India plans to have 175 GW of renewable energy capacity connected to the grid by 2022 and then 450 GW by 2030. With renewables set to occupy a significant chunk of the total energy mix of the country, it is vital to have a resilient and flexible grid, with smarter power systems. Further, in line with global commitments to reduce carbon emissions and address the deteriorating air quality issue in the country, electric vehicle (EV) uptake has become a major focus area for the government. Energy storage can play a valuable role in this transition as the country moves towards smarter grids, more renewable energy
generation and greater EV uptake. Energy storage systems can be integrated at any stage in the power supply value chain to serve multiple applications and their flexibility makes them a critical component of the evolving power sector.
India’s power distribution system suffers from frequent power cuts and poor power quality issues, especially during the summer and monsoon months. Many residents and commercial and industrial establishments in small towns as well as big cities rely on diesel generators to meet their power requirements. Energy storage can, instead, be used to reduce the reliance on these polluting diesel generators. In fact, solar plus storage solutions are becoming quite popular, especially in the urban and industrial areas to provide an uninterrupted and efficient source of power for critical services. In villages and remote mountainous regions, where the power supply situation is worse or absent, energy storage can be integrated with microgrids to provide reliable power for irrigation, lighting and other essential activities.
While energy storage systems in India are primarily used for backup at present, going forward, they are going to find greater uptake in renewable energy integration. Renewables, especially solar and wind, are infirm by nature and their generation patterns change according to the resource availability. Solar generation gets affected during the day due to clouds while wind power is dependent on wind speed. Thus, energy storage can store any excess renewable energy generated, to be used at a later time. Moreover, when renewable energy cannot be transmitted due to grid constraints, energy storage can be used to store it instead of wasting this power. It thereby helps in levelling out any peaks or troughs in the generation patterns from variable renewables and creates a stable and continuous energy stream throughout the day and night. Apart from their obvious benefit of storing energy for later use, energy storage technologies also regulate the frequency of generation, hence, improving the power quality.
Traditional coal-based power plants almost never operate at peak capacity as they have to be ramped up or down according to energy demand. Their ramping time is usually slow, which means that they cannot respond to real-time demand peaks and troughs. Large-scale energy storage systems can improve the efficiency of conventional systems, thereby lowering not only costs but also emissions. They can also be used to replace the peaking capacity on the grid. More recently, energy storage systems are also gaining prominence due to their ability to provide other additional services such as demand response, ramping, black start, renewable capacity firming and voltage support.
Uptake in India
Despite its obvious benefits, energy storage uptake has been held back by cost considerations. However, with battery costs declining owing to technology improvements and the recent spate of tenders involving the storage element, it seems that India’s energy storage market is finally ready to take off. Energy storage systems are now being deployed not only at the pilot level but also on a widespread level for commercial and technical gains. Moreover, the Solar Energy Corporation of India’s (SECI) recent auctions involving energy storage have received encouraging response from developers with affordable tariffs, which shows the growing interest of both the tendering agencies as well as developers in this space.
In July 2020, SunSource Energy won SECI’s engineering, procurement and construction (EPC) tender for 1.95 MW of solar power with a 2.15 MWh battery energy storage station in Lakshadweep. The project will power four islands on Lakshadweep – 300 kW at Agatti, 1,400 kW at Kavaratti, 150 kW at Bangaram and 100 kW at Thinnakara. As the islands are not connected to the national grid, this project will significantly help in reducing its reliance on expensive diesel-powered generators for meeting its power requirement. Similar projects are also being planned in the remote regions of Leh and Kargil, where implementing conventional power systems is not feasible.
Prior to this, in April 2020, SECI’s exploratory tender for 400 MW of renewable power on round-the-clock (RTC) basis was oversubscribed by 550 MW. Finally, ReNew Power emerged as the winner for the entire capacity in May 2020, after quoting a winning tariff of Rs 2.90 per unit. This tariff is quite competitive with that of solar or wind power. The energy procured through this project will be supplied to the New Delhi Municipal Corporation and Dadra & Nagar Haveli. According to the tender, it can be a solar, wind or a hybrid project, with the bidder having the option to choose the type of storage system to be installed such as battery energy storage, pumped storage, mechanical or chemical. The success of this project opens the pathway for other similar tenders.
In another first-of-its-kind, in February 2020, SECI’s 1.2 GW tender for peak power supply using renewables and energy storage achieved tariffs that are highly competitive against coal power. It received bids for 1.62 GW of capacity in the procurement round. The auction saw the Greenko Group secure 900 MW of pumped storage capacity at a weighted average tariff of Rs 4.04 per kWh and a quoted peak tariff of Rs 6.12 per kWh. Meanwhile, ReNew Power secured 300 MW of renewables plus battery storage capacity at a weighted average bid of
Rs 4.30 per unit and quoted peak price of Rs 6.85 per unit. For off-peak hours, SECI will pay a pre-specified tariff of Rs 2.88 per unit for the renewable energy it procures. The success of this has prompted SECI to issue another tender for setting up 1,200 MW of interstate transmission system-connected renewable energy projects with guaranteed peak power supply.
Moreover, in January 2020, SECI issued a tender for setting up 4 MW of grid-connected floating solar projects with 2 MW of battery energy storage system. The projects will be developed at the Kalpong dam in Diglipur, located in northern Andaman. A tariff cap has been set at Rs 8 per kWh for a period of 25 years. Following SECI’s example, a few states are also taking initiatives in the energy storage space. For instance, in January 2020, Madhya Pradesh UrjaVikas Nigam Limited issued a tender to select contractors for 25 MW of grid-connected and off-grid rooftop solar projects within the state. The off-grid installations will include battery storage.
Energy storage uptake is not limited to government agencies, as private entities are also equally keen on adopting these systems for commercial and technical gains. Reportedly, India’s first grid-scale battery energy storage system of 10 MW was set up in February 2019 at Tata Power Delhi Distribution’s Rohini substation. The project, owned by AES and Mitsubishi Corporation, aims to provide grid stabilisation, better peak load management, add system flexibility, enhance reliability and protect critical facilities. Another private player, Greenko is currently developing 550 MW of wind, 1,000 MW of solar and 1,680 MW of pumped hydropower project capacities as a part of IREP (integrated renewable energy project), that will provide RTC power to the grid. The company has secured equity commitment for two projects with a total pumped storage capacity of 2.4 GW, – 1.2 GW at Pinnapuram, Andhra Pradesh, and 1.2 GW at Saundatti, Karnataka. These projects will play an important role in India’s energy transition and can provide key lessons for future endeavours by other players.
Outlook for the future
Energy storage uptake in India has, until now, been mostly limited to smaller behind-the-meter power backup applications and for catering to the nascent EV market in the country. However, the past few months have witnessed an increase in the uptake activity, indicating the emergence of an energy storage market in India, driven by increasing cost competitiveness, improving technology and tendering activity. In fact, the India Energy Storage Alliance estimates the energy storage market in India to grow at an annual rate of 6.1 per cent between 2018 and 2026, to reach 64.5 GWh by 2026. It identifies renewable energy integration, transmission and distribution deferral, ancillary services, railways, microgrids, telecom and behind-the-meter applications as the major application areas for energy storage in India.
Going forward, the cost of energy storage is going to be a key factor in determining its uptake and scale. Domestic manufacturing can help in bringing the prices of projects further down due to savings on transport costs and no import duties. With battery-based storage, especially lithium-ion, expected to be the major technology in use for a large share of applications, the government’s focus is on promoting domestic manufacturing of lithium-ion batteries. To this end, in March 2019, the cabinet approved the National Mission on Transformative Mobility and Battery Storage, under which two-phase manufacturing programmes will be introduced across the country. The first will support the setting up of giga-factories for battery manufacturing across the country, while the second will focus on EV manufacturing. Following this, in January 2020, NITI Aayog sought cabinet approval for a proposal to build up to 10 giga-factories for producing lithium-ion batteries that would get government subsidies. These manufacturing facilities, once set up, can greatly help in creating a competitive market for battery-based energy storage in the country.
Overall, energy storage can be an attractive solution for the country’s stressed power sector provided cost-competitive and technologically advanced systems are made available by creating an enabling market with the right policy framework.