Without large-scale storage, coal will keep powering India’s grid, exposing the biggest challenge in the country’s renewables goals

By Garima Malu

India achieved a milestone in mid-July 2025, with 50 per cent of its installed electricity generation capacity coming from renewable sources. This means India was able to achieve one of its climate goals set under the Paris agreement for 2030, five years ahead of its target.

This achievement of 234 GW out of the total 485 GW installed capacity coming from non-fossil sources underscores India’s strong commitment to climate action through the rapid expansion of renewable infrastructure. The share of renewables in the installed capacity increased from 30 per cent to 50 per cent in a decade (2014-2025). Yet, these figures do not reflect the complete picture of India’s transition.

Capacity Vs Generation

Despite non-fossil sources constituting half of the installed capacity, they account for less than 30 per cent of electricity generated (17 per cent in 2014 to 28 per cent in 2025). Coal-based thermal plants still produce nearly three-fourths of the electricity generation despite the surge in renewables.
The gap between capacity and generation highlights a critical challenge in India’s energy transition. The transition while being impressive, is still not delivering the decarbonisation needed to achieve net-zero by 2070.

The difference between installed capacity and actual generation arises from the inherent characteristics of renewable energy and the current structure of India’s power sector. Despite the increase in capacity, the slower growth in clean energy utilisation can be attributed to their capacity utilisation factor (CUF) — a measure of how effectively installed capacity is being used.

Wind and solar energy, which account for more than half of India’s renewable installed capacity, have a lower CUF (25-30 per cent) compared to coal (60 per cent), due to their intermittent nature. Solar output will be less on cloudy days, while wind output fluctuates based on location and season. India’s grid structure is ill-equipped to handle the variability of these renewable sources. Resultantly, the energy mix is still heavily dependent on coal for base load demand, ie, the power available throughout the day.

The intermittent nature of renewables and the variability in energy demand during peak hours can be balanced with the help of large-scale storage. Storage is the bridge between the installed capacity and the utilisation of energy when needed. India relies on two types of storages — Pumped hydro storage (PHS) and Battery Energy Storage Systems (BESS). While PHS uses off-peak electricity to pump water to a higher elevation and release the stored water to generate electricity at peak demand, the BESS stores electrical energy in lithium-ion batteries.

India met its 2030 renewable capacity goal five years early, yet coal-based thermal plants still generate nearly three-fourths of the country’s electricity

Currently, India has around 5 GW of PHS and less than 250 MWh of BESS. The scale of the shortfall is stark: According to the Central Electricity Authority, India will need 60GW of storage by 2030 to balance the utilisation of renewable capacity. This highlights why coal still remains indispensable, despite the rapid growth of renewables.

Storage Barriers

One of the biggest challenges to storage expansion is high costs, driven by dependence on imported lithium and battery cells. To address this gap, the government launched the Viability Gap Funding (VGF) Scheme for BESS development. Initially launched in 2023 to support 13.2 GWh, the scheme had a second tranche in June 2025 to support 30 GWh, reflecting the growing policy momentum for energy storage. Even then, it will take years for these systems to reach scale and reduce costs.

Another obstacle is the sluggish development of PHS. Although potential sites have been identified, the transition to actual storage projects remains slow due to the complex process of obtaining land and environmental clearances. PHS also suffers from long gestational periods, further slowing capacity addition.

The huge financial requirements for storage expansion add another hurdle. Meeting the estimated requirement of energy storage by 2030 would cost roughly USD 60 billion. With no clear revenue models, these long-term projects struggle to find private investors without government support.

Success Stories

Though still in its early stages, India is witnessing pioneering storage projects that not only prove technological viability but also lay the groundwork for nationwide replication. Modhera in Gujarat became India’s first solar-powered village. With a 15 MW battery storage system, along with more than 6 MW ground-mounted and rooftop solar, the village enjoys stable 24X7 electricity. For the community, this means not just reliable power, but also reduced electricity bills and extra income from the surplus power sold back to the grid.

The World Bank’s collaboration with Solar Energy Corporation of India Limited (SECI) led to the establishment of India’s first large-scale BESS facility alongside a 100 MW solar power plant in Rajnandgaon, Chhattisgarh. This opened up the market for commercial investment in battery storage facilities. Recently, Kilokari in Delhi inaugurated South Asia’s largest (40 MWh) BESS to improve power supply and enhance grid stability.

One of the largest BESS manufacturing facility was inaugurated in Bengaluru— India’s first fully automated BESS — to harness Karnataka’s surplus wind and solar energy. In the Andaman & Nicobar Islands, a battery storage project linked to solar energy has created a clean and reliable alternative for remote areas.

The Bottom Line
India’s energy storage success stories show that the renewable revolution is gaining resilience. These projects are proof that storage can anchor a more reliable and low-carbon energy system. But these are still early milestones in a long transition journey. To meet the growing demand of energy and maintain grid stability, storage must become integral to the system. The real test lies in scaling these systems until storage becomes the norm rather than the exception.

(The author is Assistant Professor at RV University and PhD scholar at Christ University, Bengaluru)