Battery storage investment in India is projected to surpass USD 1 billion in 2025; however, high financing costs continue to hinder progress, according to a recent report by the International Energy Agency (IEA).
The report highlights that while global investment in battery storage is steadily increasing, developing economies such as India still face significant obstacles—chief among them being elevated financing costs.
“Developing economies continue to face high financing costs, with battery storage project financing in these markets reaching nearly double the levels seen in advanced economies,” the IEA stated. “India stands out, with investment in battery storage expected to exceed USD 1 billion in 2025.”
Globally, investment in battery storage rose by 45% in 2024 compared to the previous year. The United States, Europe, and China remained the dominant investors, contributing over 90% of the total global investment in the sector.
Despite the optimistic growth forecast for India, high financing costs remain a significant barrier to the success and profitability of battery storage projects. These elevated costs limit access to capital and impact the financial viability of such ventures.
The IEA emphasized the importance of targeted policies, regulatory reforms, and financial incentives to attract greater investment in emerging markets. “Policies, regulatory measures, and targeted incentives are essential to drive further progress—especially as rising power price volatility underscores the need for greater battery storage,” the report noted.
It further observed that battery storage projects are increasingly relying on diverse revenue streams, such as energy arbitrage, frequency regulation, peak shaving, and integration with renewable energy, to remain profitable.
However, the IEA stressed that realizing the full potential of battery storage will require a robust regulatory framework that ensures these revenue sources are stable and cost-reflective.
In contrast, Europe’s battery storage market saw a slowdown in 2024 following a decade of strong growth. Despite this, power price fluctuations are expected to drive renewed demand for storage, making continued policy support crucial.
Meanwhile, China continues to experience growth in utility-scale battery storage, bolstered by policy mandates requiring energy storage in new renewable energy projects. However, upcoming reforms anticipated in the latter half of 2025 may temper this growth trend.
The report also raised concerns about the availability of critical minerals used in battery manufacturing. Following a price surge in 2022, key minerals like lithium saw a significant price drop in 2024, easing cost pressures for battery producers.
While the global outlook for battery storage investment remains strong, the IEA concluded that emerging economies like India must address financing hurdles to fully tap into the sector’s potential.
