India may require more than ₹4 lakh crore in energy storage investments by FY32 as the country increases its renewable power capacity, according to a report by CareEdge Ratings.
The report said India’s power sector is gradually shifting from the challenge of adding generation capacity to managing and integrating a growing share of renewable energy into the electricity grid. While non-fossil fuel sources account for around 50% of India’s installed power generation capacity, they contribute approximately 29% of actual electricity generation.
According to CareEdge Ratings, India’s energy storage requirement is expected to reach around 411 GWh by FY32, compared with an operational storage capacity of approximately 54 GWh as of June 2026. The agency estimates that meeting the projected requirement could involve storage-related capital expenditure of more than ₹4 lakh crore.
The report highlighted the increasing importance of energy storage, transmission infrastructure and flexible generation as renewable power capacity expands. Storage can help manage electricity generated from variable renewable sources and support its integration into the power system.
Battery and Pumped Storage Capacity
Standalone energy storage tenders have also increased significantly. According to the report, such tenders rose to around 21 GW in FY26, compared with 7 GW in FY25.
CareEdge Ratings highlighted the complementary role of Battery Energy Storage Systems (BESS) and Pumped Storage Plants (PSPs) in supporting India’s power sector transition. Both technologies are expected to contribute to managing the increasing share of renewable generation and meeting changing grid requirements.
Coal Power to Continue Supporting the Grid
The report also said coal-based thermal power is entering a period of improved credit stability and renewed investment relevance. Well-contracted coal-based thermal power projects are expected to continue supporting rising electricity demand while providing flexibility for integrating renewable energy into the grid.
The report noted that renewable energy expansion is likely to be accompanied by investments across other parts of the electricity system, including storage, flexible generation and transmission infrastructure.
Transmission Investment
India’s transmission sector is also expected to see significant investment, with CareEdge Ratings estimating around ₹5.19 lakh crore of capital expenditure between FY27 and FY31.
However, the agency identified challenges such as right-of-way issues, forest clearances and coordination requirements that could affect project execution.
Despite these challenges, operational transmission assets continue to benefit from stable cash flows and long concession periods, supporting the sector’s credit profile, according to the report.
Electrify your feed! Click here to join our Whatsapp group and to get the latest updates, expert insights, and innovations driving India’s energy storage revolution.
