Renewable Energy Integration, Energy Storage Obligation (ESO) and Energy Storage Battery demand

Industry News

In July 2022, the Indian government took a momentous step in enabling higher renewable energy deployment by introducing the Energy Storage Obligation (ESO) in conjunction with the existing Renewable Purchase Obligation (RPO) framework.

What is ESO?

The ESO entails a gradual increase in the proportion of total energy consumed that is derived from solar and/or wind sources, incorporating energy storage capabilities. To ensure a smooth transition, specific targets have been set for each fiscal year, commencing at 1% in the 2023-2024 period and progressively escalating to 4% by 2029-2030. This timeline offers a clear roadmap for the enhanced integration of renewable energy sources and the implementation of energy storage technologies.

The table below provides the year-wise ESO targets.

Year Storage
(on energy basis)
2023-24 1.0%
2024-25 1.5%
2025-26 2.0%
2026-27 2.5%
2027-28 3.0%
2028-29 3.5%
2029-30 4.0%

The incorporation of energy storage within the ESO framework offers multiple advantages. It enables better management of the inherent seasonality associated with solar and wind power generation. By utilizing energy storage solutions, India can store excess renewable energy during peak generation periods and utilize it during low generation periods, ensuring a more consistent and reliable power supply. Read more here.

Key Enabler

The trajectory was preceded by a clarification regarding the status of energy storage in power systems as defined by the Electricity Act, 2003. As the role of energy storage in the power sector started to grow, there was confusion regarding where energy storage technologies fit in: generation, transmission, or distribution. In its order dated January 29, 2022, the Ministry of Power clarified that "(ii) ESS can be utilized either on a standalone basis or in complementarity with generation, transmission, and distribution. ESS shall be accorded status based on its application area, i.e., generation, transmission, and distribution." Read more here.

Influence on Utility Scale energy storage requirement.

In its report on indigenisation of Lithium-Ion Battery manufacturing in India, the Council on Energy, Environment and Water (CEEW) projected a significant increase in battery demand as a result of the ESO (Source). The table below provides the details.

Projections for utility-scale energy storage requirement

Year India's projected peak demand (Billion units)

Energy storage obilagation (%, energy basis)

Energy from storage (GWh) Battery requirement (GWh) Annual addition (GWh)
2023-24 1600 1.00% 16,002 57 57
2024-25 1695 1.50% 25,420 91 34
2025-26 1797 2.00% 35,933 129 38
2026-27 7908 2.50% 47,696 171 42
2027-28 2021 3.00% 60,632 217 46
2028-29 2139 3.50% 74,869 268 51
2029-30 2280 4.00% 91,187 327 59

CEEW also has provided comparative numbers from similar other studies, which are given below.

Studies estimating India’s grid-connected energy storage requirement

Institution Cumulative requirement by 2030 (GWh)
CEA 108 (4 hours)
TERI 120 (2 hours)
LBNL 252 (4 hours)
Wartsila 152 (4 hours)


The ESO creates a strong incentive for industries and organizations to invest in energy storage solutions, as meeting the obligation requires the procurement of renewable energy-based storage systems. This, in turn, drives the demand for advanced energy storage technologies, including battery energy storage, pumped storage hydro, and other emerging storage technologies.

Article by Madhavan Nampoothiri

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