batteries expensive, pushing battery power tariffs beyond viability for entities leasing capacity. Two years later, this same friction likely persists. We cannot build a 500 GW renewable India on viability gap funding alone.
2. Financing structures must be standardized. In my 2025 blog on rebidding languishing solar and wind projects bundled with BESS, I emphasized that success requires: "Separate but linked price discovery for energy and storage or a transparent hybrid tariff model" and "Risk allocation that attracts long-term capital (who shoulders degradation risk, FCAS obligations, etc.)." Blog - "Rebidding Languishing Solar and Wind Projects: Why Bundling Storage Is More Than a Fix — It's a Strategy" - September 21, 2025
A Cabinet approval without clear power purchase agreements and financing standards will stall projects in the same way earlier schemes have.
3. Domestic supply chain capacity. BESS safety, raw material sourcing, and recycling remain underdeveloped in India. Tesla's recent push into India's energy storage market signals that global players are ready — but India must simultaneously build local capability or risk perpetual dependence. As I noted in my Tesla piece from April 2026: "India will need locally competitive manufacturing or compelling incentives to lower end-user prices." Blog - "Tesla's India Energy Play" - April 8, 2026
Why This Cabinet Move Matters (and What It Must Do Next)
The Cabinet approval recognizes what I have repeatedly written: that India cannot achieve 500 GW of renewable energy by 2030 without firm power. Intermittent solar and wind, without storage, will hit grid constraints far before reaching 500 GW. Storage is not a luxury feature — it is the enabling infrastructure.
But approval is not execution.
The scheme will succeed only if policy now addresses three immediate gaps:
Gap 1: Cost reduction through aggregation and competition. Don't let BESS become another high-cost infrastructure category where one-off tenders inflate prices. Instead, aggregate demand across utilities, states, and industry to create volumes that bring per-MW costs down. I've proposed this before: "Governments and large corporates should pool demand (aggregated tenders) to create predictable volumes and lower unit costs." Blog - "Tesla's India Energy Play" - April 8, 2026
Gap 2: Regulatory integration. Storage must be integrated into India's ancillary services markets and compensatory mechanisms. A battery sitting on the grid should earn revenue for frequency regulation, peak shaving, and capacity services — not just energy arbitrage. Without these signals, asset utilization remains suboptimal.
Gap 3: Domestic industrial strategy. Offer time-bound incentives for domestic cell and pack manufacturing, and simultaneously build a roadmap for battery recycling and second-life use. India cannot depend on imports forever; the goal should be to build an export-grade BESS supply chain.
A Pattern Worth Noting
India has announced renewable energy schemes before. The targets climb each year — 40 GW of rooftop solar by 2022, then 500 GW by 2030. Yet execution often lags because the supporting infrastructure — transmission, storage, financing — develops in a staggered, reactive way.
This energy storage scheme has the chance to break that pattern, but only if the Cabinet approval is treated as the beginning of a structural overhaul, not the end of a policy announcement.
In my 2025 blog on rebidding, I argued: "If we treat this as a one-time procurement exercise, we will only unearth the same structural frictions. If instead we use these rebids as pilots to create standardized, bankable frameworks and build domestic supply chains, we will have taken an important stride toward a resilient, modern grid." Blog - "Rebidding Languishing Solar and Wind Projects" - September 21, 2025
The same logic applies here.
What I Would Like to See Now
- A detailed tender roadmap with timelines, risk allocation frameworks, and standardized PPA templates.
- Explicit financing support — viability gap funding, concessional rate credits, or government-backed guarantees — for early-stage projects to de-risk lenders.
- A domestic manufacturing push: incentives for cell assembly, pack integration, and recycling.
- Integration with the 500 GW renewable target: clarity on how much BESS is needed to achieve that capacity without curtailment and without dependence on fossil peaker plants.
The Longer Arc
Ten years ago, I wrote that India's deserts could power the nation round-the-clock if we solved the storage puzzle. Today, with Cabinet approval of an energy storage scheme, that puzzle is officially recognized as unsolvable through battery imports and one-off projects alone.
That recognition is progress.
But approval is not ambition met. The real test comes now — in how quickly and thoughtfully this scheme translates into standardized, bankable, domestically-led project pipelines that lower costs, build skills, and secure India's energy independence.
I remain optimistic that the team will get there. But they must move past announcement and into the hard work of structural, integrated planning.
Sources
| # | Title | Date | About |
|---|---|---|---|
| 1 | National Energy Storage Mission | 2018-02-19 | India's desert solar potential and the battery storage bottleneck for round-the-clock power. |
| 2 | Grid Storage Battery: 4 Years – and Counting! | 2023-10-25 | First-of-its-kind SECI renewable battery power bank tender and lithium price inflation challenges. |
| 3 | Rebidding Languishing Solar and Wind Projects: Why Bundling Storage Is More Than a Fix — It's a Strategy | 2025-09-21 | Structural reforms needed for hybrid solar-wind-storage auctions and standardized contracting. |
| 4 | Tesla's India Energy Play | 2026-04-08 | Tesla's entry into India's energy storage market and the need for domestic BESS supply chains. |
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