AI, data centres to push India's peak power demand to 300 GW next year; battery storage need seen at 888 GWh by FY36

India's peak electricity demand is expected to touch 300 GW next year, driven by the rapid expansion of data centres, artificial intelligence (AI) infrastructure and electric vehicles (EVs), Union Power Minister Manohar Lal said on Wednesday, stressing the growing need for large-scale energy storage to support the country's clean energy ambitions.

Speaking at the 12th India Energy Storage Week (IESW) 2026 in New Delhi, the minister said India had already recorded a peak power demand of 271 GW and has built 284 GW of available generation capacity, enabling it to comfortably meet current requirements. However, accelerating electrification across sectors will substantially increase demand in the coming years.

"According to estimates, we have already reached 271 GW and projections suggest the peak may rise even further this year. Our available capacity has grown to 284 GW, which enables us to meet all types of demand. But with the accelerating pace of electrification, we must prepare for 300 GW peak demand next year," Manohar Lal said.

Storage moves to the centre of India's energy transition

The minister's remarks came as the India Energy Storage Alliance (IESA) and Customized Energy Solutions (CES) released their latest India BESS Market Review, projecting that India's battery energy storage system (BESS) requirement will rise to 888 GWh by FY2035-36, from roughly 1 GWh today, highlighting the scale of infrastructure needed to support the country's renewable energy transition.

The report said India's installed BESS capacity has already increased 11-fold in just six months, rising from 0.78 GWh in December 2025 to 8.7 GWh during the first half of 2026. The country is also on course to cross 10 GWh of installed battery storage capacity by the end of the year.

Tendering activity has accelerated sharply, with 47 GWh of energy storage tenders floated during the first half of 2026, taking the overall project pipeline to 260 GWh. So far, 18 BESS projects have been commissioned, with nearly 70% of capacity additions in the first six months of the year coming from merchant battery storage projects.

Renewable growth driving storage demand

Highlighting India's changing energy landscape, the Power Minister said the country's installed generation capacity has expanded from 249 GW in 2014 to 445 GW today, while non-fossil fuel capacity has increased from 81 GW to 291 GW over the same period.

He noted that solar power capacity has grown nearly 50-fold—from just 3 GW about 12 years ago to 137 GW today—making energy storage indispensable for ensuring round-the-clock availability of renewable power.

"As much as solar has grown, we must invest in storage to truly harness its potential, targeting peak hours and ensuring energy is available 24x7," the minister said.

Describing storage as the next frontier of India's power sector, he added, "Energy is constant, but today the principle is evolving—energy can be stored. Earlier, consumption happened instantly upon generation. Today, through advanced storage and grid solutions, we can shift and utilise energy according to our needs."

Manufacturing push gathers pace

The IESA report also pointed to rapid growth in India's domestic battery manufacturing ecosystem.

Current lithium-ion cell manufacturing capacity stands at around 2 GWh, while announced projects are expected to take this to nearly 110 GWh by 2030. Cell, pack and container manufacturing capacity is projected to reach 180-200 GWh over the same period.

Despite global supply-chain disruptions and rising battery prices, the report said India has emerged as one of the world's fastest-growing battery energy storage markets, supported by policy incentives, strong tender activity and expanding domestic manufacturing.

"The 888 GWh target by 2035-36 signals a new era where energy storage is at the centre of our energy ambitions. With policy, industry and innovation converging, we are building the foundation for a reliable and sustainable future," said Debmalya Sen, President, India Energy Storage Alliance.

Self-reliance key to energy security

The Power Minister also stressed the importance of strengthening domestic manufacturing of solar cells, batteries and storage systems under the 'Make in India' initiative.

"Nothing is greater than the country. Even if domestic products cost more initially, they belong to India. By manufacturing within our borders, we reduce imports, lower costs over time and secure ourselves against global uncertainties," he said.

"The scale and speed of India's battery storage expansion is truly remarkable. This year alone, we've seen an 11-fold jump in installed BESS capacity and manufacturing announcements at levels that rival global leaders," said Vinayak Walimbe, managing director, Customized Energy Solutions.

With electricity demand poised to rise sharply over the coming years, the convergence of rapid renewable capacity additions, expanding battery manufacturing and large-scale storage deployment is expected to play a defining role in India's energy transition. While generation capacity has grown rapidly over the past decade, policymakers and industry executives now agree that the next challenge is no longer generating green power—but storing it efficiently and delivering it when demand peaks.