A Growing Market

Recent developments in the energy storage space

India has ambitious plans of setting up intermittent renewable energy projects. Energy storage systems are critical for integrating solar and wind power into the grid and supporting the power system. In line with this need, there has been a push towards releasing storage tenders. However, the ongoing Covid-19 pandemic has impacted the energy storage market with supply chain disruptions, leading to an enhanced focus on promoting the domestic manufacturing of batteries.

The impact of Covid-19 on the sector, the recent developments and the future outlook…

Impact of Covid-19

There has been both a short-term and a long-term impact on the Indian energy storage industry due to the Covid-19 pandemic. In the short term, in a bid to retain cash flows, most commercial and industrial consumers started focusing more on their core business activities, avoiding extra investments in storage applications.

In India, there are many battery pack assembly plants for lithium-ion (Li-ion) batteries. These plants mostly import cells from China to assemble the battery packs. Due to the lockdowns during the pandemic, these assembly plants faced severe supply chain constraints. Therefore, in the long term, the consensus among industry stakeholders was that India should minimise its import dependency on China by promoting domestic manufacturing of batteries under the Aatmanirbhar Bharat and Make in India initiatives. To this end, the Indian government also announced a production-linked incentive (PLI) scheme for manufacturing of advanced chemical cells. This strong policy impetus has indeed created a positive sentiment across industry stakeholders, and many key players such as LG, Samsung and CATL are planning to invest in India in this space.

Despite the promotion of domestic manufacturing, several concerns remain. Primary among them is that cells, which are a crucial part of batteries, are still being imported mostly from China and other East Asian countries. China accounts for a lion’s share of the world’s Li-ion battery manufacturing capacity. Experts believe it will be hard to completely reduce the dependency on China.

Key recent developments

  • In January 2020, the Ministry of New and Renewable Energy released a draft policy for the supply of round-the-clock power to discoms, which would be a mix of renewable energy and electricity generated by coal-based plants.
  • In February 2020, the draft Battery Waste Management Rules, 2020 were notified by the Ministry of Environment, Forest and Climate Change. In the same month, the Solar Energy Corporation of India’s (SECI) 1.2 GW hybrid tender, coupling pumped hydro, batteries, solar and wind power, received bids for 1.62 GW of capacity. SECI also issued a tender for setting up 14 MW of solar power projects with 42 MWh of battery storage systems (7 MW/21 MWh each) at Leh and Kargil under the Prime Minister Development Package 2015.
  • In March 2020, Energy Efficiency Services Limited invited bids for power conversion systems and fast-combo electric vehicle (EV) chargers.
  • In April 2020, SECI announced the list of bidders for its 400 MW tender for renewable power on a round-the-clock basis. The tender has been oversubscribed by 550 MW. In the same month, Uttar Pradesh Small Industries Corporation Limited invited bids for the supply and installation of 400 lithium ferro phosphate battery solar street lights for the District Rural Development Agency, Varanasi and Sultanpur. NTPC Vidyut Vyapar Nigam Limited issued a global expression of interest for 10 fuel cell EVs for public transportation in Leh and Delhi.
  • In June 2020, the Ministry of Power (MoP) amended the 2018 guidelines for developing the EV charging infrastructure to cap the tariff at the average cost of supply plus 15 per cent. It also provided conceptual clarity on various components of this sector.
  • SunSource Energy won the contract from SECI for developing 1.95 MW of solar power with a 2.15 MWh battery energy storage station in Lakshadweep in July 2020.
  • In August 2020, the Ministry of Road Transport and Highways issued a notification allowing the sale of electric two- and three-wheelers without pre-fitted batteries. This was done to bring down the upfront cost of EVs. Another important policy decision came from the MoP, which noted the importance of battery storage systems in providing balancing power to the grid. It was clarified that an energy storage system, when it stores and supplies electricity, acts as a generating station and therefore does require a licence. In the same month, Bharat Heavy Electricals Limited floated a tender for 410 kWh/415 kW of battery energy storage systems (BESS) at three sites in New Delhi.
  • In September 2020, SECI floated a tender for the development of a 100 MW solar project along with a 150 MWh BESS in Rajnandgaon, Chhattisgarh.
  • In November 2020, the Andhra Pradesh government proposed the development of seven pumped hydro storage power projects across select districts in the state. In the same month, SunSource Energy announced plans to develop a 4 MW grid-connected floating solar project along with a 2 MW/1 MWh BESS at the Kalpong hydroelectric project, at Diglipur, in the Andaman & Nicobar Islands.
  •  In December 2020, Railway Energy Management Company Limited (REMCL) launched a tender for the development of a grid-connected solar power pilot project with an energy storage system on vacant railway land in Gujarat. In the same month, SECI invited bids for the development of a 20 MW solar power project with a 50 MWh BESS in Leh district.
  • In February 2021, Tamil Nadu Generation and Distribution Corporation Limited floated a tender for developing a 1 MW solar power project with a 1 MW/3 MWh BESS.
  • In March 2020, a 150 kWh/528 kWh Li-ion BESS was installed in Rani Bagh, in Delhi by Tata Power Delhi Distribution.
  • The most important policy announcement came in May 2021 when, under the PLI scheme the cabinet approved the National Programme on Advanced Chemistry Cell Battery Storage. The programme has an outlay of Rs 181 billion and aims to achieve 50 GWh of advanced chemistry cell and 5 GWh of niche advanced chemistry cell manufacturing capacity.
  • Recently in June 2021, REMCL invited bids to set up a 15 MW solar project with a 7 MW/14 MWh BESS on railway land at Butibori in Nagpur. NTPC Limited also floated a tender inviting bids to set up a 4 MW ground-mounted solar project with a 1 MW/1 MWh BESS and an induction-based cooking system at the NTPC Energy Technology Research Alliance facility in Greater Noida. It also invited expressions of interest for setting up 1,000 MWh of a grid-scale BESS at a single location or across multiple NTPC power plants. In the same month, ReNew Power announced a partnership with Stanford University’s Precourt Institute for Energy on its battery storage initiative, StorageX.

Future outlook

According to experts, Li-ion batteries will continue to dominate the energy storage market in India over the next 10-15 years. The key advantages of being less costly and having multiple applications help the market growth of this technology. It is also envisaged that electric mobility will be the primary driver for battery demand in the next five years, before storage demand for grid applications takes centre stage. The India Smart Grid Forum and the India Energy Storage Alliance (IESA) have prepared a report, “Energy Storage Systems Roadmap for India: 2019-2032”, which estimates 2,416 GWh of battery capacity by 2032.

According to the IESA, the energy storage market in India is likely to grow at a compound annual growth rate of 6.1 per cent up to 2026. Meanwhile, global electrical energy storage is estimated to grow six times between 2016 and 2030. By 2030, India, the US and Japan are expected to install 50 per cent of energy storage systems. According to the IESA, the energy storage market in India was worth $2.8 billion in 2018. Going forward, India’s aim to have 100 per cent EVs by 2030 alone will lead to a $300 billion market for EV batteries.

By Sarthak Takyar

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