IEEFA projects exponential growth of battery storage assets in India.

• 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.
• The study by Institute for Energy Economics and Financial Analysis (IEEFA), a United States-based think tank, 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.
• Battery energy storage systems provide faster responses for balancing the grid than coal-fired power plants, within a matter of seconds.
• The market for storage assets in India is going to grow exponentially going forward. As the market for these assets develops, technology matures and financing improves, there will be ample investment opportunities.
• 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.

Initiatives

• The Ministry of Power (MoP) notified bidding guidelines for the procurement and utilisation of BESS March 2022.
• India’s draft national electricity plan released in September 2022 highlighted the importance of battery storage in the overall energy mix.
• In June 2021, the Ministry of Power ordered the waiver of interstate transmissions system charges for battery storage and pumped hydro systems commissioned until June 2025.
• 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.

Limitations

• Currently, India does not have a time-of-day pricing structure that could enable a system of energy arbitrage.
  • Time of day pricing (ToD) structure is one where the cost of electricity depends on the time of the day.
• 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.
• Also low reserves of Lithium and Cobalt.