Renewable Energy

IEEFA projects exponential growth of battery storage assets in India

Grid-scale batteries would help store this excess solar and supply power to the grid during peak demand hours, which is currently being done by coal-fired power plants

By Seema Prasad
Published: Friday 27 January 2023
Several national policies support the need for setting up BESS projects and made provisions to enable the same. Image: iStock.

A new report has projected exponential growth in India’s Battery Energy Storage System (BESS). BESS — one of the key emerging technologies in the Indian renewable energy sector — can ensure both peak-time power supply and round-the-clock power to help overcome the intermittent nature of renewable energy.

As the grid demand is lower during the afternoon, grid-scale batteries would help store this excess solar and supply power to the grid during peak demand hours, which is currently being done by coal-fired power plants.

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The study by Institute for Energy Economics and Financial Analysis (IEEFA), a United States-based think tank, released January 18, 2023, identified seven such upcoming projects in the country. Of these, three are standalone battery storage projects, which means that they can be used according to the requirements of distribution companies.

“The market for storage assets in India is going to grow exponentially going forward. There are several value streams attached to a single BESS asset. As the market for these assets develops, technology matures and financing improves, there will be ample investment opportunities,” the study said.

International Energy Agency’s India Energy Outlook 2021 also projected that India could potentially have 140-200 gigawatt (GW) battery storage capacity, the largest for any country, by 2040.

On January 19, 2023, Solar Energy Corporation of India awarded JSW Energy, an energy company, two storage projects of 500 megawatts (MW), with a 1,000 megawatt-hour (MWh) output, which can provide power backup for two hours.

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In December 2022, Greenko Energy, a renewable energy company, won the National Thermal Power Corporation Limited’s tender for a 3,000 MWh energy storage project. Last year, NTPC Renewable Energy Ltd, a subsidiary of NTPC Limited, announced a standalone battery storage project of 250MW/500M Wh.

The rest are either hybrid projects which are storage assets attached to solar and wind operations combined or to provide power during peak hours.

Gujarat Urja Vikas Nigam put out the tender for a hybrid project of 500 MW capacity combined with 250 MWh of energy storage capacity. The storage capacity seeks to serve six hours of peak demand during the morning and evening, the study said, highlighting one such hybrid project.


The complete list of battery storage projects can be found in the table. Credit: IEEFA

“The Indian grid is said to be balanced if the power supply frequency is at 50 hertz. Right now, the grid is balanced through coal-fired power plants, which either ramp up or ramp down electricity generation based on unrequisitioned capacity,” co-author Shantanu Srivastava, Energy Finance Analyst, IEEFA, told Down To Earth.

But battery energy storage systems provide faster responses for balancing the grid than coal-fired power plants, within a matter of seconds, Srivastava added.

Currently, India does not have a time-of-day pricing structure that could enable a system of energy arbitrage and Srivastava recommended it for increasing investment in BESS projects.

“Time of day pricing (ToD) structure is one where the cost of electricity depends on the time of the day. Typically power is more expensive during peak demand hours and less expensive during off-peak,” said Srivastava.

This pricing structure will help scale up BESS investment by consumers and businesses to invest in BESS to use stored energy during peak hours when Electricity prices increase in a ToD pricing system, he added.

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Several national policies support the need for setting up BESS projects and made provisions to enable the same. The Ministry of Power (MoP) notified bidding guidelines for the procurement and utilisation of BESS March 11, 2022.

India’s draft national electricity plan released in September 2022 highlighted the importance of battery storage in the overall energy mix if India has to depend more on renewable energy. The plan made projections of 51.5 GW of BESS installations by 2031-2032.

In January 2022, the Central Regulatory Electricity Commission formulated new regulations for ancillary services, which are required to maintain the voltage and frequency of the grid at safe limits, a key feature of the BESS, particularly for balancing intermittencies of wind and solar power.

On June 21 2021, the MoP ordered the waiver of interstate transmissions system charges for battery storage and pumped hydro systems commissioned until June 2025. This would enable a seamless supply across states.

The MoP also issued a trajectory of Renewable Purchase Obligations (RPO) till 2029-2030 on July 22, 2022 and for the first time, included energy storage obligations trajectories till 2029-30.

The Production Linked Incentive scheme offers incentives for creating a localised value chain for the battery industry. This includes financial allocations of Rs 181 billion for Advanced Chemistry Cell (ACC) batteries under the National Programme on ACC Battery Storage.

Srivastava told DTE:

The PLI scheme is technology agnostic which means different chemistries of advanced battery storage can be used. With Lithium-ion which is the dominant form of BESS chemistry, India lacks access to critical technologies used in its manufacturing. Hence industry players may also look at setting up capacity for alternative chemistries such as those based on sodium.

 The cost of standalone Lithium-ion battery systems globally fell to $151/kWh in 2022 from $1,220/kWh in 2010. Clean energy research provider BloombergNEF projected a further reduction in the cost to $59/kWh by 2030, the study said.

“However, in the absence of a fully developed value chain for batteries in India, the cost deflation curve could be slightly flatter compared to already developed markets in the US, Europe, Australia and China,” the IEEFA study noted.

While these projects are just the first step ahead, there’s more to be established, such as a range of services for storage systems. 

“For BESS, if you talk about using just one value stream such as arbitrage or ancillary services or as a transmission and distribution side asset, then the feasibility of these is not going to be there from an Indian perspective,” said Srivastava.

 In order to improve the feasibility of BESS, we have to look at multiple value-stacking opportunities which is a combination of all services, he added.

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