Energy storage plays an important role in maintaining the dynamic system of balancing energy supply and demand, and contributing towards a more flexible and reliable grid system. Given the intermittent nature of renewable energy, energy storage systems (ESSs) are rapidly becoming vital for larger uptake of renewable energy. Batteries are becoming the most widely used form of energy storage in the power sector. In addition, the promotion of battery technologies has given an impetus to electric mobility.
Residential, commercial and industrial consumers who deploy ESS in combination with renewable energy have the potential to improve power quality and reliability. This enables low or no demand for a backup that is based on fossil fuel sources. These systems can substantially reduce the country’s reliance on imported fossil fuels and can enable a smooth clean energy transition. However, the cost and safety of energy storage pose key barriers to its greater uptake.
ESSs can cater to numerous applications. ESSs integrated with a smart grid can assist in grid integration and stabilise variable generation sources. It can improve the power quality, reduce peak demand, increase the capacity of distribution and transmission grids, avoid deviation penalties, and increase the overall flexibility of the system. Further, it can help postpone transmission and distribution (T&D) equipment upgrades and replacements, eliminate the need for combustion turbines by providing distributed energy with local energy storage sources, and reduce ramping impacts, which include both wear and tear and reduced efficiency of fossil fuel generators caused by renewable energy intermittency, shift in wind and solar energy generation from off-peak to meet daily peak needs.
Other advantages include the provision of arbitrage opportunities by allowing load serving entities or consumers to buy and store low-cost energy during off-peak times to avoid high cost generation during peak periods, provision of ancillary services such as high-cost frequency regulation, spinning reserves and black start capacity, and reduced T&D line congestion and electrical losses by placing storage at T&D interfaces and distribution circuits.
There have been several key developments in the energy storage space in the past year. Many ventures, projects and fundings have been initiated to promote energy storage facilities with national and international alliances.
Renewable Watch provides a roundup of the key developments in the energy storage space during the past year…
November 2022: SECI requested bids for 1.2 GW of ISTS connected wind-solar hybrid power projects with energy storage (Tranche VI) across India.
October 2022: Uttar Pradesh Power Corporation Limited issued a request for proposal to establish five standalone battery energy storage systems (BESSs) of 10 MW/40 MWh each in the state.
August 2022: Maharashtra State Electricity Distribution Company Limited invited bids for a long-term contract to purchase 250 MW of flexible and schedulable power from grid-connected renewable energy projects with energy storage facility. Also, in the same month, Greenko secured a Rs 55 billion loan from the Power Finance Corporation to construct a river energy storage project in Andhra Pradesh.
JSW Renew Energy Five Limited won an auction by SECI to set up pilot projects of 500 MW/1,000 MWh standalone BESSs and won the entire capacity with a bid of Rs 1.08 million per MW. A programme agreement under the production-linked incentive (PLI) scheme for advanced chemistry cell battery storage was signed by Reliance New Energy Limited, Ola Electric Mobility Private Limited and Rajesh Exports Limited.
July 2022: The Ministry of Power (MoP) released the Renewable Purchase Obligation and Energy Storage Obligation Trajectory till 2029-30. NTPC issued a request for qualification to select developers to set up 1,150 MW of grid-connected solar power projects across 175 locations in Cuba and a tender for 150 MW/150 MWh BESS for three locations in Cuba. Hero Future Energies was selected as a successful bidder in the Kerala State Electricity Board’s tender for the construction of a 10 MW/20 MWh grid-connected energy storage plant in the state.
June 2022: Hindustan Petroleum Corporation Limited issued a tender to select consultants for a feasibility study for a hybrid project. The said project involves setting up a 100-150 MW wind-solar hybrid project with a BESS on vacant land for captive use in Andhra Pradesh.
May 2022: Sungrow collaborated with Tata Power Solar Systems Limited to build a BESS plant at Phyang, Ladakh. The BESS capacity is up to 60.56 MWh. The Greenko Group started the development of a renewable energy storage plant in Kurnool, Andhra Pradesh. The project has a total capacity of 3 GW of solar power, 550 MW of wind power, and 1,680 MW of pump storage capacity for six hours. Also, India and Italy entered into partnerships in key renewable energy sectors such as green hydrogen, biofuels and energy storage.
April 2022: Greenko Wind raised $750 million for an energy storage plant in Andhra Pradesh through a global bond offering. O2 Power signed an MoU with Powin, a US-based battery energy storage company, to supply battery storage solutions for the Indian renewable energy sector.
March 2022: The MoP notified the guidelines for the procurement and utilisation of BESS as part of generation, transmission and distribution assets, along with ancillary services to facilitate the procurement of BESS in the country.
February 2022: The Greenko Group and Ayana Renewable Power entered into a partnership to provide standalone storage capacity in India. Under the agreement, the companies aim to create robust and despatchable renewable energy solutions for industrial and distribution companies in India, including round-the-clock power supply of up to 1 GW.
January 2022: NTPC Renewable Energy issued a request for proposal for developers to build ISTS-connected energy storage systems with a capacity of 3,000 MWh and a minimum capacity of 500 MW anywhere in India. In addition, Fluence and ReNew Power announced a partnership to form a new
company to meet the needs of customers across India and address the country’s rapidly growing energy storage market.
Key challenges
As per the Handbook on Battery Energy Storage System released by the Asian Development Bank, there are a several limitations in the adoption of BESSs. While many factors influence the growth of the BESS market, battery price is expected to have the most significant impact on the viability of a BESS project. Installation cost is another key factor. Other key challenges include the imbalance between electricity supply and demand, lack of low-cost finance, safety of battery technologies, premature degradation of batteries, low utilisation rate of parallelisation of battery strings and regional power shortages. Also, there can be a long recovery time for system failures, especially in remote areas that may not have adequate connectivity.
Outlook
As per NITI Aayog’s report, India’s battery storage capacity is expected to reach 600 GWh by the end of 2030. Further, annual demand for batteries increased at a compound annual growth rate (CAGR) of 25 per cent between 2010 and 2020. This demand is expected to quadruple to 3,100 GWh per year by 2030, which will result in a 16 per cent increase in CAGR between 2020 and 2030. The key drivers for the increasing demand are green mobility initiatives, supportive government policies, climate commitments, consumer electronics demand, and overall power grid decarbonisation efforts.
A key policy challenge to meet this demand will be the dependence on imports for critical raw materials that are used in batteries. Thus, there is a need to secure the supply chain, which is dominated by a few countries especially China. This will be difficult as such raw materials are scarce in India. In order to reduce the country’s import dependence, Khanij Bidesh India and the Australian government’s Critical Minerals Facilitation Office signed an agreement to conduct joint due diligence on select projects to identify lithium and cobalt mineral assets in Australia in March 2022. Also, India is promoting urban mining that keeps recycled materials in circulation and reduces reliance on new lithium inputs.
Another challenge has emerged for the segment in the past year. It was expected that battery prices would continue to fall, thereby increasing uptake. However, the Covid-19 pandemic and the resultant supply chain disruptions and later the Russia-Ukraine war have led to global inflation. Therefore, the expected fall in BESS prices has not been achieved.
Despite the hurdles, the future outlook seems positive given that the government has taken several policy initiatives to promote the segment including issuing guidelines for the procurement and utilisation of BESSs as part of generation, transmission and distribution assets, along with ancillary services; launching the PLI scheme; floating tenders; and notifying energy storage obligations.
Going forward, it is important to have a well-defined regulatory environment and a proper market structure. This will ensure more collaborations and projects in this space, which is essential for the comprehensive development of India’s renewable energy sector.