Industry Analysis

Energy Storage: Where We Stand?

An analysis on India’s readiness for renewable energy storage.

Storage is the next big thing in the renewable energy sector as providing power as and when needed by the consumer is the important factor that contributes to its growth, states Kunwer Sachdev, Founder and Managing Director, Su-Kam. For example, using stored energy at the time of peak power tariff will lead to saving in electricity bills and also reducing the load on the grid. Novel ways of storage will lead to saving energy for longer time at a cheaper cost and at the same time prevent wastage of energy produced if not utilised at the time of generation.

Market overview
A 2014 market study by the Indian Energy Storage Alliance has estimated a market potential of 15-20 GW of storage by 2020. In its recent update, which takes into consideration current opportunities as well as a detailed overview of various growth scenarios and key government initiatives, the Alliance has revised the potential significantly to over 70 GW and 200 GWh by 2022.

The climate think-tank has said that the battery market in India for renewable applications has been growing steadily with increasing renewable penetration across different segments. It has stated that rooftop solar alone will make up for 80 per cent of the energy storage market, touching ` 13,000 crore.

According to a report released by the Council on Energy, Environment and Water (CEEW), the energy storage market for off-grid RE in India would be worth ` 16,500 crore by 2022.

Batteries are a critical component of micro- and mini-grid systems since 100 per cent backup is often required to supply electricity to rural households during evening hours. Storage is one of the problem areas in developing the renewable market. Battery manufacturers face challenges like high-technology costs and uncertainty about performance in Indian climatic conditions.

“Though the solar segment offers a huge market opportunity for advanced battery technologies, manufacturers (and researchers alike) have some ground to cover in addressing technical limitations of batteries such as charging characteristics of a battery, thermal performance and requirement of boost current to charge deep cycle batteries,” observes Hartek Singh, Chairman and Managing Director, Hartek Group.

Commenting on Indian industry’s readiness towards RE storage, Kunwer said, “The development in the introduced limit in India is driven by monetary impetuses given by the administration. These are required to drive the Indian utility-scale PV showcase development from 35 MW in 2010 to a combined limit of 627.2 MW by 2015. In the most recent year, 2016-17, the nation’s sun oriented vitality limit extended by a record 5,525.98 MW.” As per reports released by the Ministry of New and Renewable Energy (MNRE), India had included 3,010 MW in the earlier year – nearly multiplying of development in the previous year.

Energy storage and variable RE generation have important synergies, making them quite complementary. Energy storage power input and output can be controlled precisely and varied rapidly to offset effects from RE generation short duration variability. Storage can store RE generation output when that output has low value for use later when the energy has higher value (energy time-shift). Storage can also be used to firm power output from variable RE generation during times when electricity demand is high. The resulting benefits include:

  • Reduced need for conventional generation
  • Increased value of the electricity generated by variable RE generation
  • Reduced suboptimal operation of conventional generation due to reduced need for ramping
  • Reduced need for other power conditioning equipment to accommodate large wind farms and high penetrations of distributed photovoltaic.
  • Given the aforementioned synergies and benefits, it is quite reasonable to assume that energy storage is likely to play a significant role in the more sustainable, cleaner, variable and distributed electricity grid future by:

  • Offsetting negative effects on the grid from RE generation variability,
  • Increasing the value of variable RE generation output, and
  • Enabling more variable RE generation deployment

Energy storage makes economic sense
Energy storage for a country like India makes economic sense for a range of applications, feels Tanvir Singh, Vice President – Projects, Amplus Solar. He said, although we are there, the storage systems are not yet ready for mass adoption across the C&I (Commercial and Industrial) segment. The utilities are often intrigued by the potential for storage to meet their needs such as relieving congestion and smoothing out the variations in power that occur independently of renewable-energy generation.

However, Tanvir admits, “As the technology is not mature like solar or wind, there is a sense of distrust as to how the technology will behave over time and how reliable it will be. This reflects in the tenders that have come out in the recent years for entities such as NTPC and SECI (Solar Energy Corporation of India).”

Need policy push
Regulatory policies can play a big role in growth of the storage market. The need of the hour is to have a framework in place to encourage storage with specific policies, acknowledges Hartek. He says, “For instance, making storage essential part of the Rural Electrification Programme and linking it with rural micro-grids can go a long way in the development of storage market where it is needed the most. Just as in the case of solar, storage will see consistent drop in prices as more and more projects come up, resulting in access to inexpensive capital and an increase in risk-taking capacity.”

A supportive policy environment and effective implementation similar to those in developed markets such as Germany and France are indispensable for the strategic plans, which are needed to drive the mass adoption. “Taxes on battery storage systems at the present level of 28 per cent are hampering the adoption and need to be brought down to a level making mass deployment of storage solutions feasible,” suggests Tanvir.

Storage not economical for all applications
According to Tanvir, there are three major points which are presently affecting the mass adoption of storage in the industry: Initial Capital, Bankability (financing) and Taxes & Policy support. He says, “At the current costs, storage is not economical for all applications, especially in a price sensitive market like India. However, the costs are falling and could go down by around 50 per cent to as low as $200 per kilowatt-hour in 2020 and to about $160 per kilowatt-hour or less in 2025, keeping the promise of an energy independence alive for all.”

New business models will emerge
“In the present scenario,” Tanvir suggests, “it is important not to confuse high upfront price with the true cost of an energy storage solution amortised over the life of the installation. Customers in India need to be educated on the relative merits of different performance profiles of batteries like efficiency rate, cycle life, depth of discharge and optimal operating temperature and how those profiles directly impact the ROI, beyond the upfront price point. Moreover, there are possibilities of many new business models which will emerge based on consumer needs such as: Leasing, Use & Pay (almost like utility), and Zero maintenance ownership etc. These business models will help in mass adoption.”

Financing challenges
There are challenges on financing part as well. Unlike solar power which is a mature technology that is regularly financed, storage is not that mature. Financiers do not yet believe the promises being made by this technology, reveals Tanvir.

Specialised applications
Energy storage is expected to be an integral part of solar parks. Hartek Group provides EPC services to developers who have secured these projects. The company is working on specific applications for solar which also take storage into account. Rural micro-grid running on solar-cum-storage, solutions for rural warehouses and solar trees are some of the niche applications Hartek Group is working on.

Conclusion
Energy storage is the next frontier in the evolution of energy markets after RE. India needs to act now, or else it will miss out on opportunities for domestic manufacturing for a vital upcoming technology, concludes Hartek.

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