BESS Unplugged: Assessing the Imperative for Battery Energy Storage in Modern Grids

In the evolving discourse on energy, few acronyms have garnered as much attention as BESS - Battery Energy Storage Systems. Once a novelty, BESS now stands at the epicenter of the global energy transition, promising to bridge the chasm between renewable ambitions and the realities of grid management. The question, however, remains: Do we truly require BESS, or is it merely a transient fascination in the energy sector? Let us embark on a reasoned exploration, fortified by empirical data and international experience, to ascertain the indispensability of BESS.

The Essence of BESS: More Than Mere Backup

BESS is not simply a large-scale battery; it is an intelligent system designed to store electricity - often generated from intermittent renewable sources such as solar and wind - and release it judiciously when demand surges or generation wanes. In effect, BESS acts as the grid’s strategic reserve, ensuring continuity, stability, and efficiency.

The Rationale for BESS: A Pillar of Modern Energy Systems

1. Grid Stability: The Guardian of Reliability

The integration of renewable energy, while laudable, introduces volatility into the grid. Solar and wind are inherently capricious, their outputs dictated by the whims of nature. BESS mitigates these fluctuations, absorbing surplus energy during periods of abundance and discharging it during deficits. For instance, in the United Kingdom, BESS has become instrumental in balancing supply and demand, supplanting fossil-fuel peaking power plants and potentially saving the energy system up to £40 billion ($48 billion) by 2050.

2. Renewable Integration: Realizing the Promise of Green Energy

Without storage, surplus renewable energy is often squandered. BESS ensures that every photon and gust is harnessed to its fullest potential, storing excess production for deployment during periods of scarcity. Germany, with its ambitious Energy transition, relies heavily on BESS to stabilize its grid as it pursues an 80% renewable energy target by 2030.

3. Peak Shaving and Load Shifting: Economic Prudence

Electricity prices can escalate dramatically during periods of peak demand. BESS enables utilities and industries to “shave” these peaks by discharging stored energy, thereby reducing reliance on costly and polluting peaking power plants. In the United States, BESS is already employed for energy arbitrage - charging when prices are low and discharging when they soar.

4. Backup Power: Ensuring Continuity

BESS provides instantaneous backup power for critical infrastructure—hospitals, data centers, and essential services - during grid outages. In California, BESS recently emerged as the largest single source of supply during evening peaks, surpassing conventional generation sources for several hours.

Global Realities: Who Leads, Who Follows?

A comparative analysis reveals that nations investing robustly in BESS are reaping tangible benefits:

• China commands the global stage, accounting for two-thirds of installed BESS capacity, propelled by aggressive renewable expansion and supportive policy frameworks.
• The United States is witnessing exponential growth, with California alone boasting 7.3 GW of installed battery storage—a staggering 1,250% increase in five years.
• The United Kingdom and Germany leverage BESS for grid stability, renewable integration, and market optimization.

India’s Position: A Work in Progress

India’s BESS journey, whilst ambitious, is nascent. As of late 2024, the country’s installed BESS capacity stands at a modest 0.11 GW, dwarfed by the scale of its renewable ambitions and by global peers. Pumped storage plants (PSPs) contribute a further 4.75 GW, but the reliance on BESS remains minimal. The government’s vision is bold: 66 GW of BESS by 2032, necessitating an investment of ₹5 lakh crore. Policy momentum is building, with mandates, incentives, and tenders, yet the execution gap persists.

The Cost of Inaction: What India Stands to Lose

1. Grid Stability: India’s renewable capacity has expanded rapidly - over 21 GW added in the last fiscal year—yet storage infrastructure lags. The grid faces increasing instability as peak demand surges (from 169 GW in 2018-19 to 250 GW in 2024-25, with projections of 270 GW this summer). The Loss of Load Probability (LOLP) is alarmingly high, reaching 19-31% in May and 4.7-20% in June, depending on the scenario. This translates to a tangible risk of blackouts and supply shortfalls during critical periods.
2. Energy Sufficiency: Despite an installed renewable capacity exceeding 200 GW, India’s storage remains insufficient. The National Electricity Plan projects a requirement of 73.93 GW/411.4 GWh of storage by 2031-32, with BESS expected to contribute 47.24 GW/236.22 GWh. The current shortfall means that unmet demand during peak hours could reach 15-20 GW this summer, with a Normalized Energy Not Served (NENS) of 0.37% - a figure that, while seemingly modest, represents millions of affected consumers and curtailed industrial activity.
3. Cost of Energy: Industrial power tariffs in India average around ₹6.4 per kWh, with industrial users often paying a 10-25% premium due to cross-subsidization. In contrast, nations such as Vietnam offer discounted industrial power to enhance competitiveness. The absence of BESS compels reliance on expensive peaking power plants and inefficient grid management, inflating energy costs. The government estimates that widespread BESS adoption could cap energy costs at ₹4.8 per unit, delivering substantial savings to industry and consumers alike.
4. Manufacturing Competitiveness: Energy constitutes a significant proportion of manufacturing costs in India, particularly in energy-intensive sectors such as iron and steel, where it accounts for 40-60% of total production costs. Across other sectors, energy’s share typically ranges from 5% to 20%. Elevated and volatile energy prices erode India’s global competitiveness, deterring investment and undermining the “Make in India” initiative.
5. Broader Economic Impact: The repercussions extend beyond industry. Grid instability and high energy costs disrupt supply chains, elevate the cost of goods, and diminish investor confidence. The continued reliance on ageing, polluting thermal plants further undermines India’s climate commitments and economic aspirations.

The Path Forward: BESS as a Strategic Imperative

The imperative for BESS is unequivocal. It is not merely a technological adjunct but a foundational pillar for a resilient, efficient, and sustainable energy future. For India, the stakes are particularly high: without rapid deployment of BESS, the nation risks persistent grid instability, unmet energy demand, and prohibitive manufacturing costs. Conversely, a robust BESS infrastructure promises not only grid reliability and energy sufficiency but also a decisive competitive edge in manufacturing and economic growth.

The government’s recent policy initiatives - mandating BESS contracts, offering incentives, and setting ambitious targets - are steps in the right direction. If executed with resolve, India can transform its energy landscape, reduce energy’s share in manufacturing costs, and emerge as a global leader in both renewable energy and industrial competitiveness.

The Indispensable Role of BESS

In summation, BESS is far from a fleeting trend; it is the linchpin of modern energy systems. For nations aspiring to a clean, reliable, and economically viable energy future, BESS is not a luxury but a necessity. It ensures that the lights remain on, the air remains clean, and the engines of industry continue to hum. The time to invest in BESS is now - for those who do so will not only power their grids but also illuminate their path to prosperity.