Storage-backed renewable energy capacity in India to surge past 25 GW in 3 years

IANS May 14, 2025 203 views

India is on track to dramatically increase its storage-supported renewable energy capacity, aiming to surpass 25 GW by 2027, as noted in a Crisil Ratings report. The government’s encouragement for renewable sustainability plays a vital role, with storage-backed projects increasingly becoming a more substantial component of the nation's power mix. While there are inherent implementation risks, proactive measures taken by developers to secure land and grid connectivity alleviate some concerns. With nearly 70% of projects having critical resources in place, execution risks remain low to moderate, enhancing revenue visibility through long-term power purchase agreements.

"Finally, execution risks related to construction appear low to moderate." - Ankush Tyagi, Crisil Ratings
New Delhi, May 14: Installed capacity of storage-backed renewable energy (RE) in India is likely to increase to 25-30 gigawatt (GW) by financial year 2027-28 from almost zero during 2024-25, according to a Crisil Ratings report released on Wednesday.

Key Points

1

Storage-backed RE to exceed 25 GW in 3 years

2

Central government encouragement boosts RE sustainability

3

Low to moderate construction risks expected

4

70% projects have secured vital resources

The incremental capacity will account for more than 20 per cent of the total RE capacity to be added over the three years, driven by the central government's push to make renewables more sustainable, the report added.

Storage-backed RE projects provide an effective solution for the intermittent nature of RE generation. Such projects -- which include firm and dispatchable renewable energy, solar with energy storage, etc --supply power when required, supporting grid stability. For instance, these can provide green power on a monthly or hourly schedule or at the peak hours of morning and evening.

The government is pushing for these projects in a bid to make renewables a sustainable part of the country's power mix. The thrust is reflected in the high volume of these projects in recent tender auctions, forming around 25 per cent (or 11 GW) of the total capacity awarded through tenders by central agencies in calendar year 2024 as against 11 per cent (or 2.5 GW) in calendar year 2023. Given the high energy requirements, these projects need an average oversizing to the extent of 2.5 times of contracted capacity. This has resulted in a cumulative capacity pipeline of around 34 GW.

However, almost the entire capacity awarded through these tenders is either in development or in a nascent stage of construction, which exposes these to risks inherent in project implementation.

Risks in these projects typically manifest in the form of delay in securing offtake agreements, funding and execution. But we believe these risks to commissioning with material overruns would be low to moderate -- with off-take and funding risks being low. Further, the proactive approach by developers, especially towards land and connectivity requirements, augurs well -- limiting the construction risks.

Offtake risk is low for nearly half of the upcoming capacity as these have secured long-term (25 years) power purchase agreements (PPAs) at a fixed tariff, which also provides revenue visibility. For the remaining half, the risk is elevated as their tariffs are 55 per cent higher compared with vanilla RE projects, which could delay signing of PPAs.

"However, there are at least three reasons to believe these projects, too, will tie up PPAs in the near term -- first, the government's push for a higher share of green power in overall energy generation; second, increased ability of these projects to meet higher energy requirements (akin to thermal plants) at tariffs; and third, increasing renewable purchase obligations (RPO) of discoms," the report mentioned.

Funding availability is also not expected to be a material challenge as the healthy cash-flow generation potential post commissioning (backed by higher generation profile and tariffs) as well as long-term revenue visibility through 25-year PPAs should spur lender interest, according to the report.

Ankush Tyagi, Associate Director, Crisil Ratings, said that "finally, execution risks related to construction appear low to moderate".

"Based on our understanding from developers, nearly 70 per cent of the awarded capacities in calendar year 2024 have either identified or secured the critical resources required -- mainly land and grid connectivity -- prior to bid participation. This will stand them in good stead," he added.

However, material challenges pertaining to timely receipt of land and evacuation infrastructure as well as delayed PPA closure against our base expectation could result in longer-than-anticipated execution timelines and will bear watching, the report noted.

Reader Comments

R
Rahul K.
This is fantastic news! India is finally taking serious steps to solve the intermittency problem of solar/wind power. Storage-backed RE will be a game changer for our energy security. Hope states cooperate fully with the center on this mission. 🇮🇳⚡
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Priya M.
While the target is ambitious, I'm concerned about land acquisition challenges. We've seen how many infrastructure projects get delayed due to local protests. The government should involve communities early in the planning process to avoid conflicts.
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Sanjay T.
Good initiative but tariffs being 55% higher than regular RE projects is worrying. Will this lead to higher electricity bills for common people? The report mentions PPAs but doesn't clarify who ultimately bears this cost.
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Ananya P.
As someone working in the energy sector, I can confirm storage tech is improving rapidly. The 25GW target is achievable if we focus on domestic battery manufacturing under PLI scheme. Let's reduce dependence on Chinese imports!
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Vikram S.
Finally some forward thinking! Our villages still face 8-10 hour power cuts while cities waste electricity. Storage solutions can balance this. But implementation is key - hope the babus don't mess this up with red tape.
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Neha R.
Great step for environment but what about recycling these batteries later? We can't solve one problem by creating another. Hope the plan includes proper disposal mechanisms. Otherwise future generations will pay the price.

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