⚡ Quick Read
- What happened: India added 547 MWh of battery storage in 2025, reaching a cumulative capacity of 1,082 MWh, a 26% YoY increase.
- Why it matters: Developers are increasingly integrating storage to mitigate deviation settlement penalties and meet evolving DISCOM requirements for renewable energy.
- Watch: Future growth hinges on addressing the 18% GST disparity for standalone storage and the emergence of data centers as a key demand driver.
Background and Context
India’s energy storage sector reached a significant inflection point in 2025, transitioning from a nascent market to a critical component of the national power infrastructure. According to the 2H & Annual 2025 India’s Energy Storage Landscape Report by Mercom India Research, the country’s cumulative installed battery energy storage capacity climbed to 1,082 MWh by the end of December 2025. This growth reflects a 26% year-over-year increase from the 433 MWh recorded in 2024.
Key Details
The 2025 expansion was primarily fueled by robust central government policy support and proactive state-level initiatives. Solar-plus-storage projects dominated the landscape, accounting for 54% of cumulative capacity. Solar-plus-wind round-the-clock (RTC) projects followed at 23%, while standalone battery energy storage systems (BESS) comprised 21%. The remaining capacity was distributed among wind-solar storage and floating solar-plus-storage configurations.
Geographically, Bihar emerged as the leader in installations, capturing 24% of the cumulative capacity, followed by Chhattisgarh at 16% and Rajasthan at 15%. Beyond battery storage, India’s pumped storage sector remains a cornerstone of grid stability, with 7 GW of total capacity, 6 GW of which is currently operational.
What This Means for EPCs and Developers
For EPC contractors and developers, the market is shifting toward projects that prioritize grid reliability. The integration of storage is no longer optional but a strategic necessity to avoid penalties associated with the deviation settlement mechanism for intermittent renewables. Priya Sanjay, Managing Director at Mercom India, highlights that the most lucrative opportunities currently lie in states with high grid tariffs. In these regions, solar-plus-storage solutions are becoming a viable, cost-effective replacement for diesel gensets, particularly for the commercial and industrial (C&I) segment.
Furthermore, the rapid proliferation of data centers is creating a new demand vertical. Developers should look toward these high-energy consumers, especially in states where traditional net metering and open access approvals present regulatory hurdles.
What Happens Next
While the momentum is positive, the industry faces structural challenges. Raj Prabhu, CEO of Mercom Capital Group, emphasized that long-term success depends on realistic bidding strategies and regulatory alignment. A primary concern for the industry is the tax structure; standalone battery storage currently faces an 18% GST, significantly higher than the 5% applied to renewable energy projects. Resolving this disparity, alongside ensuring grid-aligned storage economics, will be essential for the sector to scale exponentially. As the pipeline grows—led by states like Gujarat—the focus will shift toward optimizing storage for grid flexibility as renewable penetration continues to rise.
