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