Why Energy Storage?
Ever since the existence of an electrical grid, grid operators have been looking for ways to safely and efficiently store energy so that it can be supplied and consumed on demand. Over 170 grid scale energy storage technologies (excluding PHES) are either commercially available or are under development across different regions worldwide. The energy storage technologies landscape is distributed across a variety of systems to ensure we meet our everyday energy needs. This includes mechanical storage like pumped hydro storage, flywheels, compressed air and electrochemical storage such as lead acid, advanced lead acid, lithium ion chemistries, sodium-based batteries, nickel-based batteries and flow batteries. Advancements in fuel cells and traditional thermal storage are also relevant to various emerging applications.
It is also worth noting that energy storage is resource neutral i.e. it allows us to use electricity more efficiently, regardless of the power source. Whether the energy production is from a thermal power plant or wind power from a field of turbines, energy storage technologies can capture the energy and make it available when it is needed most. It also provides quality and reliable power to the end consumers.
Government’s target of 175 GW by 2022
The Government of India has come up with an ambitious plan to deliver 175 GW of renewables by 2022 and 24×7 power for all by 2019 by creating an efficient, resilient and financially sustainable power sector. Furthermore, India in COP 21 has committed to generate 40 per cent power from clean energy sources by 2032. This objective, along with clean energy access, has become the center of all plans around economic development and environment.
High deployment of renewable energy and its use requires technical as well as commercial solutions and a variety of policy decisions around minimising the impact of intermittency and enabling grid integration of renewable energy. The falling costs and rising efficiencies of the supporting technologies, such as energy storage, are already making the generation of renewable power compete with conventional thermal power. Such technological advancement and cost reduction in both the renewable energy and energy storage options will facilitate the exploitation of the abundant renewable resources.
Energy storage technologies can provide an array of services to modern grid such as peak load management, grid balancing and renewable energy integration. Historically, storage systems such as pumped hydro were deployed for energy arbitrage; however, emerging distributed energy storage technologies are currently used in many other areas such as grid balancing and renewable energy integration in addition to energy arbitrage.
Globally, renewable energy along with energy storage is being increasingly seen as an alternative to building peaking power plants. Energy storage integrated with renewable energy generates a smooth and firm output that is controllable, which subsequently optimises transmission investments. A key application for energy storage in transmission is to defer the investments on upgrade for new capacity projects required to reduce renewable energy curtailments.
India’s Energy Storage Market
Most of the batteries currently consumed in India comes from China, Korea, US, Japan and Europe. Manufacturing of new technology batteries is still not happening in India. There are no Li-ion cell manufactures in India but few companies have established Li-ion assembly in India. In the consumer electronics space, importing and assembling has been feasible so far for India and if tax benefits are provided by the government, indigenous manufacturing can pick up.
In 2018, India’s total energy storage market from stationary applications was around 24 GWh. During 2019-2025, the cumulative potential of energy storage is estimated to be between 270 to 365 GWh on a business-as-usual and best-case scenario respectively. Several policies supporting the growth of energy storage in grid scale application are in the draft or proposal stage which is likely to get approved in the short term and expected to drive the market. Demand for energy storage in Behind the Meter (BTM) applications will account for ~70 per cent of the cumulative market during 2018-2026. Inverters and telecom towers have a major share of the BTM market. SLDCs or RLDCs or DISCOMs would need to be mandated or incentivised to procure a minimum percentage of their reserves needed for frequency regulation through electric storage. 2018-19 witnessed several renewable plus storage projects being floated by NTPC, SECI, State utilities/agencies such as AP Transco, Himachal renewables Ltd for peak management, DSM settlement, energy shifting, voltage support. Large ESS tenders such as the 3.2 GWh AP Transco and 3.6GWh SECI project announcements indicate the positive growth of the market during the forecast period. Besides, Central Electricity Authority (CEA) advocates storage systems for the capacity to accommodate 2.5 per cent of RE generated in a day in all projects to curtail 1 per cent of RE generation so as to maintain a Minimum Thermal Load (MTL) on Thermal power plants.
The overall projection of Energy Storage System in India for behind the meter (BTM) sector is 22 GWh during the period 2018-2026 on the base case scenario. The increasing grid availability will reduce the market growth for traditional inverter-backup markets however the capacity installed will continue to rise owing to increase per capita energy consumption, and growing demand from the rural and sub-urban commercial and residential sector. The inverter battery market was the largest contributor towards the BTM market installations in 2018, and continues to be so till 2026. Telecom sector contributed nearly 24 per cent towards the BTM market in 2018. The sector has a significant penetration of Li-ion batteries due to its adoption by one of the fastest growing players (Reliance Jio) in their telecom towers. Rooftop PV Policy subsidies, dropping battery prices and increasing electricity tariffs, energy storage with rooftop solar is expected to pick up in the short term. The rural electrification sector majorly constitutes the solar home lighting systems under Saubhagya scheme, solar street lights under AJAY scheme, and microgrids. 2018 market was driven by Saubhagya SHLS deployment; however, the sector looks unattractive due to lack of policies existing in the market to drive it beyond 2020.
In March 2018, Minister for Power and New and Renewable Energy, R K Singh chaired a meeting with battery-based energy storage manufacturers to set up manufacturing units in India. The meeting not only focused on the government’s push on electric vehicles (EVs) and its expected surge in the coming years, but also on future tenders that cover hybrid solar and wind projects to be coupled with energy storage.
Under the proposed National Energy Storage Mission (NESM), the government will soon release a policy with a focus on ‘Make in India’ and the government is planning to take all possible measures to incentivise advanced energy storage manufacturing in India. NESM also addresses the issues related to the raw materials available for manufacturing and the government had already started discussions with resource rich countries such as Bolivia and Australia.
India signed a Memorandum of Understanding (MoU) with Bolivia for development and industrial use of lithium—a prime component used in batteries for electric vehicles. The recently launched the National Mission for Transformative Mobility with Phased Manufacturing Program for li-ion battery manufacturing by NITI Aayog. Ministry of Heavy Industries has launched FAME -2 (Faster Adoption and Manufacturing of Electric Vehicles) incentives with a budget of Rs 10,000 crore. India is also focusing on domestic manufacturing for all types of energy storage technologies including advanced lead acid, thermal storage and ultra-capacitors apart from Li-ion batteries. Ministry of Science and Technology is also keen to accelerate domestic R&D capabilities to support this growing industry through Mission Innovation.
Advanced energy storage technologies can play an important role in renewable integration, energy access, electric mobility and the smart cities initiatives of the Indian government. We are at a critical stage for building a manufacturing ecosystem for advanced energy storage technologies in India. Around the globe, over 200 GWh of advanced energy storage manufacturing capacity is already built and another 200 GWh of new capacity will be built within the next three to five years. IESA is very closely working with both state and central government bodies like NITI Aayog, MNRE, MoP, DST, MEITY, DIPP, DHI and other inter-governmental departments. Due to global competition and economies of scale, it is recommended that minimum capacity for a Li-Ion cell manufacturing is 1 GWH production per year. As per estimates, for cell manufacturing, 1 GWh capacity would need an investment of up to $300 million. Looking at the potential, India has to create a 10 GWh capacity by 2020, India could attract investments to the tune of $3 billion with in next 3-4 years. And as this happens, ancillary development including module development, containers, transformers, inverters could need an equal amount of investment, taking the total potential to $6 billion. With appropriate government support, industry participation, India will be one of the top markets for energy storage adoption and manufacturing.