The status quo and future development trends of the Indian energy storage industry in 2021

India has set a goal of increasing 500GW of clean energy transition by 2030. Although the installed capacity of its renewable energy power generation facilities is steadily increasing, India lacks sufficient energy storage solutions to support the integration of renewable energy in the grid.

According to a survey report jointly issued by Wärtsilä and KPMG, by 2030, India will need to apply and integrate 450GW of renewable energy in order to obtain supply-side flexibility. Research shows that by 2030, India will need to deploy a 4-hour battery energy storage system with a total installed capacity of 38GW and a 9GW natural gas power generation project to achieve economic, efficient and reliable integration of renewable energy.

According to a survey conducted by Mercom India Research, India is currently planning to deploy a battery energy storage system with an installed capacity of 1.7GW.

The following are the major developments and future trends of the Indian energy storage market in 2021:

In order to strengthen the localization of battery energy storage systems, the Ministry of Heavy Industry (DHI) of India issued a notice in 2021 on the "Advanced Chemical Battery (ACC) Battery Energy Storage Program" related to the Performance-related Incentive (PLI) program. The planned five-year incentive expenditure is expected to be 181 billion rupees (approximately US$2.47 billion). The Ministry of Heavy Industry of India plans to best encourage domestic and foreign investors to establish gigawatt-scale battery production plants. The focus is on more value-added, high-quality output, and to achieve the promised production capacity level within a predetermined period.

The plan aims to achieve a battery life capacity of 50GWh. According to this plan, battery energy storage manufacturers will be selected through a competitive bidding process, battery production plants must be put into operation within two years, and incentive funds will be paid in five years.

A few weeks after announcing the performance-related incentive (PLI) plan, the government-owned Bharat Heavy Electric Company (BHEL) began a tender to build a gigawatt-scale battery energy storage project. The total energy storage capacity of the project that the company plans to bid for is as high as 5GWh.?

Deployment of battery energy storage projects?

In 2021, Indian government agencies and private companies will bid for the development and deployment of independently deployed battery energy storage projects with a total energy storage capacity of 3GWh in India. And some of the important tenders for these battery energy storage systems are:

The Solar Energy Corporation of India (SECI) issued an announcement that it plans to tender for the deployment of a 2GWh standalone battery energy storage system. These projects must be built on a build-own-operate (BOO) basis. The company will sign a 25-year power purchase agreement with the successful bidder.

The National Thermal Power Corporation of India (NTPC) issued a letter of intent (EoI) to deploy a grid-connected battery energy storage system (BESS) with a total energy storage capacity of 1GWh at the sites of its power generation facilities across India.

In addition, the Indian government has also approved a bid for the deployment of 1GWh battery energy storage project by the Solar Energy Corporation of India (SECI) as a pilot project. The project is implemented in accordance with a joint initiative issued by the Ministry of New Energy and Renewable Energy (MNRE) of India.

In terms of policy, the Ministry of Electricity of India has revised its guidelines for competitive bidding procedures based on electricity prices. It will purchase all-weather electricity from grid-connected renewable energy projects and supplement it with electricity from any other source. According to this new amendment, the deployed battery energy storage system can only be charged from the supporting deployment of renewable energy power generation facilities. In the case of reducing electricity or charging the battery energy storage system, the same renewable energy generation will be used to compensate. The amendment also determines that battery energy storage systems that use electricity other than renewable energy will not meet the conditions.

The energy storage system is an ideal solution to meet peak power demand, save operating costs, reduce the risk of curtailment, and improve the stability and resilience of the grid. However, the high cost of energy storage systems is the biggest obstacle to deployment and adoption by residential, commercial and industrial customers. According to a survey by Mercom India Research, India is planning to deploy 59 renewable energy power generation projects and 6 energy storage projects. The total energy storage capacity of these battery energy storage projects is 136MWh.

Research and analysis show that by 2050, the cumulative installed capacity of energy storage systems deployed in India will reach 180 GW to 800 GW, accounting for 10% to 25% of the total installed capacity of various energy sources. The total energy storage capacity of these energy storage systems is 750GWh-4900GWh.

In 2021, India will not take many incentives to deploy energy storage systems. Therefore, more work needs to be carried out by establishing a sound policy framework and providing financial incentives to ensure that energy storage deployment can keep up with the rapid growth of renewable energy in India.