Accounting for 80% of India's roughly 6.8 GWh operational BESS capacity, merchant storage faces proposed central and Rajasthan rules restricting grid charging. JMK Research estimates that mandatory co-located renewable capacity could increase project capex by at least 60-80%, reduce arbitrage spreads and introduce dispatch uncertainty.
Snapshot
Market share - Merchant projects account for 80% of India's roughly 6.8 GWh operational BESS capacity.
Project examples - Adani operates a 3,370 MWh project in Gujarat, while ACME operates a 2,031 MWh project in Rajasthan.
Central proposal - Storage seeking ISTS connectivity would require at least two hours of duration and commensurate renewable capacity for charging.
State proposal - Rajasthan's draft procedure prohibits grid charging for BESS co-located with renewable generation.
Charging windows - Solar charging would be limited to 10:00 to 15:00, while wind charging would occur from 00:00 to 04:00.
Cost effect - A captive renewable requirement could increase project capex by at least 60-80%.
System requirement - India's National Electricity Plan estimates a BESS requirement of 47.24 GW/236.22 GWh by 2031-32.
JMK Research & Analytics, an India-based cleantech research and consulting firm, examined proposed central and state-level measures affecting the country's merchant battery energy storage system market. Merchant projects account for 80% of India's roughly 6.8 GWh of operational BESS capacity. Recent additions include Adani's 3,370 MWh project in Gujarat and ACME's 2,031 MWh project in Rajasthan, which have contributed to the expansion of the merchant procurement model.
Merchant batteries operate without long-term offtake contracts and earn revenue by charging when electricity exchange prices are low and discharging during higher-priced periods. This model aligns with India's daily electricity-price pattern, as surplus solar generation can suppress prices during the middle of the day while evening demand raises market prices. In April 2026, surplus solar generation reduced Real-Time Market prices on the Indian Energy Exchange to near-zero levels, while evening Day-Ahead Market prices approached the INR 10/kWh ceiling.
The 44th Consultation Meeting for Evolving Transmission Schemes in Western Region proposed conditions for storage projects seeking interstate transmission system connectivity. The proposal requires a minimum two-hour storage duration and commensurate solar or wind generation dedicated exclusively to charging the battery. Central Transmission Utility of India Limited would prohibit withdrawal from the ISTS grid and would not allow developers to use their granted solar-hour connectivity capacity for battery charging because that capacity is reserved for direct electricity injection.
Rajasthan Rajya Vidyut Prasaran Nigam issued a separate draft procedure in May 2026 for BESS co-located with renewable generation. The procedure prohibits grid charging and limits battery charging to electricity generated by the associated renewable project. Solar-based batteries would charge between 10:00 and 15:00 for evening discharge, while wind-linked systems would charge between 00:00 and 04:00 for morning discharge.
The Rajasthan proposal states that storage scheduling must account for system constraints, transmission congestion and grid discipline rather than respond only to market prices. It would allow the State Load Despatch Centre to curtail or reschedule battery operations. This structure would shift dispatch decisions from a market-driven framework toward a system-directed operating model.
JMK Research estimates that requiring captive renewable generation would convert a standalone battery development into a hybrid renewable and storage project. Depending on the renewable configuration, the requirement could increase project capital expenditure by at least 60-80%. Developers would also require additional land, construction, connectivity and regulatory approvals, which could extend development timelines.
Charging restrictions could prevent batteries from accessing the lowest-priced grid hours and reduce the spreads available between charging and discharging prices. State Load Despatch Centre intervention could add dispatch uncertainty, which lenders may reflect through higher borrowing costs. The combined effects would include higher capital requirements, narrower revenue opportunities and reduced operational flexibility.
India crossed the 50% non-fossil installed power capacity threshold in 2025. The National Electricity Plan 2023 estimates that the country will require 47.24 GW/236.22 GWh of BESS by 2031-32. JMK Research proposes allowing grid charging during predetermined off-peak or surplus-solar periods, linking withdrawal permissions to available transmission capacity and limiting dispatch intervention to transparent congestion or grid-security events. The 45th CMETS-WR meeting partially moved toward this approach, although implementation across central and state authorities remains pending.