India is building solar faster than almost anyone else on earth. Making that power useful after sunset is proving harder.
The country added 37 gigawatts of solar capacity in 2025, edging past the U.S. to become the world’s second-largest market for annual additions, according to government data. By April 2026, installed solar capacity stood at 154 gigawatts, up from 2.8 gigawatts in 2014. On April 25, solar met more than a fifth of India’s afternoon electricity demand, a record.
Yet by the time peak evening demand hits, solar’s contribution all but vanishes. On that same day, solar accounted for 10.8% of daily generation and 0.1% after dark. The gap between what India can generate and what it can store is now the binding constraint on its energy transition.
The Numbers Don’t Line Up
India’s battery storage capacity reached 1,082 megawatt-hours at the end of 2025, a 26% increase from the prior year. Pumped hydro adds roughly 6 gigawatts of operational capacity.
Against that, the Central Electricity Authority says India will need more than 411 gigawatt-hours of battery storage by 2031-32 to integrate planned solar and wind buildout. The government’s Optimal Generation Mix 2030 plan calls for 60.63 gigawatts of energy storage, including 41.65 gigawatts from batteries.
The mismatch is already showing up in curtailment. Between late May and December 2025, India wasted 2.3 terawatt-hours of solar output, nearly 18% of average monthly generation, because the grid couldn’t absorb it. Developers are increasingly asked to back down during peak solar hours. In some cases, 15% of output never makes it to the grid.
Why Storage Lags
Three factors explain the shortfall.
First, the economics haven’t closed. Early battery auctions priced storage at tariffs that proved unviable once costs and degradation were factored in. Tariff-based bidding has since dropped to ₹2.1 per kilowatt-hour with viability gap funding, but at 1.5 cycles per day the effective cost rises to ₹2.8 per kilowatt-hour, still above current solar tariffs.
Second, policy recognition came late. Battery energy storage was designated a standalone asset class only in 2022. Standalone projects still face an 18% GST rate, compared with 5% for renewable generation. Viability gap funding schemes for 13.2 gigawatt-hours and 30 gigawatt-hours are in place, but execution has been slow.
Third, the grid can’t keep up. India commissioned 8,830 circuit kilometers of transmission against a target of 15,253 kilometers in a recent year, a 42% shortfall. Without transmission, surplus power in Rajasthan and Gujarat can’t reach deficit states in the evening.
The Shift Underway
The market is starting to respond. Adani Green Energy commissioned a 3.37 gigawatt-hour battery system at Khavda, Gujarat, in March 2026, the largest single-site battery deployment outside China. The project can power nearly one million homes for a day and was completed in under 10 months.
NTPC Green Energy has tendered 3,300 megawatt-hours of storage at Khavda, and NTPC itself is piloting 1.7 gigawatts of battery storage across 11 coal plants to shift excess solar to evening hours.
Procurement is changing too. The Solar Energy Corporation of India is moving away from plain solar tenders toward hybrid, assured peak, and round-the-clock contracts that bundle solar, wind, and storage. The goal: 80% capacity utilization and dispatchable power that looks more like thermal.
Policy is following. Co-located storage projects commissioned by June 2028 get a 100% waiver on inter-state transmission charges. A new ₹5,400 crore viability gap funding scheme for 30 gigawatt-hours was approved in June 2025. New guidelines require two-hour storage for 10% of solar tender capacity.
The Stakes
Without storage, India’s solar gains are capped. Daytime surpluses push prices down and trigger curtailment, while evening demand is met by coal and gas. That keeps India tied to a fossil import bill near $200 billion annually. It also keeps coal in the plan: the government expects to add 97 gigawatts of coal capacity by 2035 to provide firm power.
Investors are feeling it. New grid rules impose penalties for deviations between scheduled and actual supply, cutting internal rates of return by an estimated 1.2 percentage points for hybrid projects. For smaller developers, the risk is enough to stall projects.
What Comes Next
Closing the gap will require three moves.
Scale battery deployment from hundreds of megawatt-hours to tens of gigawatt-hours annually. The pipeline exists – 60 gigawatt-hours of battery tenders were issued in 2025 alone – but execution has to accelerate.
Expand pumped hydro for longer-duration storage. India has more than 91 gigawatt-hours in the tender pipeline, and it’s cheaper than batteries for six- to eight-hour shifting.
Fix the grid and forecasting. Better weather prediction and real-time dispatch can reduce the storage needed. Transmission expansion under the ₹2.4 trillion plan for 500 gigawatts of renewables has to hit its targets.
India has proven it can build solar at scale and at a cost that makes coal nervous. The next test is whether it can store that power and deliver it when the sun isn’t shining. If it can, the transition becomes credible. If it can’t, the grid will keep leaning on coal long after the solar panels are built.
