Battery energy storage system (BESS) adoption is gaining momentum in India as renewable energy deployments accelerate. Storage is increasingly being viewed as a critical tool for managing the intermittency of solar and wind generation and improving grid reliability.

India installed over 341 MWh of BESS in 2024, representing a more than sixfold increase from the 51 MWh deployed in 2023. In the first half of 2025, 48.4 MWh of energy storage capacity was installed. While this marks a 74% year-over-year decline, Raj Prabhu, CEO of Mercom Capital Group, noted that the slowdown likely reflects a temporary pause before the next phase of stronger growth.

Policy momentum also strengthened in 2025, with central and state agencies introducing several regulations and directives to accelerate storage adoption. These include measures to pair storage with renewable energy generation, expand financial support mechanisms, and establish clearer market frameworks for energy storage systems.

Here are some of the most significant policy decisions that shaped the Indian storage market in 2025.

#1 The Ministry of Power (MoP) issued an advisory for the inclusion of a minimum of a two-hour co-located energy storage system with a capacity equal to 10% of the solar capacity in all tenders. The Central Electricity Authority (CEA) later clarified that this mandate applies only to future solar tenders and does not impact existing or ongoing projects, including under programs such as the PM Surya Ghar: Muft Bijli Yojana.

#2 The government announced ₹54 billion (~$631.30 million) for the second tranche of the viability gap funding (VGF) program to support the development of 30 GWh of BESS. The program offers a VGF of ₹1.8 million (~$20,092.54)/MWh, with funding disbursed in three stages to accelerate deployment, and is expected to significantly boost storage adoption, enhance grid reliability, attract investments, and support India’s renewable energy integration goals.

#3 MoP amended renewable energy bidding guidelines to include clear provisions for energy storage, covering firm and dispatchable power from renewable projects integrated with ESS. These amendments are expected to streamline regulatory approvals, address delays caused by authorities, and revise performance guarantees.

#4 MoP’s new tariff-based competitive bidding guidelines for pumped storage projects (PSPs) announced on February 6, 2025, acknowledge their key role in India’s energy storage strategy alongside battery systems. The guidelines outline procurement methods, define eligibility criteria, provide contractual protection, and offer flexible tariff options that allow for either storage charges or combined tariffs.

#5 The Central Electricity Regulatory Commission (CERC) proposed expanding the scope of over-the-counter power markets to include new instruments such as virtual power purchase agreements, BESS contracts, capacity contracts, renewable energy certificates, and power banking. Importantly, this expansion formally recognizes BESS contracts as tradable financial products, allowing storage assets to generate revenue through contracts and improving renewable integration by effectively managing variability and peak demand.

#6 The MoP’s draft amendment to the Electricity Rules 2005 proposed allowing the sale, lease, and rental of ESS, explicitly permitting consumers, utilities, and developers to develop, own, or operate storage projects independently. The proposed change will enable new business models, such as shared or rented storage, empowering wider access to storage services while recognizing ESS as a distinct, marketable entity in the power sector.

#7 CERC released the draft second amendment to the Tariff Regulations, 2024, proposing a formal tariff framework for integrated ESS installed alongside coal, lignite, or gas-based generating stations and interstate transmission systems (ISTS). The amendment covers a separate fixed capacity and energy charges, pass-through of charging power costs via defined formulas, and incentives for extra discharge. It also sets operating norms, filing requirements, a 12-year battery life, and cost or revenue sharing.

#8 MoP notified the Electricity (Amendment) Rules, 2025, amending provisions of Rule 18 of the Electricity Rules, 2005, to broaden ESS usage across the electricity value chain. It allows ESS ownership/operation by generators, transmission/distribution licensees, system operators, or independent storage providers, gives storage the same legal status as its owner, treats non-co-located storage as a grid element, and permits wider access/scheduling.

#9 The government exempted off-stream closed-loop PSP, irrespective of the quantum of capital expenditure, from the requirement of concurrence by the CEA. However, the developers of such PSPs must seek technical guidance from the CEA, the Ministry said in a gazette notification. The notification said hydroelectric generating stations, involving an estimated capital expenditure exceeding ₹30 billion (~$342 million), will require the CEA’s concurrence.

The government also waived ISTS charges for PSPs for which construction work is awarded on or before June 30, 2028. The timeline for CEA concurrence on the detailed project reports has been reduced from 90 to 50 days for all PSP types.

#10 MoP permitted connectivity to either an intra-state transmission system (InSTS) or an ISTS, and states that land and grid-connectivity responsibilities will be clearly specified in each project’s request for selection. The revised rules also mandate that the BESS energy management system application software be developed in India, require adherence to industry quality standards, and prohibit the use of refurbished battery cells.