A report by the India Energy Storage Alliance (IESA) says 2026 will mark a critical inflection point for India’s energy storage system (ESS) industry, as the sector shifts decisively from aggressive tendering to large-scale project execution. As of December 31, 2025, India has tendered a total of 224 GWh of ESS capacity, comprising 92 GWh of battery energy storage systems (BESS) and 132 GWh of pumped hydro storage. Of this, 95 GWh is under execution, 80 GWh remains in the tendering pipeline, while 47 GWh of tenders have been cancelled, reflecting the growing complexity of project delivery.
From Record Tendering to On-Ground Delivery
While 2025 witnessed unprecedented tendering activity, 2026 will test the industry’s ability to deliver. Last year alone saw 69 ESS tenders totalling 102 GWh, nearly matching the cumulative tendered capacity between 2018 and 2024. According to IESA, projects awarded since mid-2023 are now approaching commissioning timelines of 18–24 months, pushing 2026 into focus as the year when tendered capacity must translate into operational assets. “All eyes will remain on whether the performance of these projects is in line with what was committed,” said Debmalya Sen, President, IESA. “2026 will be the year when a number of projects enter the operational phase.”
Limited Operational Capacity Highlights Execution Gap
Despite the surge in tenders, operational capacity remains limited. As of 2025, only 0.7 GWh of BESS capacity was operational nationwide. However, IESA expects an additional 2 GWh to come online by December 2026, marking the early stages of scale-up. One of the most striking developments in 2025 was the sharp collapse in tariffs, which surprised even industry veterans. Standalone 2-hour BESS tariffs fell from ₹2.21 lakh/MW/month in early 2025 to ₹1.48 lakh/MW/month by year-end, as seen in APTRANSCO’s tender. Similarly, solar-plus-4-hour BESS tariffs dropped to ₹2.70–2.76/kWh, driven by the entry of over 50 new bidders, intensifying competition across the sector.
Financing Risks Cloud Ultra-Low Tariffs
However, aggressive pricing has raised persistent concerns around project bankability. “At present, only a few projects from the large pool of awarded tenders have secured financing,” Sen said. “Whether all projects will ultimately be delivered remains an open question.” Low tariffs, coupled with long payback periods and evolving battery costs, continue to test lender confidence.
Landmark Projects to Test Market Readiness
IESA identified March 2026 as a critical milestone, when Adani will commission one of the world’s largest single-location BESS projects—a 1,126 MW / 3,530 MWh facility in Gujarat. In parallel, January 2026 will see Rajasthan float tenders for India’s largest solar-plus-BESS project at Pugal Solar Park. Meanwhile, the commercial and industrial (C&I) segment is beginning to gain traction, following Juniper Green Energy’s 60 MWh merchant BESS installation commissioned in December 2025.
Policy Support Strengthens Sector Momentum
Government policy continues to play a crucial enabling role. The Centre rolled out the second tranche of Viability Gap Funding (VGF) worth ₹5,400 crore, supporting 30 GWh of standalone BESS, while mandating 20 per cent domestic value addition for VGF-backed projects. In addition, the government extended Interstate Transmission System (ISTS) charge waivers until 2028 for pumped storage and solar-plus-BESS projects. States also stepped up commitments, with Rajasthan mandating 5 per cent energy storage for renewable projects above 5 MW, and Bihar targeting 6.1 GWh of storage capacity by 2030.
Cost and Supply Chain Uncertainties Persist
Despite strong momentum, IESA flagged emerging risks. China’s tightening trade policies and export restrictions on key battery materials could disrupt supply chains and undermine the cost assumptions behind ultra-low tariffs.
Vinayak Walimbe, Managing Director, Customized Energy Solutions, said the transition from tendering to execution marks a watershed moment for the sector. “While tariff compression reflects market confidence, the real test lies in delivering projects at promised prices amid battery cost volatility and financing constraints,” he said.
As reported by pv-magazine-india.com, success in 2026, he added, will depend not only on competitive bidding but also on operational excellence, innovative financing models, and supply chain resilience—as India seeks to prove it can execute at scale what it has successfully tendered.
