‘Battery energy storage market in India is on the cusp of unprecedented growth’ – pv magazine International

By Pune Media On Oct 7, 2024 35

From pv magazine India

pv magazine: As India targets 500 GW non-fossil fuel capacity by 2030, is the nation prepared to aid the integration of variable renewable energy in the grid?

Saurabh Kumar: India’s ambitious target of achieving 500 GW of non-traditional fuel-based electricity capacity by 2030 underscores the nation’s leadership in the global energy transition. With 186.46 GW already installed from non-traditional sources—including 178.98 GW from renewable energy and 7.48 GW from nuclear power—the progress is evident.

However, to meet the 500 GW goal, India must install an additional 320 GW of non-traditional fuel capacity within this decade. Projections suggest that renewables will comprise about 50% of the country’s total installed capacity by 2030, reflecting a decisive shift towards cleaner energy.

To facilitate this, the Ministry of Power has established a dedicated committee to develop a transmission system for integrating over 500 GW of renewable energy by 2030. This involves collaboration with state governments and energy corporations to ensure that the grid can manage the variable nature of renewable energy sources like solar and wind. Plans include enhancing transmission infrastructure, such as 8,120 circuit kilometers of High Voltage Direct Current corridors and 51.5 GW of battery energy storage capacity by 2030, with an estimated investment of INR 2.44 lakh crore (around$29 billion).

India is on the right track in its renewable energy journey, but true readiness will be tested by the nation’s ability to integrate variable sources into its grid. The future depends on visionary planning, innovation, and infrastructure advancements to create a resilient and sustainable energy system.

What is the current size and growth rate of the energy storage market in India? How does it compare with other emerging markets globally?

As of March 2024, India has reached a significant milestone with its cumulative installed energy storage capacity at 219.1 MWh, or approximately 111.7 MW. This achievement underscores India’s strong commitment to advancing energy storage technologies and enhancing its energy infrastructure. With ambitious targets to install 1.6 GWh of standalone battery storage systems and integrate 9.7 GW of renewable projects by 2027, India is positioned to play a pivotal role in shaping the future of sustainable energy.

On the global stage, the energy storage market is experiencing unprecedented growth. Valued at $31.47 billion in 2023, the market is projected to expand significantly, with estimates forecasting a rise to between $120 billion and $150 billion by 2030. This reflects a remarkable compound annual growth rate (CAGR) of 33.10% from 2022 to 2032, with a more moderate CAGR of 8.72% anticipated from 2024 to 2029.

Although India’s energy storage market is still in its early stages compared to the global scale, the country’s strategic goals and proactive investments position it as a key player in the global energy landscape. The sector holds vast opportunities and highlights India’s growing prominence. India’s forward-looking approach and commitment to energy innovation not only demonstrate its dedication to sustainable development but also align with the broader global trend of transformative growth in energy storage. India’s leadership in this critical sector will be instrumental in driving the global transition towards a more resilient and sustainable energy future.

What is the importance of battery energy storage systems (BESS) in the nation’s energy transition? What are the opportunities and challenges in this space?

Battery Energy Storage Systems (BESS) are not just a component but a cornerstone of India’s energy transition strategy, pivotal to realizing the nation’s ambitious goal of 500 GW of variable renewable energy (VRE) capacity by 2030. As VRE sources currently account for about 12% of the energy mix, with some states like Rajasthan, Gujarat and Karnataka surpassing 25%, the imperative for scalable and efficient energy storage solutions becomes increasingly evident. The burgeoning market, highlighted by the release of over 3 GW of BESS tenders in recent years, signals a crucial shift towards integrating storage with renewable energy to ensure a reliable power supply and grid stability. Notable projects like the Delhi pilot, set to be India’s first commercial standalone BESS project and the largest in South Asia, exemplify this innovation.

We have leveraged concessional financing to significantly reduce storage costs, exemplifying the transformative potential of strategic financial mechanisms in making BESS economically viable.

While progress is underway, there are opportunities to further refine the approach. The existing regulatory framework inadequately captures the full value of BESS, creating a significant financial viability gap compounded by high financing costs and limited monetization opportunities. Furthermore, regulatory delays have impeded progress, with approximately 1.5 GWh of standalone BESS projects languishing due to inefficiencies and high tariffs.

To overcome these hurdles and accelerate the deployment of energy storage systems, India must embrace forward-thinking financing solutions and enact supportive policy reforms. By addressing these issues, India can not only bolster grid resilience and achieve its renewable energy targets but also position itself as a global leader in the energy transition, driving innovation and setting benchmarks for others to follow.

What government policies and regulations are in place to drive the development and adoption of BESS in India? What role can the government and the private sector play in scalinp up BESS?

The Government of India has enacted several decisive policies to accelerate the adoption and development of BESS. The National Framework for Promoting Energy Storage Systems, released in August 2023, lays a solid foundation by defining energy storage assets, extending key benefits to BESS that are typically afforded to renewable energy generators, and setting ambitious procurement targets.

The introduction of an INR 9400 crore ($1.12 billion) Viability Gap Fund (VGF) in 2023 marks a significant financial commitment to large-scale BESS projects, supported by subsidies and market development initiatives. Furthermore, the Forum of Regulator’s Report, published in November 2022, has set the stage for regulatory preparedness among state DISCOMs and stakeholders, with upcoming regulations expected to facilitate BESS participation in ancillary markets.

Scaling up BESS requires a coordinated effort: the government must focus on operationalizing these frameworks through robust technical integration, institutional capacity-building, and stringent regulatory enforcement at the state level. Concurrently, the private sector is poised to play a crucial role by collaborating with DISCOMs, driving innovation, and optimizing BESS performance through advanced data tools. Through a shared commitment, India is positioned to establish a competitive BESS ecosystem and lead the global transition to a decarbonized, resilient energy grid.

How do you see the BESS market evolving over the next five years in India? What are the key growth areas?

The BESS market in India is on the cusp of unprecedented growth, driven by the country’s ambitious renewable energy goals and the critical need for grid stabilization as large-scale solar and wind capacities come online. With the Central Electricity Authority projecting a requirement of 32 GW/160 GWh of BESS by 2030, the market is set for rapid expansion, propelled by government initiatives, policy support, and international investment.

Utility-scale storage will be indispensable for integrating renewables, while decentralized solutions will gain traction among commercial, industrial, and residential users seeking energy independence.

Additionally, the integration of BESS with electric vehicle charging infrastructure will catalyze urban storage demand, reinforcing India’s clean energy transition.

Technological advancements in battery chemistry, coupled with local manufacturing supported by production-linked incentives, will further enhance cost-efficiency and scalability. As BESS becomes pivotal in providing ancillary services and supporting hybrid renewable projects, the next five years will witness a transformative shift in India’s energy landscape, positioning the country as a global leader in energy storage innovation.

What are the recent technological advancements in battery energy storage that you find particularly exciting for India?

The battery energy storage sector is undergoing a fascinating transformation, and what excites me the most is the emergence of new technologies beyond the dominance of lithium-ion. While lithium-ion batteries currently hold over 90% of the market share, the future of energy storage will be shaped by innovations that address critical factors such as raw material availability and the need for longer-duration storage solutions—particularly those capable of storing energy for 6 to 10 hours or more.

We are witnessing a growing momentum around ‘non-lithium’ technologies like sodium-ion, iron-air, redox flow, and nickel-hydrogen batteries. These alternatives are being tested in various international markets, specifically for their potential to meet the demands of grid-scale applications. Given their promise, I believe that some of these technologies will reach commercial viability within the next 3 to 5 years.

For India, this could be transformative. As the country accelerates its energy transition, the deployment of these next-generation storage technologies will be crucial for managing grid stability and integrating large-scale renewable energy into the system. They also offer the added benefit of alleviating supply chain pressures on lithium and other rare materials, which are becoming increasingly critical in a global context. As we look to scale clean energy initiatives across emerging economies, these technologies will not only drive innovation but also enhance the resilience and sustainability of energy systems, particularly in a country like India where energy demand is rapidly growing.

What is GEAPP’s contribution to promoting BESS in India?

At the Global Energy Alliance for People and Planet (GEAPP), we are strongly committed to driving the growth of India’s BESS market, which is essential for the nation’s energy transition and the decarbonization of its power grid. Our efforts focus on mobilizing technical expertise and concessional financing to support the development of around 1 GW of BESS projects by 2026.

We are currently working closely with several state DISCOMs (Distribution Companies) to help them roll out top-tier BESS tenders. These collaborations aim to ensure that they can secure BESS services at competitive rates, making these solutions more affordable and scalable. In addition, we are creating a ‘Post Commissioning Support Package’ specifically for early adopter DISCOMs, which will help them manage their BESS capacity safely and efficiently while extracting maximum commercial value through the use of advanced software and data tools.

By supporting the deployment of these storage technologies, GEAPP is not only promoting BESS adoption but also aiding in strengthening India’s energy system for the long term. Through a focus on innovation, capacity-building, and strategic collaborations, we aim to accelerate the country’s renewable energy ambitions and help achieve a sustainable energy future.

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‘Battery energy storage market in India is on the cusp of unprecedented growth’ – pv magazine International

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