India aims to develop 500 GW of installed renewable energy by 2030 with 420 GW of solar- and wind-based power, namely variable renewable energy (VRE). VRE-based capacity is an intermittent source of power; therefore, for the stability of the grid, India will need sufficient backup power that can come online in case of sudden fluctuations and balance the grid and, thereby, aid in improving power quality, avoiding frequency deviations, etc. The integration and addition of distributed generation resources on the low voltage grid requires the support of active demand-response and energy storage systems to maintain grid stability. In other words, use of energy storage systems by residential, commercial or industrial consumers, in conjunction with renewable energy, has the potential to improve power quality and reliability.
Energy storage systems, including battery energy storage systems (BESS), pumped hydro energy storage (PHES) or other technologies such as green hydrogen or green ammonia storage are expected to see an exponential growth in the next few years. According to NITI Aayog, the annual market for stationary and mobile batteries in India could range between $6 billion and $15 billion by 2030, with almost $12 billion from cells and $3 billion from pack assembly and integration. India currently has around 50 MW-100 MW of BESS storage in financial year 2022-23. However, according to the Central Electricity Authority’s projections, India needs to develop BESS capacity of around 51-84 GW, with a potential to operate for five hours.
Several policy and industry initiatives are being implemented to stimulate the growth of the market. Last year, the Ministry of Power released the energy storage obligation (ESO) that mandates procurement of 1 per cent electricity from solar and wind projects with storage capacity in 2023-24. This mandate remains in place until financial year 2029-30 and the ESO requirement goes up on a yearly basis. Hence, in 2029-30, the MoP requires buyers to consume 4 per cent of the total electricity from solar and wind projects with storage capacity.
The auction for the first stand-alone battery storage tender was also concluded last year. In September 2022, JSW Renew Energy Five Limited won the auction held by the Solar Energy Corporation of India (SECI) to set up 500 MW per 1,000 MWh stand-alone BESS projects under the build-own-operate-transfer model by quoting Rs 1.08 million (approx. $13,566) per MWh per month.
Meanwhile, recently, in December 2022, private major Greenko Energies won NTPC Renewable Energy’s reverse auction to provide energy storage. Greenko’s bid is for a 500 MW per 3,000 MWh pumped hydro energy storage plant. Greenko quoted a bid of Rs 2.79 million (approx. $33,985) per MW per year and won the total capacity. NTPC Renewable Energy plans to use the energy storage facility to meet its round-the-clock renewable energy needs with a wind-solar profile.
SECI has requested proposals for research and development to demonstrate scalability in gravity-based or mechanical ESS, green hydrogen-based ESS, including any other non-electrochemical ESS technology, among pilot clean energy projects. It said that the storage capacities of the projects must be up to 500 kWh with a suitable solar generation system in place. Furthermore, India is expected to unveil a Rs 216.5 billion scheme to encourage the installation of grid-scale BESSs, with Rs 37.65 in viability grants and reduced import duties on parts to build BESS.
The Ministry of Heavy Industries also extended production-linked incentives (PLI) worth Rs 181 billion for setting up advanced chemistry cell facilities in India. It awarded incentives to Reliance New Energy Limited, Ola Electric Mobility Private Limited and Rajesh Exports Limited. In addition to capacities allocated by the Ministry of Heavy Industries under the PLI scheme, private players are expected to create battery manufacturing capacity of approximately 95 GWh. Under the ACC PLI programme, the manufacturing facility would have to be set up within a period of two years. The incentive will be disbursed thereafter, over a period of five years, on the sale of batteries manufactured in India. Therefore, this PLI scheme is expected to boost the prospect of India developing its own indigenous BESS equipment and supply chain.
The way forward
Net, net, shifting from conventional fossil fuel-based energy to non-conventional VRE-based energy will necessitate development and deployment of energy storage technologies in order to ensure the power quality and stability of the grid. Hence, it is critical for multidimensional stakeholders such as government, utilities, consumers, etc., to overcome challenges related to commercial viability, battery chemistry and supply chain challenges and scale affordable energy storage solutions.