Battery Energy Storage Systems (BESS) in India

Renewable energy capacity in India (Sep 2022) : As per the installed capacity report of Central Electrical Authority (CEA), from 408 GW of the total installed capacity - 165 GW (47 GW + 118 GW) is from RES (Renewable Energy Sources). Current total of installed Variable Renewable Energy (VRE) of Wind (42 GW) and Solar (61 GW) adds up to 102 GW

Renewable Energy Target 2030: At COP26, India raised the Nationally Determined Contribution (NDC) target of non-fossil energy to 500 GW by 2030 of which 450 GW is to come from wind and solar, from 102 GW (solar + wind) as of September 2022.

Variable Renewable Energy (VRE): One of the biggest challenge to mainstream Renewable Energy is intermittency. Wind power is only generated when it’s windy, solar power is only generated when it’s sunny.?At the opposite end of the spectrum, are the times when these forms of generation create more power than the grid (in its current state) is able to handle.

Need for BESS (Battery Energy Storage System) for VRE: As more renewables arrive and flood the grid with power at the same time, they’ll create pressure to curtail or throw away whatever power isn’t needed when it's generated. Wind and solar plant owners may feel financial pressure to build long-duration systems to capture that production and sell it at times when it can make more money - Peak Load Shaving. Peak Tariffs are generally higher than off-peak tariffs. From a system perspective, that’s a more efficient use of the existing power plants and a good substitute to natural gas based peak load plants

BESS likely installed capacity in India by 2030: As per Optimal Generation mix report by CEA, India would likely need a BESS capacity of 27 GW by 2030 (Considering 4 hour maximum capacity for batteries). At the cost of ? 4 crore/MW for best available battery technology of Lithium ion(with 4 hour backup), that alone would require investment ?1,08,000 crore for 27 GW. (Assuming CAPEX costs for Li-ion battery system remaining constant during this period. Additional cost for Transmission infrastructure is not considered.)

Current BESS capacity in India: The utility-scale ESS market in India saw its first installation with a pilot project by Power Grid Corporation of India in 2017 in Puducherry. It was set up with a capacity of 500 Kilowatt-hour (kWh), 250kWh Li-ion + 250kWh lead acid, mainly to study and compare the two battery chemistries. Since then, several new ESS projects have been announced or tendered. In recent times, SECI issued several major utility-scale ESS tenders. It included demand-oriented tenders, such as assured peak power supply (PPS) and Round-the-Clock (RTC) tenders. Also, more recently, SECI and NTPC came up with standalone ESS tenders of 1,000MWh and 3,000MWh, respectively. The 1000 MWh has already been won by JSW. 10 MW/MWh by Tata Power-DDL located at Delhi is not shown below.

Key policy drivers for BESS in India

1. National Energy Storage Mission: The Government of India has created the draft National Energy Storage Mission to promote energy storage
2. National Tariff Policy: Mandatory procurement of RE power for DISCOMs and Waiver on inter-state transmission charges for RE power transmitted through the grid to promote open access for large end customers (1 MW and above)
3. National Programme on Advanced Chemistry Cell (ACC) Battery Storage: The Government approved INR 18,100 Crore PLI scheme for building manufacturing facilities for?battery storage in India. The plan is to set up a 50 GWh manufacturing capacity

Bottlenecks with deployment of BESS in India :

1. Unavailability of high tariffs for BESS integrated VRE. Higher tariffs are difficult proposition for already financially weaker DISCOMS (Distribution companies)
2. Even if peak rates in India are higher than off-peak rates by 15 to 20%. This is far less than when compared to US, UK, Australia where the difference is around 200-400%
3. Traditionally India has manufactured Lead Acid Batteries. India domestic manufacturing for Lithium-ion and other technologies is at nascent state. Almost 70-75% Lithium ion batteries are imported from China and Hong Kong. Increasing shipping costs increases the project costs.
4. Higher import duties is another hurdle for large scale adoption
5. The ancillary market services by BESS including (Voltage regulation, Frequency regulation, Black start facility, Inertia) needs to open up further.
6. Technological challenge : The NTPC tender (500 MW/3,000 MWh)requires a 6-hour BESS solution, while BESS is not a viable option beyond a 4-hour solution. There is a focus to increase the duration to 6- 8 hours, these are still not on a commercial scale resulting in the need for redundancies.
7. Lack of standardization : On account of diverse technical requirements and different policy processes there is a lack of standardization within BESS. Each supplier has different tech specs which can be a hindrance to scale.
8. Electricity losses (Transmission & Distribution in India): As per one of the working papers from Center for Social and Economic Progress, India has highest transmission losses (technical + non-technical) in the range of 21% compared to 6% in France & Australia and 10% for South Africa and Indonesia. Commercial losses are higher than the typical?AT&C losses, which are only reported for the distribution networks. Overall rates of loss can be?affected by a number of factors, including maintenance requirements, quality of infrastructure,?distance between generator and consumer, poor monitoring and the occurrence of theft.?This creates another hindrance in wide scale adoption of BESS
9. Restriction to open access : Only end consumers with sanctioned load of 1MW and above are eligible to procure power through open access route. Few states try to limit purchase through open access to protect state-owned DISCOMs. This decreases avenues for dispatchability of power by BESS.
10. BESS charging with coal : India's grid infrastructure has been developed with coal plants in mind. So to mitigate additional infrastructure for grid evacuation, utility scale BESS would have high prospects of charging via thermal power (coal + gas). This would have implication on the prospect of BESS being green energy to be used with VRE -thereby creating ESG issues and subsequently reduced investments.

Conclusions : The market for energy storage in the South Asia region is dominated by India. Energy storage helps in the integration of renewable energy and unlocking the benefits of local generation and a clean, resilient energy supply. But despite rapidly falling costs, energy storage systems remain expensive and the significant upfront investment required is difficult to overcome without low-cost financing. With right policy framework, India can create the needed storage capacity.?Going forward, multiple revenue streams will be essential for enhancing the productivity and viability of ESS projects. As per IEEFA , there also might be new tenders explicitly designed for alternate ESS technologies, such as PHS (Pumped hydro storage), Compressed Air Energy Storage, (CAES) etc., apart from BESS. Furthermore, battery manufacturing in India should grow significantly due to the PLI scheme. Thus, future ESS tenders with a domestic content requirement (DCR) condition are also a strong possibility. BESS alone will not solve the energy security issues for India. But wide scale adoption of BESS would allow more VRE penetration and would help India achieve its target for decarbonization.