While solar and onshore wind projects have gained traction in the country, a lot needs to be done to not only increase the efficiency of these projects but to reduce the dependence on fossil fuels in general. New technologies like storage, offshore wind and electric vehicles (EVs) are harbingers of change in this space. The deployment of storage systems and construction of offshore wind projects will help increase the efficiency of renewable energy projects while the uptake of EVs will be a positive step towards ensuring the country’s energy security.
A collective endeavour to improve the energy storage, EV and offshore wind technologies, along with a policy impetus, will help achieve the targets of 175 GW renewable energy capacity by 2022 and 30 per cent share of EVs in total vehicles by 2030. A look at the progress and key developments in each of these segments…
Energy storage systems
The power sector is undergoing a major transition with significant renewable energy integration. Transmission and distribution infrastructure is being augmented and upgraded to accommodate the changing energy mix. There is an increased focus on making power grids smarter and more reliable in order to address power availability and quality issues. Further, in line with the global mandates to cut down carbon emissions and reduce the reliance on fossil fuels, several state governments have rolled out their EV uptake policies.
As the country moves towards smarter grids, renewable energy integration and greater EV uptake, energy storage has emerged as a critical requirement for the power sector. While the main function of energy storage systems is to store the unused energy and deliver it as and when required, they can also 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. Further, the excess electricity generated from the rooftop solar panels can be utilised to charge EV batteries. At the grid level, storage systems can be installed to address the resource variability issue associated with the increased integration of renewable energy.
Driven by such use cases, the energy storage segment is beginning to witness some uptake across the energy vertical. In the renewable energy space, the Solar Energy Corporation of India (SECI), NTPC Limited and a few other public sector undertakings have been on a mission to launch pilot-scale as well as commercial-level tenders for energy storage-based renewable projects.
After a few disappointments in terms of tender cancellations, these agencies have managed to make some progress. A 20 MW tender with 28 MWh of battery storage capacity in Andaman & Nicobar islands was cancelled by the Neyveli Lignite Corporation (NLC) in February 2018. NLC then retendered the same solar capacity in March 2018 with 8 MWh of battery storage capacity, which made the project economically feasible for the company. Mahindra Susten emerged as the lowest bidder in both these tenders.
After a slew of tender cancellations, SECI 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 engineering, procurement and construction 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 at Kaza in Spiti valley, Himachal Pradesh.
Efforts are also being made to promote domestic manufacturing of batteries. In early 2018, the Minister of State (independent charge) Power and New and Renewable Energy, R.K. Singh chaired a meeting with battery manufacturers to persuade them to set up factories in India. Several issues regarding the dearth of raw materials and lack of technology transfers for Lithium-ion (Li-ion) batteries were addressed at the meeting.
A few months after the meeting, some key agreements were made. In June 2018, the Central Electro Chemical Research Institute and RAASI Solar Power Private Limited signed a memorandum of agreement for the transfer of technology to develop a manufacturing unit in Krishnagiri, Tamil Nadu. In the same month, Exide Industries Limited and Leclanche formed a joint venture to build Li-ion batteries for EVs and grid operations. Also, the Vikram Sarabhai Space Centre decided to transfer its Li-ion cell technology to industries or start-ups and invited applications for selection through an open evaluation process.
Notably, the world’s first thermal battery manufacturing plant owned by Bharat Energy Storage Technology was inaugurated in Andhra Pradesh in August 2018. Thermal batteries store the energy created by temperature differences and can be used in electrical grids, transport and telecom services just like regular battery energy storage. The company aims at creating a battery capacity of 1 GW by 2019 and upgrading to a 10 GW capacity by 2025.
Going forward, increase in the customs duty on Li-ion batteries from 10 per cent to 20 per cent in the Union Budget and the reduction in the goods and services tax rate on these batteries from 28 to 18 per cent will help protect domestic manufacturers from cheaper imports while incentivising them to enter this market.
Shifting gears with EVs
While the automobile sector is still awaiting the national EV policy, several programmes have been launched during 2018, at both the central and state levels. The National E-Mobility Programme was launched in March 2018 to streamline the ecosystem of EV manufacturers and charging infrastructure companies. To this end, Energy Efficiency Services Limited (EESL) was given the responsibility to procure EVs in bulk to help car manufacturers achieve economies of scale while providing a secured demand to the charging station operators. The second phase of the faster adoption and manufacturing of (hybrid and) EVs (FAME) programme was also announced. Under this, the government decided to disburse Rs 55 billion as subsidies for the purchase of EVs over a five-year period. In addition, the government earmarked Rs 1.05 billion as grants to smart cities with a population of more than 1 million, for the purpose of buying EVs and setting up charging infrastructure. In February 2018, Maharashtra approved its EV policy as well. According to the policy, the state government would aim to create a robust ecosystem to aid the manufacturing of over 500,000 EVs within the next five years. Apart from exempting road tax and registration charges, the state would also provide a 15 per cent subsidy for the first 100,000 EVs and a subsidy of up to Rs 1 million per station for the first 250 charging stations.
The Uttar Pradesh government released the Draft Uttar Pradesh Electric Vehicles Manufacturing Policy in March 2018 to promote the development of EV manufacturing facilities in the state, and facilitate the transition from vehicles run on internal combustion engines to EVs. The draft policy states the government’s plan to introduce 1,000 e-buses by 2030 and finalise green routes in Gautam Budh Nagar, Ghaziabad, Lucknow, Varanasi and Kanpur in which only public transportation run on electricity would be permitted. The states plan to promote the use of methanol fuel cells for hybrid cars while hydrogen and solar powered cells for EVs have also been mentioned in the draft policy.
In September 2018, the Tamil Nadu Energy Development Agency issued its Draft Solar Energy Policy in which the state set the target to replace 10 per cent of the existing vehicle fleet of all state departments with EVs by 2022.
In October 2018, the Uttarakhand government approved its EV policy that made provisions to promote the use as well as manufacturing of EVs. To promote manufacturing, credit in the range of Rs 100 million and Rs 500 million would be made available to micro, small and medium enterprises. In the same month, Kerala rolled out its draft EV policy, which planned to bring one million EVs in the state by 2022 by providing either a subsidy of Rs 30,000 or a discount of 25 per cent, whichever would be lower, for a period of one year.
Meanwhile, the Delhi government has announced its plan to purchase 1,000 electric buses in cluster-operator mode with a gross cost model. In this model, the operator of buses ropes in drivers and takes care of operations and maintenance of buses, while the government provides depots, bus conductors and also collects the fare. The first trial run took place in November 2018. The construction of bus depots is expected to be finished by June 2019, while the first batch of these buses will arrive a month later.
The increase in sale of EVs and the resultant increase in demand for battery storage would take place only if people are satisfied that sufficient charging infrastructure is available.
The cleanest ecosystem is, however, one in which the charging station derives power from a rooftop solar system. Magenta Power’s partnership with Exicom to install the country’s first solar powered charging station in Navi Mumbai and ABB’s decision to set up similar charging stations to recharge e-rickshaws in Jabalpur are a few examples of this ecosystem.
Interesting business models are also emerging in this space. RT Koytango Private Limited planned to set up rooftop solar systems in schools, colleges and commercial and industrial buildings with a minimum load of 100 kW and then provide free charging facilities for vehicles for the first three years.
During the year, several discoms also took initiatives to either set up or facilitate the integration of EVs with the charging infrastructure. While BSES Rajdhani Power Limited and Bangalore Electricity Supply Company Limited worked on the development of charging infrastructure, Tata Power Delhi Distribution Limited, rolled out a project to install smart meters at all their consumers’ houses by 2025. The country’s first EV tender, which was floated in 2017 by EESL for the procurement of 10,000 EVs for government departments and agencies was an experiment, which proved to be successful. But in July, the second tender to purchase an additional 10,000 EVs, which would run for a longer distance after a single charge, was cancelled as such cars were not compatible with the existing Bharat EV chargers. Hence, a lot needs to be done to set standards and develop fast charging stations to ease the burden of EV owners.
It is evident from developments in the past one year that the centre has passed the baton to the states to roll out policies on the sale and manufacturing of EVs. On the charging infrastructure front, there has been a collective effort from private companies, public companies and discoms to both develop the charging stations and make them commercially viable.
Offshore wind is one area that has only been talked about for years in India but success can only be achieved when commercial and procedural issues in setting up these projects are dealt with. The past year, however, did see some positive developments. The National Institute of Wind Energy (NIWE) proposed extensive studies to assess the offshore wind potential and also installed a LiDAR at the Gulf of Khambat to help in the accurate calculation of wind speeds. NIWE also invited expressions of interest for the development of 1 GW of offshore wind power capacity in the Gulf of Khambhat. As many as 35 national and international developers expressed interest in the development of the project. Following this, the Ministry of New and Renewable Energy set an additional target of developing 30 GW of offshore wind capacity by 2030 in a bid to tap the country’s offshore wind potential.
Going forward, the introduction of reverse auctions in the wind energy sector will provide a boost to the offshore wind segment as it may mirror the falling tariffs experienced in the solar energy sector. However, a chicken and egg scenario will persist. For tariffs to come down, the scale of offshore wind projects will have to be increased. But a falling tariff would be necessary to incentivise the government to float more tenders. Despite these complexities, a global independent power producer, ENGIE and a French infrastructure and power equity investor, STOA partnered to set up a wind energy platform in the country to develop onshore as well as offshore wind projects totalling 2,000 MW over the next five years.
A positive start has been made with the NIWE’s tender, but to entice the wind developers to help achieve the 30 GW offshore wind target, it is pertinent to ease the setting up of such projects by providing faster approvals and a robust transportation network of railways, vessels and ports.
The energy storage segment is still at a nascent stage in the country. The cancellation of a few tenders in this space led to some negative signals in the industry, but only for a short span of time. Some of the recent developments have spurred positive news for the manufacturers as well as developers. On the e-mobility front, the past year has been dominated by government policies and programmes. To fuel large-scale growth in this segment, greater consumer awareness and a shift towards market mechanism is needed. Finally, the success of offshore wind in the country pivots around the tariff trends. Developers indeed have shown interest in developing 1 GW of capacity in Gujarat. However, only time will tell if they stay inclined till the end.