By Utsav Panchal, Director and CEO, Rajesh Power Services Limited
India’s clean energy transition has entered a new phase. For years, the conversation was centred on adding renewable energy capacity at scale. Today, the challenge is no longer just about generating more green power, it is about ensuring that the power system can absorb, balance and reliably deliver that energy when consumers actually need it. The recent instance of electricity prices on India’s power exchange touching near-zero levels during the daytime is an important reminder of this emerging reality.
Periods of extremely low power prices reflect the evolving dynamics of a power system where renewable energy is playing an increasingly larger role and where flexibility solutions such as storage are becoming more important. During daytime hours, especially when weather conditions are favourable, solar generation can surge sharply. If electricity demand simultaneously softens due to lower industrial activity, holidays or weather-related cooling, the system witnesses a temporary oversupply of power. This is precisely where energy storage in general, and battery energy storage systems (BESS) in particular, becomes critical.
Energy storage allows surplus electricity generated during periods of low demand to be stored and dispatched later during peak consumption hours. In India’s case, this is especially important because solar generation is highest during the day, while electricity demand typically rises in the evening. Without adequate storage, utilities may be forced to curtail renewable generation during surplus periods while continuing to rely on conventional sources to meet evening peak demand.
As renewable penetration increases further, these balancing challenges will become more frequent. India has already crossed 220 GW of installed renewable energy capacity and is targeting 500 GW of non-fossil fuel capacity by 2030. This is among the most ambitious clean energy transitions anywhere in the world. However, renewable energy, by its very nature, is variable. Solar generation depends on sunlight, while wind patterns remain unpredictable. A modern power system therefore requires flexibility alongside generation capacity.
Globally, this transition is already visible. Developed economies have been reducing their reliance on fossil-based energy sources and ramping up the renewable energy and energy storage installations. Several mature renewable energy markets have witnessed periods of zero or even negative electricity prices when renewable supply significantly exceeds demand. These developments are often misunderstood. In reality, they are signals that the energy system requires greater storage capacity, demand response mechanisms and flexible grid infrastructure.
India is now approaching a similar inflection point. Over the last two years, we have seen a multi-fold increase in the tendered capacities of BESS, a short duration energy storage source. Long duration energy storage technologies like pumped hydro storage have also been preferred by policymakers. Soon, we will be seeing other long duration energy storage technologies like vanadium redox flow batteries and compressed air energy storage also making their way into energy storage matrix.
Policy developments over the past two years indicate that policymakers and utilities increasingly recognise the strategic role of storage. Measures such as viability gap funding for standalone BESS projects, inter-state transmission charge waivers, and the gradual introduction of storage obligations have improved the economic viability of BESS projects. The Draft Electricity (Amendment) Act, 2025 also proposes recognising energy storage as part of the power system itself: an important policy shift that reflects the changing architecture of the grid.
States are also beginning to move decisively in this direction. Gujarat, in particular, has emerged as one of the early leaders in utility-scale battery storage deployment. Gujarat Urja Vikas Nigam Limited has initiated multiple phases of standalone BESS procurement as part of the state’s broader strategy to strengthen grid flexibility, optimise power procurement and support renewable energy integration. This reflects a long-term and structured approach to power planning. Rajasthan and Maharashtra have also tendered similar capacities for utility scale deployment.
The growing importance of storage is also changing the nature of participation across the power sector. Engineering and infrastructure companies that traditionally focused on transmission and distribution execution are now building capabilities in energy storage and grid balancing infrastructure. This transition is important because BESS projects require not only technology integration, but also disciplined execution, operational reliability and long-term asset management capabilities.
The role of energy storage extends beyond renewable integration alone. BESS can help utilities manage peak demand, improve grid stability, reduce stress on transmission infrastructure and optimise procurement costs. Over time, storage will also support ancillary services such as frequency regulation, voltage support and faster response during grid disturbances. As India’s power demand continues to rise alongside industrial growth, urbanisation and electrification, these capabilities will become increasingly important.
India’s energy transition will ultimately be defined not just by how much renewable capacity it installs, but by how effectively it builds a resilient, flexible and reliable power system around that capacity. BESS are now becoming central to that transition.
The recent episodes of near-zero power prices should therefore not be viewed as a concern for renewable energy growth. Instead, they should be seen as a clear signal that the next phase of India’s power sector evolution will depend on storage, flexibility and smarter grid infrastructure. The countries that successfully manage this transition will not simply be the ones generating the most renewable energy, but the ones best equipped to integrate it reliably into their power systems.
