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The proposed mandate aims to help state utilities store surplus renewable electricity for evening peak demand, as India steps up investment in battery and grid-scale energy storage
India plans to make state power utilities install energy storage capacity as the government seeks to reduce electricity shortages during evening and night-time hours, when solar power generation falls even as demand remains high.
Power Secretary Pankaj Agarwal announced the proposed requirement at the Bharat Renewable Energy Summit on Thursday. The move is aimed at allowing utilities to store surplus clean electricity generated during the day and use it when demand peaks later in the day.
The government has not yet decided how much storage capacity state utilities will be required to install or provided a timeline for implementing the mandate. Agarwal said the situation was still evolving and added that more clean energy tenders linked to energy storage were in the works.
The announcement comes as India grapples with a growing mismatch between renewable energy generation and electricity demand. Despite having more than 300 gigawatts (GW) of non-fossil fuel-based power generation capacity, the country has continued to rely on coal-fired plants to meet demand during evening and night-time hours.
The lack of adequate battery storage has made it difficult for state utilities to store surplus electricity generated during periods of high solar output and release it when renewable generation declines.
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India’s power system faces a growing challenge as solar and wind generation expand. Solar power generation is concentrated during daylight hours, while electricity consumption often remains high after sunset. Without adequate storage, surplus daytime electricity cannot be shifted to periods when demand is higher and solar generation is unavailable.
The supply gap has increased pressure on conventional power sources, particularly coal-fired plants.
India’s electricity shortages reached 560 million kilowatt-hours in September, the highest level since August 2023, according to government data reported by Reuters. Coal-fired power generation rose 25.7 per cent year-on-year in October, its fastest annual increase in three years, while hydropower generation declined 26 per cent amid weaker rainfall.
Rs 14,500-crore push for grid-scale storage
The proposed mandate follows the Union Cabinet’s approval on Wednesday of a Rs 14,500-crore viability gap funding (VGF) scheme to develop 92 gigawatt-hours (GWh) of grid-scale energy storage capacity between FY27 and FY31.
The programme will support 60 GWh of pumped hydro storage projects, 30 GWh of battery energy storage systems and 2 GWh of emerging storage technologies. The projects are expected to attract a total investment of Rs 97,600 crore.
Under the scheme, public and private sector electricity distribution companies will be eligible for financial support for battery storage and pumped hydro projects. The government has also introduced a minimum domestic content requirement of 40 per cent for battery energy storage projects to encourage local manufacturing and reduce dependence on imported components.
Battery storage systems can absorb surplus electricity when solar generation is high and release it when demand increases. Pumped hydro storage works by using surplus electricity to pump water to an upper reservoir, which can then be released through turbines to generate power when needed.
The government estimates that the additional capacity supported by the scheme will help India move towards its requirement of 411 GWh of grid-scale energy storage by 2031-32.
India expands renewable energy ambitions
The storage push is part of a wider effort to strengthen India’s electricity infrastructure as renewable power capacity expands. The government is targeting 500 GW of non-fossil fuel-based installed power capacity by 2030.
The International Energy Agency (IEA), in its India Renewable Energy Market Report 2026 released on November 3, said India’s renewable power capacity had crossed 300 GW in 2026, almost quadrupling over the past decade. The country also achieved its target of sourcing 50 per cent of installed power capacity from non-fossil fuel sources in 2025, five years ahead of schedule.
The IEA expects India’s renewable power capacity to reach around 530 GW by 2030, with solar power accounting for more than 80 per cent of new additions. However, the agency cautioned that the expansion would require faster investment in electricity grids, energy storage and system flexibility.
India is also planning to make battery storage mandatory for new government-backed solar and wind projects from July 2027, according to draft regulations reported by Reuters in September.
