Efficient grid integration has assumed prime importance in the country’s energy and power sector, considering the impetus being given to the growth of renewable energy capacity over the next five years. Given the variability and uncertainty associated with renewable power, its integration into the grid requires additional technological assistance. To this end, energy storage proves to be a comprehensive solution that not only removes the element of variability from renewable power but also prevents the grid from burning down due to the reactive power generated. Energy storage solutions can complement the Green Energy Corridors (GEC) project currently under way to improve the evacuation infrastructure in the country. Low voltage and reactive power can have a devastating effect on the grid, as was witnessed in south Australia in September 2016 when the grid blacked out owing to the loss of generation from wind farms due to a catastrophic storm.
Key drivers
With the advent of the GEC project, grid integration and evacuation infrastructure for renewable energy is getting a facelift in the country. However, solar and wind power have high variability and uncertainty issues. Solar shows significant seasonal variation, with the highest production during the summer months and the lowest during winter and monsoon months, whereas wind follows an opposite pattern, with low generation in summers and high generation through the rest of the year. The uncontrollability and low predictability of solar and wind energy make their integration into the grid a significant concern. Solar power generation fluctuates throughout the day, with useful power available only for 8-10 hours a day on an average. Even during the day, solar power can fluctuate widely in the presence of cloud cover or rain. Excessive solar power generation in the afternoon and none during the night lead to grid inefficiency and an increased need for power production at night or during cloud cover. The need for energy storage solutions is further augmented as interstate and intra-state grids are currently incapable of handling the upcoming renewable energy generation.
A storage system could thus store additional electrical energy and then release it during night time, or during cloud cover, reducing the uncertainty. Despite uncertainty becoming a less prominent problem due to accurate weather forecasts, it still necessitates a storage system, which would compensate for reduced power generation. Energy storage systems can provide a stable, reliable and efficient power, reducing peak demand generation. In addition, these can also reduce line congestion and peak loading, leading to a lower cost of maintaining transmission lines. During a sudden cloud cover, storage will maintain the power supply to the grid and avoid reactive power generation, thus preventing blackouts. Creating a comprehensive storage solution-based renewable energy capacity would augment the GEC project and create a better power evacuation ecosystem.
Regulatory scenario
The absence of a comprehensive regulatory framework for energy storage in India has been a considerable restraint for wrinkle-free grid integration of the renewable energy segment. Also, as the GEC project progresses, the need to implement storage solutions for proper grid integration would only increase. Initial steps have been taken in this respect by the Central Electricity Regulatory Commission (CERC), which issued a staff paper, “Introduction of Electricity Storage System in India”, in January 2017. The paper outlines the grid-level application of storage solutions, operational framework and electricity storage services. It was open for stakeholder comments until March 6, 2017. The key features of the paper are:
- Applications: Storage solutions are useful for improving the reliability of wind and solar power by controlling the intermittent generation. Further, these can be used to address the issues of peak demand by shifting delivery of economical generation output during peak periods. Storage could also be an alternative method of providing spinning reserves or ancillary support services.
- Excess generation: The excess power – in peak summers for solar and in monsoons for wind – could be stored in these systems and later used to improve the power system efficiency and reduce greenhouse gas emissions caused by wasteful excess capacity.
- Storage: This can reduce the need for expansion of the new transmission grid and extend the life of the existing infrastructure. The latter is possible as distributed storage can reduce the overloading of transmission lines during peak times by moving electricity at off-peak times. This will also reduce line congestion and line losses. Also, storage can play a vital role in blackstart operations for emergency preparedness.
- Operational framework: The paper recognises that the business model for storage services is complex. Storage can act as both generation and load. While transmission licensees may operate storage solutions as per the directions of the operator, generators will operate them to optimise profit margins. When such facilities are used in part by the generator and the transmission owners, the challenge would become even worse. A cost-sharing mechanism would, therefore, appeal to all consumers of storage systems, irrespective of the usage.
- Cost recovery: Dedicated use of storage services may not attract separate charges. Instead these would be built into the costs of the generation or transmission business, recovered through tariffs determined for the licensees. This may be done via Rs per unit charges in case the storage is part of the generation and Rs per MW in the case of transmission. Under this model, there would be no need for a separate contract for storage services. However, the operational modalities of the storage system may be agreed upon with the users as part of the PPA or transmission service agreement.
- Regulatory jurisdiction: The Electricity Act does not cover energy storage exclusively. However, bulk storage facilities can reasonably be considered as a form of transmission or generation for jurisdictional purposes. The CERC has control over interstate transmission and generation, and thus storage meant for these applications across states will be regulated by it. The Indian Electricity Grid Code may be amended by CERC to address issues related to planning criteria and grid connectivity for the development of bulk energy storage. Other regulatory aspects, including depreciation rates, tariff structure, recovery methods and incentives will also be addressed by the CERC for interstate storage applications.
The Energy and Resources Institute’s (TERI) stakeholder consultation response to the CERC’s draft paper in March 2017 recommended, inter alia, that a separate tariff mechanism should be provided for balancing units. TERI also says that there should be higher arbitrage between peak and non-peak prices. In addition, it calls for proper norms for the maintenance and disposal of energy storage to reduce or eliminate environmental damage.
In another stakeholder consultation held by the India Energy Storage Alliance in collaboration with the Federation of Indian Chambers of Commerce and Industry, it was recommended that procedures should be standardised to ensure quality of installation, while end-of-life recycling norms should also be specified. Also, fast movement towards large-scale storage projects should be initiated. The CERC has responded to these comments and is expected to release the final paper on storage systems by end-June 2017.
Cost economics
Capital costs and life cycle are the two most important parameters for determining the economic viability of energy storage solutions. The matrix, for indicative purposes only, plots technologies for storage purposes with their capital costs against their life cycles. It suggests that the currently prevalent storage solutions are not completely economically viable, especially in large quantities, as required by the Indian solar segment. In addition to the investments being made in the GEC project, the cost of procuring renewable power would increase steeply.
The lithium-ion (Li-ion) technology, currently the most established energy storage solution in the Indian market, can be found in the low quadrant of the matrix, due to its high capital costs and low to moderate life cycle. In fact, the only technology that meets the “low cost-high life” criterion of the matrix is the flywheel energy technology. However, it has not yet caught on because of its low discharge capacity of only 0.25 hours as well as low range of only 10 MW-20 MW as compared to that of electrochemical technologies such as Li-ion and lead-acid batteries, the discharge capacity of which is four to five hours and the range stands at 100 MW-200 MW.
High capital costs of storage technologies for grid integration will translate into an increase in the overall cost of power generation, especially in the wake of the CERC paper that proposes to build storage cost recovery into the existing tariff model of power generation/transmission. This would lead to reduced margins amid declining profits due to the steep fall in tariffs. Investor interest would, therefore, diminish in solar and wind energy, countering the efforts of the government to increase the share of renewable power in the country. Thus, it is imperative that the cost economics of energy storage solutions is improved by either subsidising prevalent technologies or making alternatives available in the market at competitive prices.
Pilot projects
The Solar Energy Corporation of India (SECI) has initiated the use of energy storage solutions in the country with three pilot projects. One of the projects is located at Kadapa, Andhra Pradesh, which will be developed on a build-own-operate (BOO) basis with two units of 50 MW each. The tender for the plant was issued on August 9, 2016. The battery storage system is to be deployed on a pilot basis with two units of 5 MW/2.5 MWh accompanying each solar unit. The scheduled commissioning of the project has been estimated to be after one year from the signing of the PPA. Another project being undertaken by SECI is the Rangreek Plant, a solar-wind hybrid power plant with 2 MW solar, 0.5 MW wind and 1 MWh of storage capacity. The third project is located at Pavagada, Karnataka, as a part of the Pavagada Solar Park. It will be built on a BOO basis with four units of 50 MW each. The battery storage system is to be deployed on a pilot basis with four units of 5 MW/2.5 MWh accompanying each solar unit. The use of storage solutions in projects within solar parks also complements the GEC infrastructure being built for power evacuation from them, thereby acting as pilot projects for the GEC-energy storage combination, which has been proved in projects across the globe.
Other pilot projects include a 10 MW/10 MWh storage plant that will use Li-ion batteries at the Jhajjar manufacturing park of Panasonic. This project is part of the collaboration between Panasonic and Applied Energy Services (AES) and is expected to be India’s first large-scale battery energy storage system. On May 9, 2017, NTPC released a tender for an 8 MW solar plant, with a storage capacity of 3.2 MW/3.2 MWh, at Chidiyatapu, Andaman & Nicobar Islands. The tender is open till July 7, 2017. On May 5, 2017, another tender was released by NTPC for a 17 MW solar plant, with a storage capacity of 6 MW/24 MWh, in South Andaman, Andaman & Nicobar Islands. The tender is open till July 3, 2017. The Neyveli Lignite Corporation has released a tender for a solar plant of 20 MW (2×10 MW) with a storage capacity of 28 MWh at Attampahad, Andaman & Nicobar Islands. The tender was issued on May 6, 2017 and the last date for bid submission is June 27, 2017.
Global scenario
As of August 2016, a total of 695 electrochemical storage systems were operational with a generation capacity of 1.64 GW, and 50 electromechanical storage systems were operational with a generation capacity of 1.57 GW.
In the US, energy storage policy exists and regulatory support is available at the federal level. Individual states have either launched or are successfully implementing independent programmes, led by California (1,324 MW by 2024), Oregon (5 MWh by 2020) and Massachusetts (yet to finalise targets) which have already set up or are in the process of setting up energy storage procurement targets. In Canada, Ontario is leading the way with the procurement of 50 MW of storage in 2015 to test a range of battery applications.
Europe is experimenting with new storage technologies, although the focus at the pan-European level continues to be on the pumped hydro solution. However, new technologies like compressed air energy storage (CAES) and molten salt are under consideration for inclusion in the 2016 Ten-Year Network Development Plan. The UK’s National Grid awarded four-year contracts to seven firms to provide balancing services for the network under the country’s first 200 MW Enhanced Frequency Response auction during 2016. Italy and Finland are also testing various energy storage technologies. Germany is leading the way as far as residential storage applications are concerned, mainly due to the grants and subsidies it offers to this segment.
China is aggressively developing energy storage solutions to provide support to its grid network, which is witnessing an increasing influx of renewable energy capacity. Its recent policy documents also mention energy storage, including the Innovation in Energy Storage Technology Revolution: New Action Plan (2016-30) and Made in China 2025 – Plan for Installation of Power Equipment, indicating that country’s emphasis on technology. It is estimated to increase its energy storage capacity to 14.5 GW by 2020 from around 105 MW in early 2016. China’s efforts have not only paved the way to the inclusion of energy storage into the grid network on a large scale but also increased the competition in the continent.
The way forward
Energy storage solutions are extremely important for the growth of renewable energy capacity in India as targeted by the government. However, the prevalent technologies are both costly and bulky, thereby preventing large-scale adoption of energy storage to facilitate a rapid increase in the installed capacity. Meanwhile, states like Tamil Nadu are struggling with power evacuation due to a lack of grid integration support, which has led to undersubscribed state tenders, as opposed to oversubscription of tenders elsewhere in the country. Efforts to improve the grid infrastructure through the GEC project will be aptly complemented by the implementation of large-scale storage solutions, especially to avoid curtailment of generation from renewable energy plants.
CERC’s draft paper and the expected final paper on regulations will provide a comprehensive framework for the growth of the energy storage market in the country, which could bring the prices down for new technologies. Providing storage targets at the state and central levels and incentivising them, akin to renewable purchase obligations, would go a long way in streamlining the implementation of policies and providing a structure for the growth of the technology.
New technologies such as graphene-based storage solutions are being developed across the world, but these are highly expensive and at a nascent stage. Providing a platform for research to develop indigenous storage technologies will help create affordable solutions for large-scale deployment in the country. However, subsidies will be required at the initial stage as the cost economics of storage at current levels does not look too optimistic, especially as it has been proposed to be subsumed into electricity tariffs. Otherwise, grid integration might prove to entail too high an opportunity cost that could hamper the growth of renewable energy capacity.