Debi Prasad Dash, Executive Director, India Energy Storage Alliance (IESA)
In 2015, when the Government of India set itself the target of 175 GWs of renewables by 2022, it was a very ambitious target. But when we see back today there has been considerable growth that the renewable sector has witnessed over the last 5 years. India’s ambitious target to achieve 40% of installed capacity from renewable sources by 2030 implies that concerted efforts in areas like energy storage will be critical to realize this. India in the last six years has increased its installed renewable energy capacity by two and half times and is the 4th largest producer in the world. The renewable energy capacity in India is currently 136 GW, which is about 36% of our total capacity.
The growth of renewables in the way ahead will not be as smooth as it has been, the reasons include constraints like evacuation, price, land, Right of Way, strict DSM, etc. Therefore, to make the growth sustainable, renewables need an enabler to maintain and accelerate the transition. This can be provided by storage of energy, which will make renewables reliable and also help in better utilization of the resource as well as optimize the network capacity for T&D. Battery storage is one domain which has gained prominence here. With a price fall of around 90% w.r.t 2010, li-ion batteries are now posing tough competition to many other conventional technologies. Lots of research on other forms of energy storage is targeting applications such as long duration energy storage that could be essential for continuing the growth beyond 2030. Being at the early stage of technology lifecycle, the benefit that storage technologies enjoys is that there are better discoveries and scaling up of manufacturing yielding to performance enhancement and cost reduction almost every day.
The Government of India intends to develop giga-scale advance cell manufacturing for domestic application and to enhance exports. It has launched the National Programme on ACC Battery Storage. To achieve this, NITI Aayog Official, on behalf of the Government, has issued the draft Request for Proposal (RfP) documents for the selection of private entities to set-up manufacturing facilities that produce Advance Chemistry Cells (ACC). ACC battery program has been approved a financial outlay of INR 18,100 crores. Automobiles and auto components have been approved INR 57,042 crores.
Growth prospects and the outlook
In October 2020, MNRE has released guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid connected Wind Solar Hybrid Projects. India Energy Storge Alliance anticipates that out of 70+ GW of renewable tenders that will get released in next 2 years, we will witness growing share of storage. The path is already laid by the 2 SECI tenders for RE+Storage as peak power and Round the Clock RE tenders. Both these tenders which are expected to see projects getting commissioned by 2022, could witness GWh scale storage deployment in India and put India on the global map for energy storage deployments.
IESA has been continuously tracking the developments in the stationary energy storage market in India and has released six editions of its annual stationary energy storage market overview reports. It has estimated the stationary energy storage market potential in India to be around 230 GWh during the period 2020-2027. The share of grid scale applications contribution is expected to be 15%, with behind-the-meter applications making up the rest. In grid application, renewable energy integration takes up majority of this share, split between solar and wind projects. CEA also projects requirement of 136 GWh of storage in the grid at various levels by 2030. Focusing on renewables, the penetration of storage in wind will be more gradual than the penetration rate in solar, as has been observed in RE+ storage projects across the globe. The duration of storage in each such project, where we also combine hybrid projects which will come with storage, is anticipated to be of 1-hour duration initially and gradually increasing up to 2-3 hours in the long term or after 2025. The requirement with wind in terms of hours is less due to wind being available throughout the day. Thus, a long duration storage requirement with wind is less.
We expect the penetration of storage in terms of MWh in each wind + storage or hybrid project to grow, with storage being 10% of capacity initially and gradually increasing to around 30% by 2027.
However, there are some roadblocks to be overcome
The RE+ storage process have not just reached parity with peak grid tariffs but are cheaper than the regular rates being charged to C&I customers across the country. Thus, only challenge that needs to be overcome is financing and capacity building for the industry. Key challenges for financing are – technology and design (this happened with solar as operational history was not available and lenders were wary of giving money till solar achieved volume). PPA bankability is another reason along with asset life mismatch. Storage financing will become easier with revenue stacking being available with changes in the regulatory and policy frameworks. Many international finance agencies such as Climate Impact fund, World Bank, Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) are activity working on this area. IESA anticipates launch of a 500M$ + financing fund for supporting accelerated deployment of ESS in India, like funds created to support solar deployment in past 5 years. World Bank is doing analysis across G-T-D to see where storage makes the biggest sense in India. It is also working with MoP on opening of ancillary market.
One challenging area for India for RE+Storage deployment is the Transmission and DISCOMs. This sector is dominated by public sector entities and have their own challenges on financials. We also need to have a concerted effort to bring the state regulatory commissions up to speed with the global trends and address any concerns they have in enabling rapid adoption of storage and RE. Main applications of storage at present for DISCOM is DSM and peak management along with DT upgrade deferment, reactive power penalty.
While a lot of focus is on the CAPEX reductions of storage, there are other performance parameters that can also enable deployment of storage for different use cases. Similarly, work is being done on looking at high temperature tolerant batteries and batteries with longer cycle life. This is an area where flow batteries have a considerable advantage and can find a niche for especially longer duration applications.
Several IITs and national research labs have been working on research in li-ion batteries. At the same time there is a big gap in the commercialization of these innovation as well as linking R&D to industrial needs and their timelines. Hence, most of the local manufacturing companies if interested in setting up a li-ion cell manufacturing plant in India may need to license technologies from counties like Korea, Japan, China, Germany, the US, Canada, the UK, or Australia. This has also been the case in the lead-acid industry, where leading lead-acid providers have traditionally licensed intellectual property from American, Japanese, or Chinese companies.
In the wake of building a sustainable future, and India’s rapid economic growth, reliance on energy storage remains a concern. It is imperative that we work towards a clear roadmap towards a higher supply of clean energy in the future. A clearer policy and supportive regulatory framework for energy storage in accordance with renewable energy, higher investments, efforts towards battery and cell production will help realize India’s renewable energy goal. India has a huge potential in as a strategic energy storage market for batteries and we believe that there is a need to build an entireecosystem of accelerators and incubators along with the government for India to be an innovation hub for energy storage. A skilled workforce, and inter-industry collaboration is the need of the hour to make India a growth driver in the energy storage space.