The Automation Impact on Power Industry
Published on : Thursday 08-02-2024
Under the guidance of government policies, energy storage deployments in India gradually took off, with rapid development in the past two years, says Shirly Zhu.
India announced at the 26th United Nations Climate Change Conference (COP26) in 2021 its commitment to meet 50% of the country’s energy needs from renewable energy by 2030, and to achieve net zero emissions by 2070. According to the International Renewable Energy Agency (IRENA), total installed capacity of renewable energy generation in India exceeded 160 GW by 2022, with nearly 42 GW and 63 GW from wind and solar photovoltaic respectively. The rapid growth of renewable energy offers great potential for the development of energy storage in India, especially electrochemical energy storage.
India’s ambitious renewable energy plan
In 2023, the Central Electricity Authority of India (CEA) released the latest National Electricity Plan (2022-2032), which clearly stated that the installation of renewable energy is expected to reach 336.6 GW by 2026-27 and 596.3 GW by 2031-32. Of this total, wind installation is projected to reach 72.9 GW by 2026-27 and 121.9 GW by 2031-32, while solar installation will reach 185.6 GW and 364.6 GW by the same dates.
Based on electricity demand, the CEA forecasts energy storage demand in India to reach 16.13 GW/82.37 GWh in 2026-27 and 73.93 GW/411.4 GWh in 2031-32. It is worth mentioning that the forecast is significantly higher than the previous CEA estimation – 27 GW/108 GWh energy storage demand in 2030, and it is also higher than the 160 GWh grid-scale energy storage demand predicted by the Indian Energy Storage Association’s IESA Vision 2030.
Government policies drive energy storage deployment
Over the past couple of years, the Indian central government has launched a series of policies relating to energy storage to promote market development. For example,
Financial Subsidy: In February 2023, the Federal Budget for fiscal year 2023-2024, released by the Ministry of Finance of India, identified “Green Growth” as one of its seven priorities and reiterated the important role played by energy storage in achieving India’s zero-carbon goal. Furthermore, in September 2023, the Union Cabinet approved the Scheme for Viability Gap Funding (VGF), providing up to 40% of the capital cost of projects through competitive tenders, and the scheme aims to reduce the cost of energy storage for both consumers and for India’s electricity distribution companies (Discoms). The government provides union budget support for around 4 GWh of battery energy storage systems.
Financing support: In February 2022, the Federal Budget Report for the fiscal year 2022-2023 unveiled by the Ministry of Finance of India listed energy storage technology and data centres as infrastructure assets, which means energy storage projects will be eligible for infrastructure loans to promote their credit financing.
Purchase Scheme/Energy Storage Obligation: The Indian government has taken multiple measures to promote the development of renewable energy in recent years. In July 2022, the Power Authority issued a policy to include energy storage in the scope of purchase obligations. The Energy Storage Obligation specifies that consumption of solar and/or wind energy with or through storage should account for 1% of total electricity consumption during the fiscal year 2023-2024, and this ratio will gradually rise to reach 4% by fiscal year 2029-2030.
Localisation: The Indian government approved the expansion of the Production Linked Incentive (PLI*) Scheme in 2021 to include the National Advanced
Chemical Battery (ACC), with a budget of Rs 181 crore to build 50 GWh of advanced chemical battery production capacity. The scheme aims to stimulate India’s local scale battery manufacturing capacity and enhance its competitiveness within the global market. By July 2022, Reliance New Energy Limited, Ola Electric Mobility Private Limited and Rajesh Exports Limited won the bids out of 10 companies that submitted.
The Indian government adopted diversified measures spanning financial subsidies, credit support and procurement obligations to promote the development of energy storage. Moreover, in August 2023, The Ministry of Power released its National Framework for Promoting Energy Storage Systems, aiming at creating an ecosystem that facilitates the development of energy storage.
Battery Storage deployment still at an early stage
According to incomplete project statistics, the installed capacity of energy storage in India is estimated at 6 GW by the end of 2023, most of which comprises PHS projects (nearly 5.8 GW) and installation of electrochemical energy storage projects (around 140 MW).
A large-scale PHS project came into operation as early as 1988 (Tamil Nadu – Kadamparai 400 MW pumped storage hydropower station), but growth stalled until around 2000, when new projects commenced operation. Statistics show that during 2000-2023 India added seven PHS projects with a total of 5.6 GW. Electrochemical energy storage projects entered the market in 2012 and a series of projects got underway, comprising different technologies such as lead-acid batteries, vanadium flow batteries, super capacitors, and so on. Examples of these are Rajasthan – Gram Power Khareda Lakshmipura Microgrid – 40 kW lead-acid battery energy storage, and Madhya Pradesh – Sun-carrier Omega Net Zero Building – 45 kW Vanadium flow battery energy storage.
At present, India’s energy storage deployment is still in its early infancy, with relatively low installed capacity. However, driven by multiple factors such as the increasing installation of renewable energies and energy storage support policies, India’s energy storage installation is expected to accelerate in the future. Data indicates the scale of energy storage projects to be put into operation in India (including projects under planning, bidding and construction) totals 35.6 GW, comprising approximately 6.4 GW electrochemical energy storage projects, and 29 GW PHS projects. It should be noted that some projects are announced as intentional development projects, which are at a very early stage, and therefore the actual landing situation is uncertain. From the perspective of project deployment at this stage, the expected installation capacity of PHS projects is higher than that of electrochemical energy storage – which is below the energy storage demand forecast made by the CEA – but electrochemical energy storage will account for an increasing share of total energy storage in the future.
As of September 2023, there are 27 PHS projects planned or under construction in India, exceeding 29 GW. From a regional perspective, Andhra Pradesh has 12 PHS projects to be commissioned, totalling around 12.2 GW. The CEA reported it has identified over 96 GW of potential PHS capacity across the country and more pumped storage projects are likely to be announced in the future.
Compared with PHS, 6.4 GW of electrochemical energy storage projects under planning/construction are dispersed across the country, of which Gujarat is the largest state, with around 1 GW planned projects, and Rajasthan ranks second with 750 MW. It is worth mentioning that 3.6 GW of electrochemical energy storage projects are in the early stage of intention and specific information such as deployment location and commencement has not yet been announced.
Favourable policies drive the emergence of large-scale front-of-meter electrochemical energy storage projects.
Before 2020, the deployed electrochemical energy storage projects were mainly small-scale and mostly for small industrial and commercial energy storage applications. Driven by energy storage policies in the past couple of years, “state-owned” background enterprises entered the market by launching multiple tenders for large-scale energy storage project deployments, i.e., Solar Energy Corporation of India (SECI) and NTPC. Of the 750 MW of planned energy storage projects in Rajasthan, 500 MW is SECI’s independent electrochemical energy storage project. Large-scale renewable energy integration and grid projects will continue to be the main application scenarios for electrochemical energy storage projects in India.
In addition, India has deployed a couple of small-scale hydrogen storage demonstration projects. In early 2023, the National Cabinet passed the National Green Hydrogen Mission Plan, which sets a target of establishing five million tons/year of green hydrogen production capacity by 2030, with associated additional renewable energy capacity of about 125 GW across the country.
Final thoughts
Under the guidance of government policies, energy storage deployments in India gradually took off, with rapid development in the past two years, although there is still a considerable way to go to meet the CEA’s estimated energy storage demand of 73.93 GW/411.4 GWh in 2031-32. As a result, India’s energy storage policy and project deployments will continue into the future.
Reference
The PLI scheme was launched by the Indian government in 2020 to encourage both domestic and foreign investors to build manufacturing plants in the country. The scheme was initially applied to 3 sectors, has now grown to 14 sectors, widely spanning automobiles and auto parts, electronics and IT hardware, telecom, pharmaceuticals, to solar modules, textiles and apparel, drones, and so on. There might be more manufacturing industries to be included in the scheme.
Article courtesy: Interact Analysis
Shirly Zhu, Principal Analyst at Interact Analysis, has worked across multiple industry sectors in her 10+ year career, conducting projects requiring primary and secondary research, as well as quantitative and qualitative analysis. She’s primarily focused on Industrial Automation topics including motion and industrial controls.
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