Steering Change

Storage systems and electric vehicles redefine the clean energy space

The two main themes that dominated the clean energy space in 2019 were energy storage and electric vehicles (EVs). As the government took concrete steps towards establishing these as technologies of the near future, the market responded positively with initiatives that promise lower costs and greater adoption.

As the country plans to meet the ambitious target of integrating 175 GW of renewable energy capacity into the grid by 2022, the existing transmission infrastructure is expected to be heavily overloaded. The variable generation profile of solar and wind power plants can cause major problems in grid operations due to over- or under-injection of power. Various forms of energy storage have emerged as possible solutions to facilitate the grid integration of stored power as and when required.

There is also a lot of focus on EVs and they certainly present an opportunity to reduce the contribution of automotive products to climate change. Manufacturers are looking to move to electric mobility as the government continues to emphasise its importance. Initiatives such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme have fast-forwarded the growth of the EV segment over the years. EVs can significantly reduce greenhouse gas emissions and air pollution only if the electricity powering these vehicles is generated sustainably. The good news is that just as EVs are becoming commercially viable, renewable energy is already among the cheapest and most reliable sources of power generation. So, as the government creates a policy framework for encouraging the move to EVs, the transition to renewable energy can become an important aspect of that strategy.

Renewable Watch analyses the key developments in these segments over the past one year, the challenges and the outlook…

Energy storage

The integration of variable and uncertain renewable energy into the grid will require the deployment of various centralised and decentralised energy storage technology solutions. According to Sanjay Banga, chief executive officer, Tata Power Delhi Distribution Limited (TPDDL), the need for energy storage is particularly high in cities such as Delhi. The capital has a typical load curve wherein the variation between peak and off-peak load could be as high as 60-70 per cent. Energy storage will help flatten the load curve and reduce the cost of peak power, which is usually procured through the deviation settlement mechanism (DSM) route by discoms at costs as high as Rs 8 per MWh.

In February 2019, TPDDL set up India’s first MW-scale energy storage system with a capacity of 10 MW at its Rohini substation in Delhi in collaboration with the AES Corporation and Mitsubishi Corporation. The system aims to facilitate better grid stabilisation and peak load management, enhance system flexibility and prevent critical failures. It will serve as a case study for bigger grid-scale energy storage solutions.

Energy storage systems can be useful for contingencies during transformer maintenance, replacement of diesel generator (DG) sets, and avoiding DSM penalties due to variable renewable generation. Rupam Raja, market director, India and Southeast Asia, Fluence, believes that lithium-ion (Li-ion) battery-based energy storage systems can be deployed behind the meter for large industrial and commercial consumers facing power quality issues or for consumers dependent on DG sets and paying high power charges. Atul Arya, head, energy systems division, Panasonic India, suggests that energy storage systems can be deployed at telecom towers to replace DG sets. Panasonic India has set up energy storage systems at about 50,000 telecom towers across the country. In his opinion, the cost of power from energy storage systems is somewhere between that of DG sets and grid power.

Energy storage, in conjunction with solar or rooftop solar power, makes strong commercial sense for industrial consumers with large land resources. According to Arya, rooftop solar plus storage can cater to about 90 per cent of the needs of an industrial establishment, thereby necessitating only 10 per cent to be drawn from the grid. This can result in significant cost savings for the consumer and build a strong case for energy storage in the captive power segment.

However, Banga adds, energy storage system costs are restrictive at the moment, especially for distribution companies. At present, power at Rs 3-Rs 4 per kWh is available in the market. Therefore, until the per kWh cost of power from storage systems achieves parity, its deployment by discoms will not scale up. This was a primary reason for the lukewarm response to the storage-based tenders in the recent past.

Various energy storage technologies such as batteries, compressed air energy storage, thermal storage and pumped hydropower are currently available. While all these technologies entail high capital costs, they are equally potent as energy storage systems. In a bid to promote all forms of energy storage, the government has decided to be technology agnostic. To this end, the Ministry of New and Renewable Energy has amended its recently finalised wind-solar hybrids policy to remove the word “battery” from storage, thus allowing wind-solar hybrid project developers to choose the storage technology that suits their project requirements best.


The transition to low-carbon fuels in the transportation sector has already begun in India. In March 2018, the National E-mobility Programme was launched by the Ministry of Power to aid demand creation for EVs by promoting public procurement. To this end, the government introduced the FAME scheme. Phase I of FAME, which ended in March 2019, was followed by Phase II that came into effect in April 2019. Phase II aims to incentivise the use of EVs by way of capital subsidies. As of March 2019, a financial support of Rs 3,207 million had been given to about 266,970 x EVs. This has resulted in 42.35 million litres of fuel saving and 105.69 million kg of carbon dioxide reduction. Under FAME II, electric two-wheelers will be given a subsidy of Rs 20,000, electric three-wheelers Rs 50,000, electric four-wheelers Rs 150,000 and electric buses Rs 5,000,000. The total outlay for Phase II has been estimated at about Rs 10 billion.

The country’s mobility transformation is being spearheaded by Energy Efficiency Services Limited (EESL). The company has a mandate to electrify the government vehicle fleet over the next three to four years. So far, it has replaced around 1,500 petrol and diesel cars with EVs. It has also announced a tie-up with taxi aggregator Blu Smart to roll out services first in Delhi and then in Mumbai. Meanwhile, it is making concerted efforts to set up charging stations. It has set up around 200 charging stations, of which 20 have been energised so far and at least half of these have a utilisation factor of over 20 per cent. It is targeting the deployment of around 1,000 charging stations over the next 6-12 months. The next step for EESL in this segment is to set up unmanned app-based charging stations.

Several states have specified their EV targets. Delhi has set a goal to have 25 per cent of all new registrations by 2023 from the EV segment only along with a replacement of 50 per cent of its bus fleet. Uttar Pradesh’s draft policy states that it will introduce 1,000 e-buses by 2030, while Maharashtra has set a target to introduce 500,000 EVs by 2023. Karnataka has set an ambitious target of 100 per cent e-mobility by 2030.

The EV and energy storage segments can result in significant cost synergies. The use of batteries for EVs and charging stations will increase the scale of battery deployment in the country, resulting in higher economies of scale that will bring overall costs down. Meanwhile, charging stations can be powered by rooftop solar to reduce the carbon footprint of EVs. In September 2019, Bharat Heavy Electricals Limited installed five solar EV charging stations on the Delhi-Chandigarh highway. This will increase rooftop solar installation and reduce the cost of power for charging EVs. Further, solar-based EV charging stations can act as battery banks that can be charged during high generation periods to absorb the excess generation, which can later be fed into the grid. This can be an alternative source of revenue for EV charging stations. However, high upfront capital costs for setting up rooftop solar power plants atop EV charging stations may prove to be a hindrance. Low utilisation factor of solar panels in areas with inadequate solar irradiation may end up increasing the per unit cost of charging.


In the near future, solar plus storage may pick up on the back of its commercial appeal in the industrial and decentralised captive power segments. However, capital costs may continue to pose problems. Battery prices have gone down by over 70 per cent in the past five years to reach $300-$400 per kWh in 2018. Unless the prices nosedive further, the use of MW-scale grid-connected energy storage deployment will remain a distant possibility.

Pure-play EVs have higher capital costs as compared with petrol/diesel cars in India. Considering the high price sensitivity of the Indian market, this is a dampener for the segment. Meanwhile, inadequate charging infrastructure acts as a deterrent to its uptake. The future of EVs in India is primarily envisaged in the shared mobility space rather than private transportation, as is evident from incoming investments in app-based taxi aggregators such as Ola and BluSmart.

Energy storage and EVs are two emerging technologies that have proven value but are yet to achieve mass utilisation. Given the country’s ambitious renewable energy targets, the potential for energy storage is high. India offers the largest market globally for the EV segment given the sheer scale of existing and incremental transportation needs. The two segments together hold the promise of driving India’s transition towards a low-carbon economy.

By Ashay Abbhi


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