The Government of India has projected a cumulative investment of approximately ₹4.78 lakh crore in Battery Energy Storage Systems (BESS) and Pumped Storage Plants (PSPs) by 2031-32, as it accelerates efforts to strengthen grid reliability and support the large-scale integration of renewable energy.
According to information shared by Minister of State for Power Shri Shripad Naik in a written reply in the Rajya Sabha, the National Electricity Plan (Generation) notified in May 2023 estimates that India will require 47.24 GW/236 GWh of Battery Energy Storage Systems (BESS) and 26.69 GW/175 GWh of Pumped Storage Plants (PSPs) by 2031-32. The estimated investments for these capacities are around ₹3.49 lakh crore for BESS and ₹1.29 lakh crore for PSPs.
For the interim period, the National Electricity Plan projects a requirement of 8.68 GW/34 GWh of BESS and 7.45 GW/47 GWh of PSP capacity by 2026-27.
The Ministry of Power noted that NITI Aayog, in its report ‘Sectoral Insights: Power (Volume 7)’ released in February 2026, identified energy storage as a critical enabler for managing the variability associated with renewable energy integration. To support this transition, the Government has introduced a series of policy, regulatory, market development and manufacturing initiatives aimed at accelerating the deployment of Energy Storage Systems (ESS).
Policy and Regulatory Reforms
The Government has amended the Electricity Rules to formally recognize Energy Storage Systems as an integral component of the power sector, enabling their participation across generation, transmission and distribution. ESS was also included in the Harmonised Master List of Infrastructure by the Ministry of Finance, allowing access to long-term and lower-cost financing.
Further, the Government issued Resource Adequacy Planning Guidelines in June 2023, making energy storage a key planning resource for meeting peak demand and ensuring grid reliability. A National Framework for Promotion of Energy Storage Systems followed in September 2023, providing a roadmap for deployment, market integration and regulatory facilitation.
In addition, the CEA (Measures Relating to Safety and Electric Supply) (First Amendment) Regulations, 2025, notified on March 30, 2026, introduced safety requirements for Battery Energy Storage Systems, while the CEA Technical Standards for Construction of Electrical Plants and Electric Lines (Amendment) Regulations, 2026 established construction standards for BESS installations.
Market Development and Demand-Side Measures
To improve the commercial viability of storage projects, the Government has introduced several demand-side measures.
These include 100% waiver of Inter-State Transmission System (ISTS) charges for eligible Battery Energy Storage Systems and Pumped Storage Projects commissioned or awarded within specified timelines. Co-located BESS and PSP projects have also been granted extended ISTS charge waivers up to June 2028.
The Central Electricity Regulatory Commission (CERC) has permitted storage resources to participate in ancillary services, including secondary and tertiary reserves, enabling energy storage to support real-time grid balancing. The Government has also notified Tariff-Based Competitive Bidding (TBCB) Guidelines for procurement of BESS and PSPs to facilitate transparent large-scale procurement.
Additional measures include permitting electricity supplied from BESS to participate in the High-Price Day-Ahead Market, mandating a transition from diesel generator sets to cleaner backup solutions under the Electricity (Rights of Consumers) Rules, providing Viability Gap Funding (VGF) for 43.8 GWh of BESS capacity, and exempting closed-loop off-stream PSP projects from requiring Central Electricity Authority concurrence.
Manufacturing and Supply-Side Initiatives
On the manufacturing front, the Ministry of Heavy Industries is implementing a Production Linked Incentive (PLI) Scheme with an outlay of ₹18,100 crore to establish 50 GWh of Advanced Chemistry Cell manufacturing capacity, including 10 GWh dedicated to grid-scale stationary storage.
The Government has also announced infrastructure support for Hydro Pumped Storage Projects, providing ₹1 crore per MW for projects up to 200 MW, while projects exceeding 200 MW are eligible for support of ₹200 crore plus ₹0.75 crore per MW.
Other measures include allowing separate grid connectivity during non-solar hours to facilitate renewable energy integration with storage, permitting consumers to develop, own, lease or operate energy storage systems through amendments to the Electricity Rules, and a CEA advisory recommending co-location of energy storage with solar projects at a minimum of 10% of installed solar capacity for at least two hours to improve solar dispatchability.
The Ministry said these coordinated initiatives are intended to accelerate the deployment of energy storage infrastructure, enhance grid flexibility and reliability, and support India’s clean energy transition while enabling higher renewable energy penetration across the power system.
