In an interview at the Mercom India Renewables Summit 2025, Debmalya Sen, President of the India Energy Storage Alliance (IESA), provided in-depth insights into the evolving dynamics of India’s energy storage sector.

Sen discussed recent trends in battery auction pricing and noted that although prices have dropped, further declines are unlikely due to stabilized lithium and metal costs, reduced viability gap funding, and changing policy incentives. He shared perspectives on policy mandates, such as the government’s advisory for storage integration in solar tenders. He emphasized that market forces are already pushing toward higher battery penetration regardless of formal mandates.

Battery storage auction prices have recently reached record lows, driven by declining lithium-ion costs. In your view, how do you see battery prices evolving in the coming years?

Currently, two-hour storage is priced at around ₹208,000 (~$2,375)/MW/month and four-hour storage at ₹359,000 (~$)/MW/month, supported by viability gap funding of about ₹2.7 million (~$30,778)/MWh. Now that the Viability Gap Funding support is being reduced to about ₹1.8 million (~$20,519)/MWh and interstate transmission system waivers are being phased out, we should not expect another drastic price drop like last year.

Currently, lithium and cell prices range between $35 and $40/kWh and are expected to gradually fall to about $28 per kWh. However, this will take time. Over the next year or so, we expect price stabilization rather than steep declines. Metal prices are also stable for now, though there is speculation they might rise around 2027. Overall, we are likely entering a period of price stagnation.

So, I do not foresee significant changes in the prices discovered in upcoming tenders.

The government has advised a minimum of two hours of co-located energy storage system, amounting to 10% of the installed solar capacity. From your perspective, is this requirement sufficient in addressing the grid’s flexibility needs, or should we aim higher to match the scale of renewable integration?

The government has issued an advisory suggesting two-hour battery storage for 10% of solar project capacity. However, market trends already show 50% penetration of battery storage in current tenders. So even without formal mandates, the market is naturally moving toward higher adoption.

Compared to China, which mandated 30% pairing of renewables with storage back in 2018, 10% is relatively low. But with ongoing tender trends, storage integration in India is already progressing well.

The Central Electricity Authority estimates that India will need over 400 GWh of storage capacity by 2031–32. How realistic are these targets in your assessment, and what structural or policy steps must be taken now to ensure we are on track?

Yes, the target is feasible, but whether it is achievable is another matter. All the necessary components, guidelines, tendering plans, and resource adequacy plans are in place. The problem lies in execution. Some states have developed storage requirement plans, but the 4 % energy storage obligation remains voluntary. For real progress, such obligations must become mandatory.

Also, one major issue is that tendering targets are mistaken for deployment goals. We need clear deployment-based targets, not just tender announcements. Delays in project approvals are another issue. It often takes over a year and a half to get approvals. This needs to be addressed. Also, there should be equal accountability from offtakers. If developers are penalized for not securing buyers, then offtakers should also be held accountable for meeting timelines for signing PPAs.

As rooftop solar adoption increases and more households begin feeding excess power into the grid, do you believe there is a case for incentivizing residential battery storage?

The government has mentioned rooftop solar and storage in advisories, but implementation is unclear. For this business model to become viable, particularly for residential and commercial consumers, more effective incentives and clearer business models are required. Awareness is low, and incentives around battery integration are poorly defined. For example, if incentives are offered on solar modules, we need clarity on whether they also extend to batteries.

What is the future role of pumped hydro storage alongside batteries?

Pumped hydro will be essential for long-duration storage, especially for backup needs of eight to nine hours. Although India has a plan for 176 GW of pumped hydro by 2032, these projects have long gestation periods and have historically missed deadlines. Their impact will be seen more in the next decade rather than this one. Batteries and pumped hydro will coexist, not compete.

Does it currently make more sense to import batteries than to manufacture locally?

This situation is playing out similarly to how it did in solar. The government is encouraging domestic manufacturing of inverters, containers, PCS, and transformers, as well as cells. Import duties are being adjusted to favor local assembly and manufacturing. However, these efforts may not completely close the cost gap. We may bridge the gap to some extent, but full parity with imports is unlikely in the short term.

India currently has minimal battery manufacturing capacity. Under the PLI program, only 40 GW has been awarded, and 10 GW is still in discussions. Even with optimistic projections, by 2030, we may reach 140 GW of manufacturing capacity, with a realistic 70% utilization rate, which comes down to 80 GW per year, which must serve both EVs and stationary storage. But our projected demand is around 2 TWh. So, the gap remains very wide. The pace of capacity building needs to accelerate.

What role does IESA play in this energy storage landscape, and what are the three key steps needed to support battery deployment?

First, we need to invest more in research and development. India’s R&D funding in energy storage is far below global and Chinese standards. Second, we must stop mindlessly copying other countries’ technologies. While we copy, they have already moved on to the next innovation. Third, we need to focus on raising awareness and developing skills. Energy storage education is often missing from academic programs, despite discussions about wind and solar. That needs to change.

IESA comprises over 180 members. We collaborate with both the government and the private sector to inform policy, gather industry feedback, and support new entrants into the ecosystem. We also run training programs through our IESA Academy to support workforce development.

(Note: Sections of the interview have been paraphrased for better reading. Check out the video for a full chat)