The Ministry of Power informed Parliament on Monday that the government plans to invest ₹3.49 lakh crore by 2031-32 to build out a Battery Energy Storage System (BESS) installed capacity of 8.68 GW/34 GWh by 2026-27, scaling to 47.24 GW/236 GWh by 2031-32. The disclosure, made in a written reply to the Rajya Sabha, signals one of the largest single-sector energy infrastructure commitments in India's renewable transition.

Pumped Storage Plants Also in the Frame

Alongside the BESS outlay, an additional ₹1.29 lakh crore is earmarked for Pumped Storage Plant (PSP) capacity — targeting 7.45 GW/47 GWh by 2026-27 and 26.69 GW/175 GWh by 2031-32. Together, the two storage verticals represent a combined planned investment of over ₹4.78 lakh crore, underscoring the Centre's intent to make grid-scale storage a structural pillar of its clean energy architecture.

What the Government Said

Minister of State for Power Shripad Naik told the Rajya Sabha that NITI Aayog has identified energy storage as a critical requirement for managing the variability inherent in renewable energy integration. Naik said the government has already rolled out a series of coordinated policy, regulatory, demand-side, and supply-side measures to accelerate deployment of Energy Storage Systems (ESS), including BESS.

Key among these is a 100 per cent waiver of Inter-State Transmission System (ISTS) charges for BESS projects commissioned by June 2025, with a 25 per cent annual reduction in the waiver thereafter. Co-located BESS projects enjoy the full ISTS waiver if commissioned by June 2028. Hydro PSP projects where construction is awarded by June 2028 also qualify for the full waiver.

Regulatory and Manufacturing Support

The Central Electricity Regulatory Commission (CERC) has permitted storage-based resources to provide ancillary services — including secondary and tertiary reserves — enabling energy storage systems to support real-time grid balancing alongside conventional generators.

On the manufacturing side, 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, of which 10 GWh is reserved for grid-scale stationary storage.

Infrastructure Incentives for Hydro Projects

Enabling infrastructure support of ₹1 crore per MW is being extended to hydro PSP projects up to 200 MW. For projects exceeding that threshold, the support structure shifts to ₹200 crore plus ₹0.75 crore per MW, Naik added. These tiered incentives are designed to de-risk capital-intensive hydro storage projects that have historically faced long gestation periods.

With India's renewable capacity additions accelerating, the scale of storage investment now being committed will be critical to ensuring grid stability — and whether these targets translate into commissioned capacity on schedule remains the central question for the sector.