New Delhi [India], November 9 : India's efforts to strengthen energy security and reduce dependence on imported energy and critical minerals are expected to gain momentum with the government's latest policy measures to expand grid-scale energy storage capacity and promote domestic critical mineral processing, according to an ICICI Securities report.
The report said the Union Cabinet's approval of a Rs 14,500 crore viability gap funding (VGF) scheme for developing 92 GWh of grid-scale energy storage capacity, alongside a Rs 2,800 crore capital expenditure support scheme for critical mineral processing, marks an important step towards building domestic capabilities in these strategic sectors.
According to the brokerage, the measures assume greater significance amid the energy crisis triggered by the West Asia conflict and the prevailing geopolitical uncertainties, which have highlighted the need for India to strengthen its energy and critical mineral supply chains.
"We believe both measures are welcome steps in India's desirous path to self-reliance in energy and critical minerals," the report said, while cautioning that their success would depend on timely execution and the ability to secure supplies of critical mineral ores and intermediates.
Under the energy storage scheme, the government aims to support the development of 92 GWh of yet-to-be-commissioned grid-scale storage capacity over five years, from FY2026-27 to FY2030-31. The estimated investment requirement for the projects is Rs 97,600 crore, with Rs 14,500 crore to be provided as viability gap funding.
The proposed capacity includes 60 GWh of hydro pumped storage projects, 30 GWh of battery energy storage systems (BESS) and 2 GWh of alternative and emerging storage technologies.
The proposed addition is equivalent to around 170 per cent of India's present-day energy storage capacity and is intended to help meet the country's projected requirement of 411 GWh by 2031-32.
The report noted that the scheme could accelerate renewable energy integration, improve grid stability and support reliable and affordable round-the-clock power supply. A mandatory minimum domestic content requirement of 40 per cent for battery storage projects is also expected to encourage domestic manufacturing.
On the critical minerals front, the Rs 2,800 crore capital expenditure support scheme seeks to establish domestic processing facilities for lithium and nickel, with cobalt expected to be recovered as a by-product of nickel production.
The scheme envisages setting up four processing plants, including two lithium facilities with a minimum capacity of 30,000 tonnes each and two nickel facilities with a minimum capacity of 50,000 tonnes each. Eligible investments will receive a capital subsidy of 30 per cent, with support capped at Rs 500 crore per lithium beneficiary and Rs 900 crore per nickel beneficiary.
ICICI Securities said the initiative aims to add value domestically, reduce import dependence and build resilient supply chains for electric mobility, battery energy storage systems, electronics, defence and speciality steel.
Highlighting the broader energy transition requirements, the report pointed out that India's total final energy consumption stood at 25,480 petajoules in FY25, with oil products accounting for 40 per cent and natural gas contributing 9 per cent. Coal and electricity together accounted for the remaining share.
The report also highlighted the growing importance of electricity in India's energy consumption, with total electricity consumption reaching approximately 16.23 lakh GWh in FY2024-25. Electricity consumption recorded a compound annual growth rate of 6 per cent between FY2015-16 and FY2024-25.
Against this backdrop, the latest policy interventions are expected to support India's transition towards a more diversified energy mix while strengthening domestic capabilities in critical mineral processing.
However, the brokerage emphasised that the implementation of the schemes, particularly timely commissioning of storage projects and securing consistent supplies of critical mineral ores and intermediates, will remain crucial to translating policy support into actual capacity creation and reducing import dependence.