India Focuses on Integrated Energy System for Future Growth

India's energy sector is moving beyond capacity expansion to focus on creating an integrated energy system capable of managing diverse sources, growing industrial and digital infrastructure, and changing demand. This new approach prioritizes resilient infrastructure, domestic capabilities, and diversified supply chains.

The electricity grid is emerging as a critical component, requiring integrated planning for generation, transmission, and demand. Transmission networks, storage solutions, and distribution systems must evolve rapidly to absorb and deliver power from various sources. Storage is increasingly viewed as a core system asset, not merely an adjunct to renewable energy, with battery energy storage systems playing a key role in flexibility and reliability.

The expansion of AI and data centers is creating new, power-intensive demand, making power availability, quality, and efficiency crucial for investment decisions. India's energy transition will remain multi-energy, with hydrocarbons continuing to support reliability and industrial activity alongside cleaner technologies. Workforce transformation, including reskilling for a digital and multi-energy sector, is also a vital part of this transition.

BEST Opposes Adani Electricity's Bid for Dharavi Power Distribution

BEST is opposing Adani Electricity's application for a power distribution license in Dharavi. The civic utility fears losing approximately 87,000 existing consumers and additional future consumers following the area's redevelopment. BEST has submitted objections to MERC, emphasizing its established infrastructure and significant investments in Dharavi.

Sonia Sethi, BEST general manager, announced the formation of a task force to develop an action plan within one month. This initiative aims to enhance BEST's competitiveness and explore opportunities for expanding its power distribution network into the eastern and western suburbs. The undertaking is also investigating consumer incentives and preparing a feasibility report for future distribution applications in suburban areas, including new housing societies.

S.P. Makwana, BEST deputy general manager, stated that the utility possesses a well-established electricity distribution network in Dharavi, including receiving stations, substations, and an extensive cable network. BEST officials argue that a parallel distribution system is unnecessary and that granting the license to Adani Electricity would significantly impact BEST's revenue and market presence. BEST has also objected to plans that could affect its power and cable installations during the redevelopment project.

India's Battery Energy Storage Capacity to Expand Significantly

Crisil Ratings reports that India's battery energy storage system (BESS) capacity is expected to grow to 45-50 GWh by the next financial year, up from about 1 GWh in the last financial year. This expansion is driven by a strong project pipeline and sustained policy support. The report, which covers bids awarded between fiscal years 2024 and 2026, includes nearly 100 renewable energy developers.

However, approximately 8-9 GWh of awarded capacity faces a higher risk of delays, potentially moderating the deployment pace. About 12 GWh, or 21%, of under-construction BESS capacity, shows weak return potential, which may lead to commissioning delays. This risk stems from increased battery prices in 2026, contrasting with the lower tariffs bid for these projects. Developers typically procure batteries about a year after securing project bids.

Projects awarded in 2025 are now exposed to higher battery prices, which have rebounded from 2025 lows. Developers had bid aggressively, assuming a continued downward trend in battery prices. However, current battery prices may render project returns insufficient to achieve the target internal rate of return of 12-14%. Consequently, developers may defer implementation, anticipating more favorable battery pricing.