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Battery Energy Storage
Systems (BESS) in India
Binu Nair, ASA 2 articles Follow
Capital Equipments | EY MENA
November 10, 2022
Open Immersive Reader
Renewable energy capacity in India (Sep 2022) : As per
the installed capacity report of Central Electrical Authority
(CEA), from 408 GW of the total installed capacity - 165 GW
(47 GW + 118 GW) is from RES (Renewable Energy Sources).
Current total of installed Variable Renewable Energy (VRE)
of Wind (42 GW) and Solar (61 GW) adds up to 102 GW
Total Installed capacity in India (September-2022)
Renewable Energy Target 2030: At COP26, India raised the
Nationally Determined Contribution (NDC) target of non-
fossil energy to 500 GW by 2030 of which 450 GW is to
come from wind and solar, from 102 GW (solar + wind) as
of September 2022.
Variable Renewable Energy (VRE): One of the biggest
challenge to mainstream Renewable Energy is
intermittency. Wind power is only generated when it’s
windy, solar power is only generated when it’s sunny. At the
opposite end of the spectrum, are the times when these
forms of generation create more power than the grid (in its
current state) is able to handle.
Peak Load Shaving Example using BESS
Need for BESS (Battery Energy Storage System) for VRE:
As more renewables arrive and flood the grid with power at
the same time, they’ll create pressure to curtail or throw
away whatever power isn’t needed when it's generated.
Wind and solar plant owners may feel financial pressure to
build long-duration systems to capture that production and
sell it at times when it can make more money - Peak Load
Shaving. Peak Tariffs are generally higher than off-peak
tariffs. From a system perspective, that’s a more efficient
use of the existing power plants and a good substitute to
natural gas based peak load plants
BESS likely installed capacity in India by 2030: As
per Optimal Generation mix report by CEA, India would
likely need a BESS capacity of 27 GW by 2030 (Considering
4 hour maximum capacity for batteries). At the cost of ₹ 4
crore/MW for best available battery technology of Lithium
ion(with 4 hour backup), that alone would require
investment ₹1,08,000 crore for 27 GW. (Assuming CAPEX
costs for Li-ion battery system remaining constant during
this
peri
od.
Addi
tiona
l
cost
for
Tran
smis
sion
infra
struc
ture
is Likely required BESS capacity for India by 2030
not
considered.)
Current BESS capacity in India: The utility-scale ESS market
in India saw its first installation with a pilot project by Power
Grid Corporation of India in 2017 in Puducherry. It was set
up with a capacity of 500 Kilowatt-hour (kWh), 250kWh Li-
ion + 250kWh lead acid, mainly to study and compare the
two battery chemistries. Since then, several new ESS
projects have been announced or tendered. In recent times,
SECI issued several major utility-scale ESS tenders. It
included demand-oriented tenders, such as assured peak
power supply (PPS) and Round-the-Clock (RTC) tenders.
Also, more recently, SECI and NTPC came up with
standalone ESS tenders of 1,000MWh and 3,000MWh,
respectively. The 1000 MWh has already been won by JSW.
10 MW/MWh by Tata Power-DDL located at Delhi is not
shown below.
Summary of Major BESS tenders in India
Key policy drivers for BESS in India
1. National Energy Storage Mission: The Government of
India has created the draft National Energy Storage
Mission to promote energy storage
2. National Tariff Policy: Mandatory procurement of RE
power for DISCOMs and Waiver on inter-state
transmission charges for RE power transmitted through
the grid to promote open access for large end
customers (1 MW and above)
3. National Programme on Advanced Chemistry Cell
(ACC) Battery Storage: The Government approved INR
18,100 Crore PLI scheme for building manufacturing
facilities for battery storage in India. The plan is to set
up a 50 GWh manufacturing capacity
Bottlenecks with deployment of BESS in India :
1. Unavailability of high tariffs for BESS integrated VRE.
Higher tariffs are difficult proposition for already
financially weaker DISCOMS (Distribution companies)
2. Even if peak rates in India are higher than off-peak
rates by 15 to 20%. This is far less than when compared
to US, UK, Australia where the difference is around
200-400%
3. Traditionally India has manufactured Lead Acid
Batteries. India domestic manufacturing for Lithium-
ion and other technologies is at nascent state. Almost
70-75% Lithium ion batteries are imported from China
and Hong Kong. Increasing shipping costs increases
the project costs.
4. Higher import duties is another hurdle for large scale
adoption
5. The ancillary market services by BESS including
(Voltage regulation, Frequency regulation, Black start
facility, Inertia) needs to open up further.
6. Technological challenge : The NTPC tender (500
MW/3,000 MWh)requires a 6-hour BESS solution, while
BESS is not a viable option beyond a 4-hour solution.
There is a focus to increase the duration to 6- 8 hours,
these are still not on a commercial scale resulting in
the need for redundancies.
7. Lack of standardization : On account of diverse
technical requirements and different policy processes
there is a lack of standardization within BESS. Each
supplier has different tech specs which can be a
hindrance to scale.
8. Electricity losses (Transmission & Distribution in India):
As per one of the working papers from Center for
Social and Economic Progress, India has highest
transmission losses (technical + non-technical) in the
range of 21% compared to 6% in France & Australia
and 10% for South Africa and Indonesia. Commercial
losses are higher than the typical AT&C losses, which
are only reported for the distribution networks. Overall
rates of loss can be affected by a number of factors,
including maintenance requirements, quality of
infrastructure, distance between generator and
consumer, poor monitoring and the occurrence of
theft. This creates another hindrance in wide scale
adoption of BESS
9. Restriction to open access : Only end consumers with
sanctioned load of 1MW and above are eligible to
procure power through open access route. Few states
try to limit purchase through open access to protect
state-owned DISCOMs. This decreases avenues for
dispatchability of power by BESS.
10. BESS charging with coal : India's grid infrastructure has
been developed with coal plants in mind. So to
mitigate additional infrastructure for grid evacuation,
utility scale BESS would have high prospects of
charging via thermal power (coal + gas). This would
have implication on the prospect of BESS being green
energy to be used with VRE -thereby creating ESG
issues and subsequently reduced investments.
Conclusions : The market for energy storage in the South
Asia region is dominated by India. Energy storage helps in
the integration of renewable energy and unlocking the
benefits of local generation and a clean, resilient energy
supply. But despite rapidly falling costs, energy storage
systems remain expensive and the significant upfront
investment required is difficult to overcome without low-
cost financing. With right policy framework, India can create
the needed storage capacity. Going forward, multiple
revenue streams will be essential for enhancing the
productivity and viability of ESS projects. As per IEEFA,
there also might be new tenders explicitly designed for
alternate ESS technologies, such as PHS (Pumped hydro
storage), Compressed Air Energy Storage, (CAES) etc., apart
from BESS. Furthermore, battery manufacturing in India
should grow significantly due to the PLI scheme. Thus,
future ESS tenders with a domestic content requirement
(DCR) condition are also a strong possibility. BESS alone will
not solve the energy security issues for India. But wide scale
adoption of BESS would allow more VRE penetration and
would help India achieve its target for decarbonization.
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Published by
Binu Nair, ASA
Capital Equipments | EY MENA 2 articles Follow
Published • 1y
Current update of Battery Energy Storage Systems in India.
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Add a comment…
Aslam Amir • 3rd+ 1y
Electrical Engineer | Researcher
Thanks for the neat explanation. I do have a question. Are there RES units
installed on distribution scale? And in that case what would be the scope
of having BESS units at that scale?
Like Reply · 1 Reply
Binu Nair, ASA • 2nd 1y (edited)
Capital Equipments | EY MENA
At distribution level, we can see the example of Tata power-DDL.
They have come up with 10 MW/10 MWh BESS whose primary
function is DSM (Deviation Settlement Mechanism). BESS, because of
its fast ramp up, has helped in bringing down the penalty for the
distribution company. They have also come up with Pole mounted
…see more
Like · 1 Reply
Binu Nair, ASA
Capital Equipments | EY MENA
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