Storage Takes Centre Stage

Key role of ESS in integrating renewables and ensuring firm power supply

The energy storage market in India has grown rapidly and continues to do so owing to not only electric mobility but also renewable energy integration. Inter­mittent generation sources such as solar power and wind power, when present in large volumes in the grid, may cause stability-related issues. Energy storage helps in balancing this resource-related uncertainty, thereby providing a firm source of power as well as managing frequency, pe­ak power requirements and other imbalances. Historically considered an effective but expensive proposition, energy storage has witnessed massive uptake in the past few months with increasing focus on round-the-clock renewable power procurement, a slew of tenders, policy interventio­ns from government agencies and similar uptake plans announced by the renewable energy industry.

Perhaps the most transformational of these developments has been the succe­s­sful conclusion of the Solar Energy Cor­po­ration of India’s (SECI) recent auction (Au­gust 2022) for 500 MW/1,000 MWh of standalone battery energy storage system capacity to be set up on a build-own-operate-transfer model. JSW Renew Ener­gy won the entire capacity with a bid of Rs 1,083,500 per MW for setting up two battery storage projects at the Fatehgarh-III sub­stations in Rajas­than. Acme Barmer So­lar, Hartree Partners Sin­gapore, Eden Re­ne­wable Vavin, Sterlite Po­wer Trans­mis­si­on, NTPC Renewable Energy, ReNew Solar Power and Azure Po­wer Sixty Three al­so participated in the auction but were not able to secure capacity. Although the se­cond lowest price of Rs 1,084,499 per MW (quoted by ACME) is close to the winning bid, there is a significant difference between the highest and lowest bids. However, as this is the first su­ch auction to be conducted, these differences were ex­pec­ted. Further, the result of this auction will dictate future energy storage tenders and the discrepancies witne­ssed in bids are expected to narrow down.

An interesting provision of this tender, which probably contributed to the successful bidding result, is the composition of capacity offtake. Of the total capacity being installed under the tender, 60 per cent will be acquired by SECI on behalf of the buying entities, while 40 per cent will be procured by developers through third-party or market sale arrangements. This long-term procurement guarantee from SECI along with the freedom to explore attractive business opportunities through third-party transactions has been a key factor in discovering the competitive pricing. This auction, the first such bid by SECI for large-sca­le energy storage, has enhanced in­dustry and government confidence in the potential for storage deployment on a large scale for renewable energy integration. It has opened new doors for technology pro­viders, manufacturers as well as system in­te­grators and developers in the energy sto­rage space, by proving the cost-competitiveness of grid-scale storage in India. This tender is also important for being the first tra­n­che of the government’s procurement pla­ns for 4,000 MWh of battery storage ca­pacity that will help in increasing the penetration of renewables in the grid. Thus, more such tenders are expected to be la­un­ched by SECI to successfully implement government plans.

The way forward

India’s energy storage market is set to boom in the coming months on account of a number of policy interventions including the introduction of competitive bidding guidelines for battery energy storage projects, round-the-clock renewable power guidelines incorporating storage component and the notification of the energy storage obligation trajectory. Thus, many projects are coming up in this space and significant tendering activity has also been witnessed in recent months.

In August 2022, the Maharashtra State Elec­tricity Distribution Company invited bids for a long-term contract to purchase 250 MW of flexible and schedulable power from grid-connected renewable energy pro­jects with an energy storage facility. Pri­or to that, in July 2022, Hero Future En­er­gies emerged as a successful bidder in the Kerala State Electricity Board’s tender for construction of a 10 MW/20 MWh grid-connected energy storage plant in the state. Further, in June 2022, Hindustan Petroleum Cor­poration Limited issued a tender to se­lect consultants for a feasibility study for a 100-150 MW wind-solar hybrid project with a battery energy storage system. The project will be set up in Andhra Pradesh and will be used for meeting captive power req­uirements. Apart from these companies, large renewable energy development firms such as Adani Green Energy, Greenko, JSW, NHPC and NTPC Limited have ann­ounced plans to deploy mega energy storage (pumped hydro and battery) projects.

With this successful auction leading to many more bids and timely policy interventions from the government, the stage is set for massive integration of energy st­o­rage in India’s round-the-clock renewable energy expansion.

By Khushboo Goyal

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