Megatrend for 2025 and Beyond: Part 2, Battery Energy Storage Systems (BESS)

Let’s start with understanding what Battery Energy Storage Systems (BESS) are, why they are important, why it is a megatrend, and finally, companies to watch out for.

In simple terms, Battery Energy Storage Systems (BESS) are devices or systems that store energy for later use. But you might ask, why do we need to store energy?

We all know that India is aggressively moving towards renewable energy and aiming for 500GW renewable energy-based capacity.

But there is a problem with renewable energy sources. These energy sources are not constant—they generate power only when the sun shines or the wind blows. They have variable power output due to factors like sunlight intensity and wind speed.

This variability can lead to:

1. Mismatch between supply and demand: Power is generated when it’s not needed and unavailable when demand peaks. For example, in India, solar power peaks during midday, but power demand rises in the evening.

2. Reliance on fossil fuels: To fill gaps, utilities rely on coal or gas plants, and we all know that they are harmful to the environment. That’s why we are moving to renewable energy sources.

3. Grid instability: Grids can become unstable due to fluctuations in power supply.

BESS is the solution for all of the above. How?

BESS makes renewable energy sources like solar and wind reliable by storing their variable output and making it possible to have a 24/7 power supply.

• Excess power generated during low-demand periods is stored and used during high-demand periods.

• BESS stabilizes the grid by managing sudden changes in supply or demand. For example, when a power plant unexpectedly shuts down, BESS can instantly supply stored power to maintain balance.

• Apart from these, BESS has applications in data centers, telecom towers, and so on as they are used as backup power systems after power outages.

• BESS can also enable the creation of microgrids and provide resilient and independent power supply to remote or isolated communities.

Why BESS is a Megatrend

Government push and support:

There is a clear shift toward integrating BESS with renewable projects. In FY20, only 5% of renewable energy tenders included storage solutions. It increased to 23% by FY24.

• The government has mandated that DISCOMs should buy some percentage of electricity from renewable energy sources backed by storage. There will be penalties for non-compliance.

• To support the BESS ecosystem, the government has come up with a PLI scheme, which targets establishing 50 GWh of Advanced Cell Chemistry manufacturing capacity, with an additional 5 GWh for niche technologies.

• The government has also announced a Viability Gap Funding Scheme under which financial support of up to 40% of the capital cost of the BESS project is provided. This scheme targets 4 GWh BESS capacity by 2030-31.

BESS is becoming more and more affordable:

• Battery cells and related components constitute about 80% of a typical BESS project's cost. The rest includes power conversion systems, battery management systems, and auxiliary equipment.

• In the last decade, battery prices dropped by 82%, while cell prices decreased by 89%.

• As per IEX con-call, BESS tenders had ₹10-11 price per unit last year, which has dropped to ₹3.7 for recent tenders. Clearly, BESS is becoming financially viable and can compete with conventional sources.

Huge opportunity:

• India is going to need a massive 208 GWh BESS capacity by 2030. SBI Capital has projected it to grow to 42 GW by 2032 from 0.2 GW in 2024—a massive 375x jump.

• ₹3.5 lakh crore investment will be needed for this. Still, supply will be less than demand. Bids worth ₹96,000 crore are expected in the next 2 years.

• If we include everything—projects, cell manufacturing, and component manufacturing—then BESS is a ₹5 lakh crore massive opportunity by 2032.

Companies to Watch Out For

There is no company that provides only BESS solutions.

As this is a new trend, companies haven’t provided many details like revenue numbers. But I have compiled everything they have said about BESS so far.

Gensol Engineering:

• They provide solar EPC services, such as installing rooftop solar panels, along with BESS solutions.

• They are one of India’s largest BESS project developers and have won orders worth 570 MW/1140 MWh of capacity from GUVNL.

• This order will generate over ₹3,100 crores in revenue over 12 years.

• Bids worth ₹6,000 crores are in the pipeline.

JSW Energy:

• They are constructing a 1.0 GWh SECI BESS project with an expected commissioning date of June 2025.

• This is the largest standalone battery energy storage project in India.

Oriana Power:

• They have 300 MWh worth of BESS projects in their business pipeline.

• They are aiming to generate 10-20% of next year’s revenue from this segment.

• Their vision for 2030 is to become a key player in BESS with a total capacity of 3.5 GWh.

Jupiter Wagons:

• They are currently manufacturing containers for BESS and plan to start making integrated solutions before the end of FY25.

• They are working with major players in the segment, such as Schneider, Tata Solar, and Reliance.

• The price of a completely integrated container can range between ₹60 lakh and ₹2 crores, depending on the size and battery capacity.

Sterling and Wilson:

• They have won the LOI for India’s largest battery energy storage project, a 2 x 250 megawatt (MW) AC standalone BESS plant in Rajasthan by JSW.

• They also commenced a pilot project for solar plus BESS for Reliance Industries at Jamnagar, Gujarat.

Advait Infratech:

• They have submitted the lowest bid for a 50 MW IPP and a 100 MW IPP in BESS projects.

• They are targeting 1 GW of BESS projects over the next 5 years.

Indag Rubber:

• They have invested in a company called Millennium Manufacturing Systems Pvt. Ltd., which manufactures power conversion systems for BESS projects.

• The factory, based in Mohali, Punjab, is fully certified and ready for production following successful factory acceptance testing and third-party homologation in Q1 FY25.

• The first customer delivery took place in Q2 FY25.

HEG:

• They have a fully operational pilot anode plant that has been running for a year, enabling them to collaborate with cell companies and test various raw material combinations.

• They have successfully achieved global standards and exceeded performance expectations on several technical parameters.

• They are working on a complete plant, and they expect construction to take approximately 18 months.

Amara Raja:

• They will be investing ₹9,500 crores in Giga Factories for battery production, including Li-ion batteries used in BESS.

• They have set up E Positive Energy Labs to build in-house competency in cell technology development, including advanced cell chemistries suitable for BESS applications.

Exide Industries:

• They are preparing to enter the BESS market.

• They see synergies between automotive and storage batteries, as some of the cells developed for EV packs can also be used for BESS.

• They plan to stay on the manufacturing side of the value chain.

• They believe their existing expertise in lithium-ion battery packs, combined with their scale advantages, positions them well for success in the BESS market.

Servotech Power:

• They manufacture battery energy storage systems as part of their range of solar solutions.

• They installed a 466 kWh lithium-ion battery energy storage system as part of Delhi’s first microgrid system in Shivalik BSES. The system also includes 100 KWp solar and ensures a continuous supply from solar and stored battery energy, saving from outages.

Exicom:

• They are targeting the solar market with BESS solutions.

• They offer Li-ion batteries for data center battery applications.

• They showcased energy storage systems at the Riyadh EV Show.

CG Power:

• They have introduced power conversion systems specifically designed for the BESS market.

Power & Instrumentation:

• They aim to offer complete turnkey BESS solutions as an EPC contractor.

• They are in discussions with BESS solution providers for potential partnerships.

Adani Green Energy:

• They are actively developing battery storage solutions and are looking to participate in both market and merchant opportunities to maximize returns.

Bondada Engineering:

• They provide EPC services and operation and maintenance services for the solar and wind industry.

• They are planning to introduce battery energy storage systems and green hydrogen segments in addition to their existing solar and wind offerings in the renewable energy sector.

Pump Storage:

Apart from BESS, there is another technology for storing energy called pump storage. However, it is not financially viable and scalable because of high upfront costs, long gestation periods, and complex clearance requirements. The current capacity for pump storage projects is 4 GW, and it is expected to grow to 55 GW by 2032.

So, both PSP and BESS will co-exist, but BESS will dominate because of government schemes like the viability gap funding and PLI scheme. Additionally, BESS is becoming more and more affordable due to technological developments and economies of scale.

What Are the Risks?

1.

Technology Risk:

• Battery technology is rapidly advancing. There is a risk of the current technology becoming outdated. New technologies like sodium-ion batteries are emerging, so we need to keep track of these developments.

2.

Import Dependence on China:

• Most of the cells and components are imported into India from China. Any conflict between India and China might create supply chain disruptions. However, the aforementioned PLI scheme is addressing this risk.

These are the risks that are currently coming to the top of my mind.

Let me know whether you are going to invest in this megatrend or not.

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#Exicom

#CGPower

#PowerAndInstrumentation

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#BondadaEngineering