The increasing power generation from variable renewable energy (RE) sources, such as solar and wind, has introduced challenges for grid management due to their intermittent nature.
These sources vary significantly based on the time of year, climatic conditions and geographic location, making it difficult to maintain grid stability and ensure an uninterrupted power supply.
To avoid wasted generation (curtailment) and prevent deemed generation (caused by inadequate transmission), RE-based power must be continuously transmitted to load centres, such as industries, residences and utilities.
Recent advancements in storage technologies have demonstrated their critical role in supporting the energy transition by complementing variable RE sources.
With the growing integration of RE, particularly solar and wind, there is often excess generation during daylight hours, especially during peak solar production.
This creates an oversupply, while peak demand typically occurs in the evening (around 19:00 hours). During this time, reliance on solar energy drops sharply, necessitating immediate backup from other sources, often thermal power.
This mismatch between supply and demand poses a significant challenge for grid operators, who must continuously model electricity dispatch in real time to balance the system.
The operations are further constrained by the need to meet peak demand and adapt to ever-changing daily load profiles. Since grid systems require real-time balancing, energy production must constantly adjust to varying loads.
With the rising share of RE, particularly solar energy, there are frequent instances where daytime generation exceeds consumption.
Given that electricity demand surges in the evenings and at night, storing excess energy for later use — preferably during periods of low generation or sudden demand spikes — is a logical solution.
The need for extensive energy storage has grown with the ongoing expansion of over 500 GW of non-fossil energy capacity, primarily from wind and solar by 2030.
According to the Central Electricity Authority’s (CEA) National Electricity Plan (NEP 2023), India aims to integrate 364 GW of solar and 121 GW of wind capacity by 2031–32. To support this, the optimal energy storage requirement is projected to be nearly 74 GW (411 GWh), comprising 27 GW (175 GWh) of pumped hydro storage and 48 GW (236 GWh) of battery energy storage systems (BESS).
In this context, the CEA recently issued an advisory mandating the co-location of energy storage systems with solar power projects.
This aims to enhance grid stability and store excess generation during peak solar hours. All Renewable Energy Implementing Agencies (REIAs) are required to incorporate a minimum of 2 hours of co-located energy storage, equivalent to 10 per cent of the installed solar capacity, in future tenders. The advisory also extends to distribution licensees who can mandate up to two hours of energy storage for rooftop solar projects. This will improve supply reliability for consumers and reduce over-injection during solar hours.
This development is a significant step towards enhancing power system flexibility and enabling higher levels of RE integration. Energy storage systems work by converting injected renewable energy into another form of energy for later use.
While various technologies exist — such as pumped hydro storage, electrochemical storage, flywheels, compressed air and gravity-based systems — the most optimal and economical solution depends on factors such as:
The current and planned mix of generating technologies.
Flexibility in existing generation sources.
Interconnections with neighbouring power systems (e.g., inter- and intra-regional grids).
Hourly, daily, and seasonal profiles of electricity demand.
Hourly, daily, and seasonal profiles of current and planned RE generation.
Among the available technologies, battery energy storage systems (BESS) are currently one of the most promising due to their superior charge-discharge capacities (round-trip efficiency), storage duration and cycle lifetimes.
BESS also plays a crucial role in enhancing power quality, providing frequency response (rapid ramp-up and ramp-down of injected power), and deferring capital costs associated with upgrading transmission and distribution infrastructure.
Given their versatility, BESS should be strategically planned for high utilisation through an approach known as ‘value stacking.’ This involves optimising and pricing multiple system services, such as managing peak demand using stored energy (priced according to time differentials) and maintaining frequency levels. This approach ensures that BESS services are prioritised and appropriately priced.
Despite their potential, the rapid co-location of BESS with conventional RE projects faces several implementation challenges. These include the need for regulatory innovation and stronger domestic market linkages. Given the nascent stage of large-scale chemical-based energy storage, there is an opportunity to improve system efficiency through regulatory advisories on generation, transmission, and distribution. Additionally, consultations with state regulators and utilities are essential to determine the ‘value stacking’ of BESS services.
To ensure an optimised and cost-effective model, it is critical to establish clear pricing, guarantees, and compensation mechanisms for the purchase and sale of BESS services.
For instance, there is currently a lack of clarity on how investments in storage can defer capital expenditures in upgrading transmission and distribution networks or how to price wholesale electricity transactions.
The development of a parallel market with strong linkages will also incentivise the co-location of storage systems. This requires continuous cost reductions in chemical storage technologies to remain competitive and spur deployment. However, the supply chain for battery cells, system components, and critical minerals is highly concentrated, underscoring the need for indigenous development of the battery value chain.
Batteries have a shorter operational lifespan compared to solar PV (5–10 years less), raising concerns about battery waste accumulation and its environmental impact.
Adopting a circular economy approach early on can mitigate these issues by reducing reliance on imported critical raw materials and developing a domestic value chain with minimal ecological impact. Existing Battery Waste Management Rules can be revised to address the growing use of batteries in clean energy technologies.