The Indian power sector is undergoing a major transition owing to significant renewable energy integration. In 2017-18, the sector saw renewable energy capacity additions exceeding conventional power capacity additions for the first time. Transmission and distribution infrastructure is also being augmented and upgraded to meet the changing energy requirements. There is an increased focus on making the power grids smarter and more reliable in order to address power availability and quality issues. Further, in line with the global mandates to reduce carbon emissions and reduce the reliance on fossil fuels, the government will soon come up with an ambitious electric vehicle (EV) uptake plan.
As the country moves towards smarter grids, renewable energy generation and greater EV uptake, energy storage has emerged as a critical requirement for the power sector. While their main function is to store unused energy and deliver it as and when required, energy storage systems can be integrated at any stage with the power supply value chain to serve multiple applications. For instance, an energy storage system being used to store surplus solar power generated during the day and supply it at night can also help reduce the usage of diesel generators and manage peak load.
Drivers of energy storage in India
In India, the availability of quality power supply remains a major concern with frequent power cuts even in urban areas. Energy storage can reduce the reliance on diesel generators in urban areas, particularly in the industrial and commercial consumer segments. Meanwhile, microgrids integrated with energy storage can improve energy access in rural areas. Remote mountainous areas and islands rely on diesel generators for power supply as setting up transmission lines is not possible in the difficult terrain. In such cases, small stand-alone solar photovoltaic units integrated with energy storage systems can help in making these regions self-reliant and also reducing the transportation costs of diesel.
At the grid level, storage systems can be installed to address the resource variability issue associated with solar and wind power. As India moves towards its 175 GW renewable power target by 2022, storage systems have become essential to store surplus energy at the time of overgeneration and feed this energy into the grid at the time of undergeneration. This will not only help in better grid management through improved scheduling of power, but also save the developer from paying deviation charges for over-or undergeneration. Storage systems can also regulate frequency and voltage, and help operators in reducing the power supply-demand gap.
Another area where energy storage is of prime importance is EVs. The government’s National E-Mobility Programme with a target of 30 per cent EVs by 2030 has driven the demand for energy storage in India.
As per estimates shared by the India Energy Storage Alliance (IESA) in 2016, the energy storage market is expected to have a potential of about 72 GW by 2022. The total market size for the period 2015-22 is estimated at 200 GWh. In 2022, about 39 per cent of the demand for energy storage systems will come from newer applications like renewable energy integration, frequency regulation, peak load management and EVs.
IESA’s figures indicate that 48 per cent of the total energy storage capacity will be required for power backup applications in the rural, residential, industrial and commercial segments even in 2022. This points to a grim power supply situation in the future as well, and a need for more decentralised renewable energy systems along with energy storage systems.
As per IESA’s estimates, energy storage for solar and wind integration will account for only 4 per cent of the market demand by 2022. However, with the government’s focus on renewable energy, there has been a shift in market dynamics since 2016. The recent mega auctions in the solar and wind power space have led to the large-scale installation of wind and solar projects, and the trend is likely to continue in the future as well. This could lead to greater energy storage demand to manage the resource intermittencies arising out of renewable integration. Further, the energy storage potential for solar and wind would increase if new regulations make energy storage mandatory for large solar and wind projects.
The Indian battery energy storage market is currently dominated by lead-acid batteries, which are used by all categories of consumers for power backup, as well as for running vehicles. However, due to limited depth of discharge, lower cycle life and other technical issues associated with these batteries, the market demand is shifting towards more advanced batteries like lithium-ion (Li-ion), redox flow and sodium sulphate that can offer a longer cycle life and higher depth of discharge. In remote locations, small battery-based energy storage systems are being increasingly deployed alongside solar plants to resolve energy access issues.
Notably, the world’s first-ever thermal battery manufacturing plant was inaugurated in Andhra Pradesh in August 2018. The plant is owned by BEST. These thermal batteries store the energy created by temperature differences, which can be used in electrical grids, transport and telecom services just like regular battery energy storage. BEST aims to create a battery capacity of 1 GW by 2019 and upgrade to a 10 GW capacity by 2025.
To encourage the uptake of advanced battery storage systems, the Solar Energy Corporation of India (SECI) launched two separate tenders in 2016 for setting up storage-equipped solar power projects – a 200 MW project at the Pavagada solar park, Karnataka, and a 100 MW project at the Kadapa solar park, Andhra Pradesh. However, owing to high costs and the lack of buyers for the generated power, both the tenders were cancelled.
Similarly, a 20 MW solar engineering, procurement and construction (EPC) tender with 28 MWh of battery storage capacity in Andaman was cancelled by the Neyveli Lignite Corporation (NLC) in February 2018, most likely due to the high cost of storage. NLC then retendered the same solar capacity in March 2018 with 8 MWh of battery storage capacity. The smaller storage capacity made the project economically feasible for NLC. Interestingly, Mahindra Susten emerged as the lowest bidder in both these tenders.
After a slew of tender cancellations, SECI has again issued a tender for the development of a 160 MW solar-wind hybrid power project with a battery energy storage system (BESS) to be set up in EPC mode at Ramagiri in Anantapur district, Andhra Pradesh. It has also launched two smaller tenders for the remote mountainous regions of Leh and Spiti. As part of these tenders, two 1.5 MW solar projects with BESS will be set up at Tangtse and Durbuk in Leh district of Jammu & Kashmir, and a 2 MW solar project with BESS will be developed at Kaza in Spiti valley, Himachal Pradesh.
Challenges and the way forward
Although India is a huge market for energy storage solutions, it poses significant challenges in their large-scale uptake. The high entry costs, lack of technical expertise and absence of local case studies have led to the cancellation of many energy storage tenders in the past. There are no regulations or policies specific to energy storage at present, which creates uncertainty about pricing mechanisms and grid integration norms. In addition, India has low lithium reserves and there is no concrete supply chain in place. This makes domestic manufacturing a challenge.
However, the costs of advanced batteries like Li-ion are going down globally, and they will soon become affordable for large power plants in India. Further, the government is ready to launch an Energy Storage Mission, which will encourage domestic manufacturing. A recent joint report by NITI Aayog and Rocky Mountain Institute on India’s Energy Storage Mission has proposed a three-stage approach to achieve the 30 per cent EV target. The approach involves the creation of a favourable environment for battery manufacturing growth, the adoption of supply chain strategies and expansion of battery cell manufacturing.
Going forward, with strong support from the government, India will be able to develop the storage capacity required to unlock the benefits of improved power supply across the country.
By Khushboo Goyal