Indian Energy Storage Market: An Opportunity to Support Rapid Solarisation

Driven by deteriorating climate conditions, failure to provide electricity to all (~1 bn people globally), and depleting conventional energy reserves, the world is now rapidly shifting towards green energy- mainly solar and wind. However, since energy generation through solar and wind are intermittent, there is a merit in thinking and taking active steps towards energy storage.

The way developing countries are aggressively investing in renewable energy, it is fair to state that energy storage industry will flourish within developing countries in near future. It is estimated that by 2035, developing nations will account for more than 80% of global growth in energy production and consumption. And energy storage will definitely play a major role in that scenario.

Taking hints from the facts like-

  • Emerging markets like India, Brazil, Chile, Africa, South Africa are expected to support energy storage growth over 40% annually in the next decade.
  • With the continued price declines in energy storage systems, a 30% increase in global storage market revenue is estimated within 2018.
  • The battery cost has been dropping 23% per year (average) globally, which by the way considerably reduced the storage system cost by 14% per year.

India is moving towards building an energy storage industry.

Current Scenario

States such as- Rajasthan, Gujarat, AP, Telangana, Tamil Nadu where solar PV installations are flourishing, are showing interest towards energy storage to stabilize the energy flow within the grid 24×7. Besides states within India that have to use diesel to maintain electricity flow (Andaman & Nicobar Islands) are showing keen interest in replacing Diesel Generator with solar energy modules and storage systems.

National Storage Mission of the Government aims to bring all applications of energy storage systems under one umbrella. This also includes policies for electric vehicles (such as, Faster Adoption and Manufacturing of e-vehicles or FAME), which is becoming popular as price of Li-ion technology slides down further. The first few solar storage projects are about to kick off and knowledge gained from these will form the backbone of India’s storage policy in the future. India has recently tendered a major solar PV + energy storage project (20 MW SPV + 28 MWh storage) in Andaman. Several more are in the pipeline in FY 2018-19.

Providing electricity to rural households is another area where there is ample scope in India. The Government has plans to install 10,000 micro/mini grids with energy storage to help solve this issue.

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What is Urging India to Build Energy Storage Market

Solar Energy plants do not generate electricity during night. Therefore, when the amount of Solar energy injected to the grid exceeds the threshold value which grid can accept in the daytime, there is a need of storage for storing the excess energy. During evening, when the demand reaches peak, the storage can discharge the excess stored energy and satisfy requirements.

India’s aggressive move towards rapid solarisation of the country is driving energy storage market.

Drivers of this industry within India are-

  • Mitigating intermittency: Renewable energy sources like solar and wind are intermittent. For example, cloudy sky presents low power generation opportunity. In order to smooth the effect of this intermittency and improve power quality that is fed to the grid, energy storage system (ESS) can be effectively used.
  • Grid stabilization: Passing clouds, change in clearness index, etc. creates continuous fluctuations in power generation. As the percentage of renewables in the grid increases, possibility of the grid de-stabilization increases. This is particularly important in India where power grid is not very robust (weak grid). Bulk Energy Storage Systems (BESS) act as safeguard against grid failure.
  • Rural electrification: 60 million households in India have no access to electricity/grid. Micro/mini grids including battery systems can help bring electricity to these houses.

These are some of the major drivers for adopting energy storage technologies in India.

 

Challenges in Developing Energy Storage Market

Energy storage is still an expensive technology. The cheapest technology is lead acid based that typically lasts <5 years in Indian climate. Li-ion batteries have longer lifetime (6-8 years for most chemistries; advanced chemistries last up to 15 years) but involve much more upfront expenditure. This is the main reason that almost all home UPS systems in India have Flooded Lead Acid (FLA) batteries. But in the global market the price of Li-ion cells is on sharp decline and experts claim that cost/kWh or Levelized Cost of Storage (LCOS) for standard Li-ion batteries will keep on falling for the next 2 years at least. There are currently no major Li-ion cell manufacturers in India. The price decline will hopefully encourage some major manufacturers to set up plant in India and cater to the upcoming storage market.

 

Way Forward

As India already has a good infrastructure to support lead acid battery manufacturing process, similar infrastructural developments can happen with ease for Li-ion technology development. The most important requirement for solar energy storage system development globally, seems to be low-cost financing facility and favourable regulatory frameworks development. The time is right, and opportunities are coming for India to take steps forward in creating a strong energy storage market to fulfil in-house requirements and to claim global demand or energy security.

 

 

Bibliography:

http://www.theenergycollective.com/willcoenergy/2408164/current-trends-energy-storage-market

http://www.goldmansachs.com/our-thinking/pages/north-american-energy-summit/reports/beci-trends-in-renewable-energy-and-storage.pdf

https://www.ifc.org/wps/wcm/connect/ed6f9f7f-f197-4915-8ab6-56b92d50865d/7151-IFC-EnergyStorage-report.pdf?MOD=AJPERES

http://www.renewableenergyworld.com/articles/print/volume-20/issue-1/features/storage/energy-storage-market-outlook-2017-state-of-play.html

http://www.businesswire.com/news/home/20170717006000/en/Global-Residential-Solar-Energy-Storage-Market-2017-2021

http://www.frost.com/sublib/display-report.do?id=MCFB-01-00-00-00

http://solarprofessional.com/articles/design-installation/solar-energy-storage#.WieyeUqWbIU

https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017-full-report.pdf

https://www.eia.gov/outlooks/ieo/

http://www.globalesa.org/images/documents/GESA-WESD2017.pdf

 

Share your thoughts with me on this at @gyaneshc.

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