By Dr Sapan Thapar, Associate Professor, TERI School of Advanced Studies
India is steadily deploying more solar and wind assets as part of its strategy to enhance energy security and meet climate goals. The government has planned for 900 GW by the year 2031-32, with 40 per cent contribution from solar and 13 per cent from wind. The grid share of these two intermittent technologies shall be 25 per cent and 10 per cent respectively. This may pose a challenge for utility grid managers, in terms of handling large quantum of variable power, compounded by the fact that the generation capacity is concentrated in certain areas of the country.
As a remedial measure, energy storage systems comprising batteries (47 GW) and pumped storage power (62 GW) are being planned for the year 2031-32. Both technologies have their unique characteristics. Pumped storage projects are typically associated with a longer gestation period and a slower response time, compared to battery energy storage systems (BESSs). A number of BESS tenders have been floated in the recent past, either on a standalone basis, or in combination with solar plants. Recent bids saw a levellised cost of storage (LCoS) in the range of Rs 4-Rs 7 per kWh and in the case of viability gap funding (VGF), it is slightly lower.
A standalone BESS will require land and power evacuation infrastructure, increasing the capital investments, and will be associated with a long gestation period. In addition, the charging power will experience transmission and distribution (T&D) losses from the generation source. For a BESS being set up within a solar plant, there will be requirement of a dedicated land parcel. In addition, this can lead to BESS asset concentration in solar-dominant locations.
It has been observed that to accommodate solar power, which gets generated during daytime, coal plants are asked to ramp down their output, reducing their effective operational capacity plant load factor.
A financially prudent option can be putting up BESSs within existing thermal power plants (TPPs). Over 250 TPPs are there in India, some with multiple units. Most of these plants are large enough to accommodate BESSs with suitable power evacuation infrastructure facilities in place. Coal power plants can charge BESSs during daytime and the stored energy can be discharged to meet evening peak loads. A two-hour storage system shall enable an increase in PLF by 7 per cent. In addition, maintenance needs (and expenses) due to frequent ramp-up/ramp-down of coal plants shall get reduced. Moreover, the personnel of coal plants would typically know the management of BESSs.
There would be benefits for energy consumers as well. Power distribution utilities are required to pay generating companies fixed power charges, irrespective of their operational status (even when they are not generating any power), and the same are passed on to end-consumers in the form of tariffs. Coal plants, coupled with BESSs shall obviate the same systems.
In terms of numbers, savings can be attributed to the following (approximate values).
- Land and power evacuation system – equivalent to 10 per cent of the initial BESS investment.
- Transmission losses for charging BESS – equivalent to 5 per cent at HT level.
- Fixed power charges – equivalent to Rs 1.63 per kWh (as per the CEA for FY 2023-24).
- Reduced operations and maintenance (O&M) in coal plants – equivalent to 1 per cent of the total O&M charges.
Multiple cost economics can enable significant reduction in the LCoS for a coal-coupled BESS. As per our calculations, 30 per cent reduction can be achieved compared to a standalone BESS. This is equivalent to the current level of VGF support extended by the government.
Overall benefits would include reduced capital investment (for land and power infrastructure system), avoidance of T&D losses towards battery charging (being charged from a coal plant directly), reduced O&M expenses (no ramp-up/ramp-down and BESS management by coal plant staff), and most importantly, obviating payment of fixed power charges by distribution utilities. The quick response time associated with BESS and the even spread-out of coal plants across the country shall further enable grid (load) management as well as continued use of coal assets, fulfilling the just transition.
A suitable business model can involve co-investment by the coal power company with their offtakers (distribution utilities/OA consumers/railways). It may be interesting to note that the sum of the NPV (net present value) of fixed power charges (payable to generation companies) and T&D loss savings (attributed to battery charging) would be equivalent to equity investment of a typical BESS. This value can be monetised as future receivables to raise equity as well as debt from financial institutions.
