India could commission 45–50 GWh of BESS capacity over FY2027 and FY2028, compared with approximately 1 GWh by the end of FY2026
Storage-linked projects accounted for nearly 40% of India's total auctioned capacity in FY2026, up from around 5% in FY2024 and FY2025, says Crisil Ratings
Rising battery prices and declining storage tariffs have weakened project returns, putting approximately 12 GWh of under-construction capacity at risk of lower profitability
India could see a sharp increase in battery energy storage system (BESS) installations over the next 2 years, with 45–50 GWh of capacity expected to be commissioned in FY2027 and FY2028, according to Crisil Ratings. This would represent a substantial increase from the approximately 1 GWh commissioned by the end of FY2026.
Based on project pipeline and increasing share of storage-linked auctions, 50 GWh to 55 GWh is scheduled for commissioning during the next two fiscal years. However, the rating agency expects actual additions to reach 45 GWh to 50 GWh, factoring in potential execution delays and project-related risks.
Crisil cautions that 8 GWh to 9 GWh of awarded capacity faces a higher risk of delays due to rising battery prices, weaker project returns and implementation challenges.
The increasing inclusion of storage in renewable energy tenders reflects the need to manage variable solar and wind generation while improving electricity availability during peak demand periods. Analysts point out that the growing integration of energy storage into renewable energy projects is contributing to the expansion of India's BESS pipeline.
Projects incorporating BESS accounted for nearly 40% of total auctioned capacity in FY2026, up from around 5% in both FY2024 and FY2025.
The projections are based on Crisil's assessment of projects awarded between FY2024 and FY2026, covering nearly 100 renewable energy developers.
Of the 50 GWh to 55 GWh scheduled for commissioning, approximately 40 GWh was awarded through government-led auctions, with distribution utilities as offtakers. The remaining 10 GWh to 15 GWh is expected to serve the commercial and industrial (C&I) segment or be deployed in the merchant market.
At the end of FY2026, India's total installed power generation capacity stood at approximately 533 GW, including around 206 GW of renewable energy capacity. As more renewable energy projects enter the grid, storage is expected to play an increasing role in managing fluctuations in power supply, Crisil points out. A recent Ember analysis claimed that solar paired with battery storage could meet 90% of India’s power demand (see Ember: Solar, Storage Could Meet 90% Of India’s Power Demand).
Despite the expanding BESS pipeline, increasing battery procurement costs are putting pressure on project economics, highlight the analysts.
Battery prices declined through 2025, encouraging developers to bid for projects based on expectations of continued cost reductions. However, prices have increased in 2026, creating challenges for projects awarded at tariffs that reflected lower anticipated equipment costs.
According to Crisil, battery prices declined from $118/kWh in 2024 to $50/kWh to $55/kWh in 2025, before rebounding to $70/kWh to $75/kWh in 2026. Meanwhile, average BESS tariffs fell from INR 4.49 lakh/MW/month in 2024 to INR 2.12 lakh/MW/month in 2026.
The gap between bidding and procurement is particularly relevant for BESS developers because battery purchases generally take place around a year after project awards, says Crisil.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer explained, “Nearly 21% of the under-construction BESS capacity, equivalent to about 12 GWh, faces weak return potential which may lead to some delays in commissioning. The risk has emerged because battery prices have hardened in 2026, while tariffs bid out for these projects were relatively low.”
As a result, analysts believe some developers may prefer to defer project implementation as they wait for battery prices to decline or become more favorable. Any increase in battery prices can reduce their expected returns. Additionally, about 8 GWh to 9 GWh of this 12 GWh is also exposed to the challenge of limited implementation experience among project sponsors, highlights Ankit Hakhu, Director Crisil Ratings.
Developers may therefore face pressure to renegotiate procurement arrangements, improve project execution or reconsider commissioning schedules to protect project economics.
India also continues to rely significantly on overseas suppliers for batteries and other critical components, exposing projects to international supply conditions and procurement uncertainties, they point out.
