Energy storage

Indian Economy glossary

Also called: Battery energy storage system, BESS · Topic: Infrastructure: Transport, Communications and Energy · NCERT: Beyond NCERT

Meaning

Energy storage means technology that stores electricity when there is more supply than demand and gives it back to the grid later, when demand is high or generation is low. It stores the energy in another form: chemical energy in a battery energy storage system (BESS), or the potential energy of water lifted uphill in pumped storage hydropower (PSP). Solar power is available only in daylight and wind changes with the weather, so storage is what lets a grid with a lot of renewables supply power at all hours.

Round-trip efficiency (%) = (Energy taken out of storage ÷ Energy put into storage) × 100

Explanation

How it works

  • Charge: when supply is more than demand (for example, solar at midday), the surplus power charges batteries or pumps water from a lower reservoir to an upper one.
  • Store: the energy waits as chemical energy (battery) or as gravitational potential energy (water held high up).
  • Discharge: when demand peaks or generation falls (for example, in the evening after sunset), the battery releases power, or the water flows down through turbines.
  • Two size measures:
  • Power (MW/GW) is how fast the store can deliver electricity.
  • Energy (MWh/GWh) is how long it can keep delivering.
  • A short-duration store can respond quickly. A long-duration store can keep going for many hours.

Main types

BESS (battery) Pumped storage (PSP)
Stores energy as Chemical energy Water's potential energy in an upper reservoir
Best for Fast, short-duration needs: frequency regulation, peak management, grid balancing Long-duration, large-scale storage
Location Can be placed near generation or consumption centres Needs suitable geography: two reservoirs at different heights
  • The three PSP layouts:
  • On-stream: both reservoirs are on a river, stream or nallah.
  • Off-stream open-loop: one reservoir is on a river and the other is not.
  • Off-stream closed-loop: neither reservoir is on a river, perennial stream or perennial nallah.

  • "Off-stream" is the umbrella term for open-loop and closed-loop together. The government prefers off-stream projects because they are faster to build and do less harm to aquatic life.

  • PSP and BESS work together. Neither replaces the other.

What makes storage worth building

  • Losses. Every store gives back less than it takes in. Pumped hydro's round-trip efficiency is about 80%.
  • Worked example (round-trip loss):
  • 100 units of surplus solar power are used to pump water uphill.
  • About 80 units come back at the evening peak, so 20 units are lost.
  • Suppose the solar power costs about ₹2.5/kWh (the auction level in the study note).
  • Each unit delivered then costs 2.5 ÷ 0.8 = ₹3.125/kWh, before adding the cost of building the store.

  • The store makes money only if evening power sells clearly above this.

  • Falling battery costs strengthen the case for BESS:

  • A 2022-23 BESS bid came to about ₹10.18 per kWh.
  • Recent bids reached about ₹2.1 per kWh without viability gap funding (a government grant that covers part of the building cost), if the battery is used twice a day.

  • At the 1.5 cycles a day the Ministry expects in practice, the cost is about ₹2.8 per kWh.

  • More renewables mean more need for storage:

  • As solar capacity grows, midday supply can exceed midday demand.
  • Without storage or new transmission lines, the grid has to curtail plants (tell them to stop generating even though sun or wind is available).
  • Meanwhile, coal plants are still needed to meet the evening peak.

In India

  • Who does what:
  • Ministry of Power: issued the Guidelines to Promote Development of Pumped Storage Projects (April 2023). It also issued the Tariff-Based Competitive Bidding (TBCB) Guidelines (February 2025) for buying storage capacity and stored energy from PSPs. TBCB means the project goes to whoever bids the lowest tariff.
  • Central Electricity Authority (CEA): the technical body. It runs the Jal Vidyut DPR portal, which tracks PSP surveys and project reports in real time.

  • MoEF&CC: allows B2 category appraisal for eligible PSPs, and asks for less baseline data for off-stream projects.

  • Incentives:

  • 100% waiver of ISTS charges (fees for using the Inter-State Transmission System) for PSPs whose construction is awarded by 30 June 2028. The waiver lasts 25 years from COD, the date commercial operation starts.

  • Viability gap funding was extended to battery energy storage in 2023 (study note; verify current).

  • Status and targets:

  • Operational PSP capacity was 7.43 GW across 10 projects (August 2026).
  • India ranks 4th globally, with 7.18 GW at end-2025.
  • Identified PSP potential is 345.38 GW across 320 projects. The Western Region has the most potential (129.72 GW), because rivers in the Western Ghats are steep.
  • CEA projects 73.93 GW of storage by 2031-32: 26.69 GW PSP + 47.24 GW BESS.

  • Planned PSP additions of 100.81 GW by 2035-36 would take the total to 105.56 GW.

  • Why it is urgent:

  • Non-fossil sources passed 50% of installed capacity in mid-2025, and the target is 500 GW by 2030 (study note).
  • Peak demand reached 241 GW on 9 June 2025, and most of the evening peak falls after the sun has set.

Don't confuse with

  • Pumped storage vs conventional hydropower: a conventional dam generates power from river flow. A PSP is a net consumer of power, about 20% lost per cycle. It is a storage device that shifts power across time, not a new source of energy.
  • Installed capacity vs firm (round-the-clock) supply: 50% non-fossil capacity does not mean 50% of power generated at every hour. Storage is what turns variable solar and wind capacity into supply that can be relied on.
  • Strategic petroleum reserves (SPR): these stock 5.33 MMT of crude oil to protect against import shocks (energy security). Energy storage holds electricity to balance the grid within a day.
  • Time-of-day tariff / net metering: these are pricing tools that shift demand or credit rooftop solar exports. Storage is physical infrastructure that shifts supply.

Prelims Hooks

  • A PSP stores energy as gravitational potential energy in an upper reservoir. Pumped hydro's round-trip efficiency is about 80%.
  • Closed-loop = neither reservoir is on a river. Open-loop = one is. "Off-stream" covers both.
  • PSP Guidelines (April 2023) and TBCB Guidelines (February 2025) come from the Ministry of Power, not MNRE. The Jal Vidyut DPR portal is run by CEA.
  • ISTS waiver: the cut-off is construction awarded by 30 June 2028, not commissioning by that date. The waiver lasts 25 years from COD.
  • Trap: "CEA projects more PSP than BESS by 2031-32." FALSE. The projection is BESS 47.24 GW vs PSP 26.69 GW.
  • Number traps: 345.38 GW = identified potential; 7.43 GW = operational (August 2026); 73.93 GW = CEA storage projection for 2031-32.

Mains Points

  • The real cost of renewable power.
  • Solar auction tariffs of about ₹2.5/kWh are below the cost of new coal, but adding storage raises the cost (study note).
  • So the fair comparison is solar plus storage against coal, at the hours people actually use power.

  • Storage, together with transmission (Green Energy Corridors, to reduce curtailment), turns capacity milestones into actual decarbonisation.

  • PSP vs BESS: plan by role, not rivalry.

  • Battery costs have fallen from about ₹10.18/kWh to about ₹2.1–2.8/kWh, so batteries now win on short daily cycles.
  • PSPs face high upfront capital cost, clearance delays, uncertain tariffs and few civil contractors. Only about 7 GW of the 280 GW potential estimated by the Standing Committee had been built by April 2026, about 2.5%.

  • PSPs still make sense for long-duration needs, where batteries remain weaker.

  • Speed vs ecology, and Centre–State coordination.

  • B2 fast-track appraisal meets the Western Ghats, the region with the most PSP potential.
  • The Kasturirangan HLWG said that any project within 10 km of the Western Ghats ESA (Ecologically Sensitive Area) that needs clearance should be regulated under the EIA Notification 2006.
  • Land, water and gram panchayat consent are handled by States. This is why the Union Power Minister has stressed the role of State Governments.

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