7 Smallcap BESS Stocks Worth Tracking

Energy cannot be created or destroyed. It only changes form.

The principle many of us read in school textbooks is now unfolding in a powerful way - defining how we power homes, cities, and the economy.

The sun and the wind are becoming the backbone of India's energy story.

In FY25, India added 34 gigawatts (GW) of power capacity.

The most telling part? A staggering 29.5 GW of that came from renewable sources-mostly solar and wind.

The country's installed renewable capacity now stands near 220 GW. And the government has its sights set on 500 GW by 2030.

But here's the challenge with nature: it doesn't follow our schedule. The sun doesn't shine at night (sometimes not even during the day), and the wind doesn't blow on demand.

This is where the next big opportunity in the energy sector is emerging: energy storage.

To turn inconsistent renewable energy resource into a reliable source of power, we need a way to store the energy they produce. The solution - Battery Energy Storage Systems, or BESS.

Without BESS, green energy rise would be just reduced to a concept.

BESS takes excess electricity when it's abundant and stores it for times when the grid needs it most.

Battery systems help buildings with solar panels use their own energy at night. They help reduce pressure on the grid when demand surges at once. They also perform complex tasks like stabilizing voltage and frequency on the power grid.

Without storage, the shift to renewables could hit a wall.

India recognizes this. Every new solar project in the country is now required to include co-located energy storage, with enough battery capacity to store at least two hours' worth or 10% of the installed solar capacity.

Well the bottomline is that storage is not optional anymore. It's integral, and mandatory.

But are BESS projects viable?

Well, increasingly yes. The cost of lithium-ion batteries, which power most BESS today, has crashed in recent years.

Innovations, improved supply chains, and mass production have all contributed to making these systems more affordable.

The government too, is putting its money where its mouth is-offering viability gap funding to support up to 30% of capital costs for storage projects.

What does this mean for the market?

A massive runway for growth.

India's National Electricity Plan aims for 47 GW of battery energy storage by 2032. For context, the current installed capacity is just 300 MW. That's a projected growth of over 150 times in under a decade.

As per the industry players, by 2030, the Indian BESS market could reach US$ 32 bn, growing at a compound annual rate of 27%.

This shift is already beginning to show in the markets. Established names in power generation and renewable energy are either entering or expanding their storage portfolios.

Tata Power, JSW Energy, Adani Green, NHPC, KPI Green Energy, Sterling & Wilson, and Acme Solar are all making moves in this direction.

But the real intrigue lies in the less obvious names.

Advait Infratech, for example, is a company that primarily operates in telecom and power transmission infrastructure. It has quietly announced plans to develop 1 GW worth of battery energy storage projects over the next five years.

Bondada Engineering (SME), a small but nimble player, has emerged as the lowest bidder for a BESS project for Telangana GENCO, worth Rs 2.4 bn-and is eyeing a pipeline of projects totalling Rs 10 bn.

For IEX, storage increases its relevance. BESS allows energy to be charged and discharged at optimal times, increasing energy liquidity on exchanges and potentially boosting volumes.

Then there are players like Jupiter Wagons, best known for making rail freight wagons. It has diversified into electric mobility and now received orders for full-fledged battery storage systems.

Quality Power Electrical Equipments recently acquired a majority stake in STATCON Energiaa, a domestic power electronics manufacturer whose offerings include BESS.

Himadri Specialty Chemicals is working on key lithium-ion battery materials and boasts backward integration-a rare edge in this space.

Similarly, PCBL is developing ultra-conductive battery chemicals and helping build a local supply chain for battery materials.

These companies may not be traditional energy giants, but they're positioning themselves for tomorrow's market. For investors, that spells opportunity.

Of course, no big opportunity emerges without its fair share of risks. And there are some real risks to consider.

Technological disruptions and different cell chemistries for instance. And then there is China - producing around 75% of lithium-ion batteries. This creates exposure to geopolitical and supply disruptions, and competition risk.

Government policy, though supportive now, can change course. And scaling BESS projects comes with execution risks.

Still, it's an interesting emerging space to watch out for. It may not be long before it becomes as essential as the energy it stores.

The time to pay attention isn't when everyone is already on board. It's when the pieces are just starting to come together. That's where we are with BESS. So, stay alert.

Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)