The humble battery has come a long way to become a crucial part of storage systems and electric vehicles (EVs), two technologies that are catalysing India’s path to emission reduction. Storage systems have emerged as vital solutions as India continues the rapid expansion of its renewable capacity. They are essential for reducing the inefficiencies and leakages in renewable energy generation, particularly wind and solar. At the start of the decade, batteries were perceived to be an expensive technology but with falling battery costs, they have increasingly become more affordable in recent years. Similarly, the rapid decline in battery prices led to meant an increase in the uptake of EVs in the Indian market.
Energy storage systems
As of April 2020, wind and solar energy dominate the country’s renewable energy portfolio, accounting for a share of 54.9 per cent. It must be noted that these sources are discontinuous as the power that they generate varies with the time of day and weather. This causes imbalances due to differences in the supply and demand. Storage systems can play a vital role in bridging the gaps and variations in renewable power generation. With falling battery prices and policy initiatives, energy storage options are gaining traction along with renewable energy technology.
In March 2019, India inaugurated its first grid-scale battery at Rohini, New Delhi, which is operated by Tata Power Delhi Distribution Limited. The energy storage facility uses a 10 MWh lithium-ion battery and has been designed especially for peak load management. Since then, there have been several tenders floated for energy storage in the country, particularly with solar technology. In August 2019, the Solar Energy Corporation of India (SECI) invited bids for 1.2 GW of renewable projects, with an energy storage component with guaranteed peak power supply, to be set up anywhere in the country. It was announced that the Greenko Group and ReNew Power secured 900 MW and 300 MW respectively of the floated capacity in February 2020. The first integrated renewable energy storage project is due to be developed in Kurnool, Andhra Pradesh. The project will consist of a 2 GW solar farm, a 400 MW wind farm and a 1.2 GW pumped storage hydroelectric facility. Andhra Pradesh is also planning about 6.3 GW of pumped storage hydroelectric capacity across seven districts in the state. More recently, in September 2020, SECI floated a tender for the installation of a 100 MW solar project along with a 150 MWh battery energy storage system in Rajnandgaon, Chhattisgarh.
On the policy front, in July 2020, the Ministry of New and Renewable Energy (MNRE) announced guidelines for procuring round-the-clock power from grid-connected renewable energy projects supported by conventional thermal power projects. The combination or “bundle” of power will ensure power supply throughout the day as conventional power will help mitigate the intermittency of renewable power. This will encourage developers to address the intermittent nature of clean energy in the country. However, cost still remains one of the biggest challenges in the storage sector and when a high storage capacity is proposed, it often leads to unviable tariffs and results in the cancellation of tenders. It may take some time for storage system costs to fall to a level, at which it can fully address the issue of intermittency.
The EV market in India has gained traction in recent years, after several years of staggered progress. It was realised early in the decade that to build a strong EV foundation in India, the industry needed a push at a policy level. Thus, in 2010, the Ministry of New and Renewable Energy (MNRE) announced a financial incentive on the purchase of electric cars and scooters, resulting in a 200 per cent rise in sales. However, in March 2012, the subsidy was removed and the sale of EVs dropped by 70 per cent. In 2015, the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) initiative was launched under the National Electric Mobility Mission Plan. Under the initiative, a sale of 0.28 million hybrid vehicles and EVs was recorded, and projects worth about Rs 1,580 million were sanctioned. However, the programme was not successful in generating the expected demand for EVs.
In February 2019, the government launched FAME II with a renewed focus on demand creation and charging infrastructure. The programme is planned for three years with a budget of Rs 100 billion and aims to generate demand for 7,090 e-buses, 0.5 million electric three-wheelers, 55,000 electric four-wheeler passenger cars and 1 million electric two-wheelers. Several state governments have set electric mobility targets, nine have released the final policies while five are awaiting approval of their draft policies.
On the manufacturing end, the government launched the Phased Manufacturing Programme, set to start in April 2021, to fast-track local manufacturing by increasing the basic customs duty on the import of raw materials that are used for EV manufacturing. This will strain India’s limited reserves of cobalt and lithium. NITI Aayog has also drafted a proposal to offer $4.6 billion in incentives to companies for the development of advanced battery manufacturing facilities in the country. The proposal predicts that the adoption of the policy could cut oil imports to around $40 billion by 2030.
The demand for EVs is also linked to the development of charging infrastructure in the country. Since 2016, India has been gradually increasing the number of charging points, adopting fast charging technologies in its EV infrastructure. In October 2020, the Department of Heavy Industry (DHI) invited expressions of interest (EoIs) for the development of over 1,500 charging stations across 25 expressways and highways in the country. A similar EoI was issued by the DHI in August 2019 for the installation of 7,000 EV stations. Despite a great response, it sanctioned only 2,636 charging stations, of which 1,633 stations are expected to be fast chargers. Various city-level agencies and PSUs like EESL and NTPC have also created a market for charging infrastructure through bids and forged partnerships with technology providers for promoting the deployment of charging stations.
Renewable Watch Research has projected that total EV sales could reach 15.78 million by 2030 in a realistic scenario. The key enablers of this transition are the central and state governments that are working on the creation of a supporting policy framework. The process involves creating incentives for consumers while simultaneously building an adequate infrastructure.
In the future, we are looking at an increased rate of EV and renewable energy storage adoption. This will result in reduced emissions. At the heart of both these technologies is battery. Batteries are critical for balancing the intermittencies of renewable power generation and efficiently powering EVs. Owing to technological advancements, the cost of batteries has fallen by about 80 per cent in the past decade. Global battery production is projected to increase 20 times by 2040, driven by the predicted rise in demand for EVs.
In the EV market, the generation of demand is equally important. To increase the pace of charging infrastructure development in the country, private developers must assume a bigger role. Efforts should also be made to integrate renewable energy into the EV charging network. The first solar-powered EV charging station was set up by Bharat Heavy Electricals Limited in March 2019, but since then, limited progress has been made on expanding this model. The battery-swapping model could also ease the concerns of affordability and reliability at the consumer end. However, this can work only with proper standardisation as well as a regulated market. In the future, the country must work towards building a policy that involves manufacturers, and central and state governments.
Once battery prices become cost competitive, efforts must be made to scale up energy storage. Globally, green hydrogen is being increasingly adopted and it is an option that India must explore as it aims for higher integration of renewables. It is also important that the storage potential and vehicle-to-grid application of EVs is explored.