Energy storage plays a vital role in grid integration and the balancing of variable generation sources. By just increasing the system’s overall flexibility, energy storage systems (ESS) improve its power quality, enhance the capacity of transmission grids, reduce deviation penalties and reduce peak demand. The adoption of ESS by residential, commercial and industrial consumers, in conjunction with renewable energy, increases the quality of power and is considered more reliable. In the electric vehicle space, too, ESS is the main component as it determines the cost and performance.
As per the India Energy Storage Alliance forecast, the market for stationary energy storage systems will be around 230 GWh during the period 2020-27. The Central Electricity Authority projects 136 GWh of energy storage requirement by 2030. The wind energy space will witness a more gradual penetration of storage as compared to the solar sector. The duration of storage in each project, including hybrid projects with storage facilities, is anticipated to be one hour initially. This is expected to slowly increase up to two to three hours in the long term. The expected penetration of ESS in each wind plus storage or hybrid project is expected to be almost 11 per cent storage capacity initially and increase to around 32 per cent by the end of 2026.
Energy storage is a flexible asset as it provides a wide range of benefits, siting options and potential technologies, which provide value to the grid system. The value of energy stored varies as per controllability, despatch and the use of energy. ESS applications range from ancillary services to grid operations and cost reduction for end users. The key commercial applications of ESS are:
- Load shifting: A battery energy storage system allows clients to shift their energy usage, charging batteries with solar energy or grid electricity when it is the cheapest, and discharging batteries when it is expensive.
- Peak shaving: It is the most important application of energy storage. Solar arrays alone are not sufficient for commercial application. Battery ESS can guarantee that no power above the pre-determined threshold will be drawn from the grid during peak times. Solar energy combined with storage systems can eliminate the demand charges and reduce the electricity bill of commercial consumers to near zero.
- Emergency backup: The battery ESS can keep operations running during power outages.
- Renewable energy integration: ESS can smooth out the output of renewable energy sources. Solar energy is stored during the daytime and can be used later as per requirement.
- Grid services: For a utility-scale customer, battery energy storage can serve a host of valuable applications such as reserve capacity, frequency regulation and voltage control to the grid.
The key applications of ESS for residential consumers are:
- Off-grid usage: Batteries are the most essential part of a solar-powered off-grid house. Battery ESS based on the latest technologies has exceeded the capabilities of the earlier used lead-acid batteries. Modern battery storage systems are easy to install and configure, more scalable and cheaper per kWh of storage, and extremely safe.
- Emergency backup: ESS works with or without solar and is a safe alternative to small generators running on fossil fuels that often lead to the production of harmful gases like carbon monoxide.
- Solar self-consumption: Energy storage allows the owners of a building to store the surplus amount of energy generated by solar-powered systems during the day and use it as and when required.
Challenges and outlook
Despite the recent advancements in terms of technology uptake and deployment, challenges remain. There are four main challenges in the battery storage market. First, there is a perception of high pricing although there has been a constant drop in the ESS prices. Often, the decision-makers have outdated notions regarding the price of these systems. Second, proper standards are lacking and new entrants in the early-stage market often contend with diverse technical requirements as well as varied processes and policies. Third, the regulatory policy and market design is outdated and lagging in terms of energy storage technology. Besides, the retail rules need to be updated along with the wholesale market rules, especially as interest in residential, commercial and industrial markets is growing. Finally, there are concerns regarding an “incomplete definition of ESS”. Thus, energy storage is having an identity crisis, with stakeholders and policymakers around the world tussling with each other on how to define fast-acting battery storage.