India’s BESS Market Projected to Grow 91% Annually as Renewable Energy Expands

India’s battery energy storage system (BESS) sector is projected to expand at a compound annual growth rate (CAGR) of 91 per cent between FY26 and FY32, with cumulative installed capacity expected to rise from 6.3 GWh to 302 GWh, according to a report by Nuvama.

The projected expansion reflects growing demand for infrastructure that can support renewable energy integration, balance electricity supply and demand, and ensure round-the-clock power availability.

Annual BESS capacity additions are estimated to increase from 5.7 GWh in FY26 to 56 GWh by FY32, the report said.

The Central Electricity Authority (CEA) estimates that India’s BESS requirement will reach 236 GWh by FY32 and 1,840 GWh by 2047, highlighting the potential scale of the market as the country expands its renewable energy capacity.

However, around 89 per cent of current requirements are met through imports, leaving considerable scope for domestic manufacturing. Falling battery costs and the possible introduction of a framework similar to the Approved List of Models and Manufacturers (ALMM) used in the solar sector could accelerate adoption and strengthen local production, the report noted.

Lithium-ion technology currently accounts for 98 per cent of the BESS market. However, sodium-ion batteries and the broader China+1 strategy — under which companies diversify manufacturing beyond China — could create additional opportunities for India.

The report also highlighted differences in manufacturing economics across end-user segments. Commercial, industrial and retail markets offer estimated spreads of $18 to $23 per kilowatt-hour, translating into earnings before interest, taxes, depreciation and amortisation (EBITDA) margins of 17 to 20 per cent.

Returns from an integrated BESS manufacturing facility are estimated at a relatively modest internal rate of return of 12 per cent. However, domestic manufacturing could benefit from capital expenditure of around $80 million per GWh, production-linked incentive support of Rs 181 billion for 50 GWh of capacity, and competitive labour costs.

With supportive policies, greater localisation and economies of scale, integrated battery storage manufacturing could also create opportunities for export-led growth, the report said.

The sector could become an increasingly important revenue contributor for listed companies. BESS-related business is estimated to account for 17 to 60 per cent of some companies’ revenues by FY28.

Premier Enterprises presents a potential opportunity of Rs 103 billion, equivalent to 60 per cent of its projected FY28 revenue, while Vikram Solar could see a 54 per cent revenue uplift, according to the report.

Despite growing interest in battery storage and the potential for significant revenue contributions over the coming years, the earnings of most listed solar and BESS companies have yet to reflect a substantial contribution from the segment.