India: Newly tendered PV projects must be equipped with energy storage systems

The Ministry of Power (MoP) of India has recently issued an important regulatory update, requiring all new solar PV power tenders to be equipped with a coordinated energy storage system (ESS) of at least 2 hours and a capacity of 10% of the installed capacity of the solar project. This new rule will have a positive impact on India’s renewable energy industry.

New rules apply to institutional and state-level utility PV bidding projects

The recommendation was written to all Renewable Energy Implementing Agencies (REIAs) and state utilities to include this energy storage requirement in future solar tenders. Distribution licensees are also authorized to mandate 2-hour energy storage systems in rooftop solar plants to improve supply reliability and avoid over-injection of power into the grid when solar power is generating, thereby reducing pressure on distribution companies.

Implementing agencies can choose to operate the energy storage system in single-cycle or dual-cycle mode. In single-cycle operation, the energy storage system will be charged by coordinated solar power and release energy in the evening hours; in dual-cycle operation, the energy storage system can be charged from the grid during low-demand hours in addition to being charged by solar power, and discharged during peak hours.

India's Ministry of Power said: "This requirement will help alleviate intermittency issues and provide critical support during peak demand hours." With large amounts of renewable energy coming online, ensuring grid stability, reliability and optimal use of energy will become crucial.

It may drive the cumulative energy storage installed capacity in 2030 to nearly double that in 2024

Under this new energy storage provision, the Indian Ministry of Power expects to install about 14GW/28GWh of energy storage systems by 2030. As the price of energy storage batteries falls, it is expected to help reduce the cost of purchasing electricity in the evening, when solar power is not available and energy prices in the power trading market are higher.

As of December 31, 2024, India's installed energy storage capacity is 4.86GW, of which 4.75GW is pumped storage (PSP) and 0.11GW is battery energy storage system (BESS).

According to estimates by the Ministry of Power, India’s energy system will require 73.93GW/411.4GWh of energy storage capacity (including 26.69GW/175.18GWh of pumped storage and 47.24GW/236.22GWh of battery energy storage systems) by 2031-2032 to complement 364GW of solar and 121GW of wind power.

India aims to achieve 500GW of non-fossil energy installed capacity by 2030, of which solar PV is expected to contribute 280GW. Recently, India reached a milestone of 100GW of cumulative solar PV installed capacity, and according to the Ministry of New and Renewable Energy (MNRE), there are currently 84.10GW under construction and another 47.49GW under tender.