India is likely to become the world’s third-largest market for utility-scale batteries by 2030 with capacity additions projected to accelerate considerably over the next seven years to reach nearly 9 GW, supported by cost reductions, according to a report by IEA (International Energy Agency).

Solar PV plus battery storage is already more cost-competitive than coal in India, a trend expected to continue. The country’s increasing PV capacity will lead to higher short-term flexibility requirements, boosting the utility of energy storage. The government has mandated that wind and solar PV projects must incorporate at least 5 per cent of their installed capacity with storage.

The report underscores that if India meets all its government-set targets on schedule, solar PV and battery storage will become the backbone of the country’s power grid by 2050. Batteries will charge during peak solar hours and discharge during evening peak hours.

Globally, the upfront costs of utility-scale battery storage with a four-hour duration are projected to drop from a global average of $290/kWh in 2022 to $175/kWh in 2030, a 40 per cent reduction. India’s robust growth in the battery storage market is driving significant cost reductions. In India, strong growth in the battery storage market enables deep cost reductions.

Advancements in battery chemistry and manufacturing have led to a remarkable decline in average battery costs from $1,400/kWh in 2010 to under $140/kWh in 2023, one of the fastest cost declines for any energy technology.

The leading market

China became the leading market for battery storage two years ago, with its share of annual global additions increasing from approximately 20 per cent in 2019 to 55 per cent in 2023. The US is the second-largest battery storage market, with additions doubling year-on-year to over 8 GW in 2023. Installed battery storage capacity in the European Union grew by 70 per cent in 2023, with annual additions reaching nearly 6 GW.

The report notes that India, with its energy storage targets and financial support, has the potential to become another major market for battery storage.