At the current stage of transformation in renewable-based energy generation, the Indian power sector needs a range of demand and supply-side regulatory reforms. The reforms should be aimed at enabling effective grid management and providing long-term visibility to private sector investors. In this scenario, energy storage systems can play a catalytic role in the growth of both the renewable energy and electric vehicle markets. Thus, battery energy storage systems (BESSs) are gaining popularity among large solar power plants in the country.
In July 2016, the country took its first step in the segment with the announcement of a utility-scale energy storage project tender for two solar parks in Andhra Pradesh and Karnataka. One of the objectives of this tender, floated by the Solar Energy Corporation of India (SECI), was to showcase India as an upcoming market for utility-scale energy storage solutions. However, the tender is facing delays due to the low pricing cap on viability gap funding (VGF). Meanwhile, SECI had set the tariff at Rs 4.40 per kWh (including VGF), which is very low and will account for only 25 per cent of the battery costs, as per industry experts. Further, while SECI had believed that a 30-minute backup for load shifting would be affordable, the industry disagrees.
Under the National Electric Mobility Mission, the government has also planned to bring 6 million electric vehicles on the road by 2020. Meanwhile, NTPC Limited has announced its plans to create a battery charging ecosystem across the country to promote the adoption of electric vehicles. However, these plans require strong long-term policy and regulatory support, which are currently missing.
Under a trial programme aimed at making renewable energy a more reliable source of power, SECI, in July 2016, invited bids for storage-based solar energy projects. The bids were for the 100 MW Kadapa Solar Park to be built in Andhra Pradesh and the 200 MW Pavagada Solar Park to be built in Karnataka along with battery storage systems. In Andhra Pradesh, bids were invited for two 50 MW solar projects with a battery energy storage system of 5 MW or 2.5 MWh. In Karnataka, bids were invited for four 50 MW solar projects, with the same storage specifications.
The size of the proposed storage systems is small (equivalent to just three minutes of plant production of a 50 MW project at full capacity), and the Ministry of New and Renewable Energy (MNRE) believes that the cost implication will not be very high. As per its estimates, assuming a price of Rs 15,000 per kWh for lithium-ion batteries, a 2.5 MWh storage unit would cost around Rs 38 million. The final impact of this, according to the ministry, would be less than 2 per cent on the total cost of the project, which would increase from Rs 50 billion to about Rs 51 billion. However, industry players believe that the costs would be much higher, leading to delays in the tendering process. Since the announcement of the request for proposals, SECI extended the deadline for the sixth time, from September 8, 2016 to December 23, 2016 for the Andhra Pradesh project, and from September 9, 2016 to January 31, 2017 for the Karnataka project.
For the Andhra Pradesh solar park tender, SECI received 13 bids. The results for both the projects are yet to be announced. These pilot projects are aimed at acclimatising project developers and grid operators with utility-scale storage technologies. However, once completed, these will showcase India as an upcoming market for utility-scale energy storage solutions and provide useful technical, operational and financial learning for the power sector.
In addition to these, SECI has floated a tender for a hybrid plant with 2 MW solar and 0.5 MW wind power capacity, along with a 1 MWh battery storage system at Kaza in the Lahaul and Spiti district of Himachal Pradesh. Other projects in the pipeline with SECI’s battery storage systems include a 40 MW solar-diesel hybrid plant in Leh, Kargil, and a floating solar-diesel hybrid plant in the Lakshadweep islands. SECI is also planning to develop 200 MW of solar-wind hybrid projects with BESS in Andhra Pradesh, Karnataka and Madhya Pradesh. As of January 2017, in-principle approvals for multilateral funding and purchase of power have been received for these projects, and site identification and feasibility studies are in progress.
As part of its green energy commitment to set up 10 GW of solar projects by 2022, NTPC Limited plans to set up 50 MW of solar projects with battery backup at different locations in Port Blair, Andaman & Nicobar Islands. To this end, it signed an MoU with the MNRE and the Andaman & Nicobar administration in October 2016. The company has floated two tenders for southern Andaman, one for 8 MW of capacity at Chidiya Tapu and another for 17 MW at Manglutan. However, the storage capacity will be tendered separately, and the capacity will be specified in the tender.
In August 2016, NLC India Limited invited expressions of interest to set up a 20 MW grid-interactive solar photovoltaic power project with BESS at Attampahad in Port Blair, including its operations and maintenance, on a turnkey basis. At present, the electricity needs of the Andaman & Nicobar Islands are met by 42 power houses. Some of these are hydroelectric power plants while the others are solar power plants. Owing to the geography and topography of these islands, including separation by sea over great distances, there is no single power grid for all the islands.
The Power Grid Corporation of India is testing various grid-scale energy storage technologies through pilot projects. These include testing battery technologies like lithium-ion and advanced lead acid for frequency regulation in Puducherry. It has also issued tenders for testing alkaline and flow battery technologies.
Private players too have been deploying storage technologies to support their renewable energy projects. For instance, molten salt thermal energy storage technology has been deployed in three concentrating solar power (CSP) plants; the 100 MW Diwikar CSP plant and the 100 MW KVK Energy solar project in Rajasthan, and the 25 MW Solar One project in Gujarat.
In April 2016, Panasonic India and AES India also announced their plans to build a 10 MW/10 MWh energy storage facility in Jhajjar, Haryana. Electricity from the project, based on the AES Advancion platform and Panasonic’s lithium-ion batteries, will provide backup power for a Panasonic India manufacturing site.
Large-scale electricity storage is reaching an inflection point, and is poised to give a big boost to renewables across the world. However, the pace of development of the BESS market in India has been slow owing to the aforementioned issues. The country does not have any operational utility-scale battery storage projects and the tenders announced so far are facing delays. While countries like China and the US are setting up giga factories for mass production of these systems, the domestic battery manufacturing capacity for utility-scale projects is almost non-existent in India.
With a target of setting up 175 GW of renewable energy capacity by 2022, the country can ill afford to overlook the potential of the energy storage market. Energy storage can be particularly helpful in integrating various renewable generation sources as the existing infrastructure is not sufficient to support the growing renewable capacity. There is also an urgent need to develop domestic large-scale energy storage technologies. For this, the government needs to provide policy and market incentives to enable developers to offer customised solutions that meet various project requirements at cost-effective prices, and compete well with large foreign players.
Unless India moves quickly and decisively, it runs the risk of missing the bus on domestic manufacturing for a key technology of the future. More planning and research are needed to achieve the growth target for the battery storage market.