The National Renewable Energy Laboratory (NREL) has published a report, “Energy Storage in South Asia: Understanding the Role of Grid-Connected Energy Storage in South Asia’s Power Sector Transformation.” The report sheds light on cost-effective opportunities for grid-scale energy storage deployment in India and South Asia, both in the near and long term. The report includes a detailed analysis of energy storage drivers, potential barriers, and the role of energy storage in system operations.

The cost of energy storage technologies has sharply declined and is predicted to reduce further over the next decade. This comes in the wake of grid flexibility being hailed as a vital resource for integration and reliable operation of renewable energy, which is intermittent. Grid flexibility has been referred to as the “new currency for the use of energy” In India. Energy storage, such as lithium-ion battery energy storage systems (BESS), has the technical potential to provide grid flexibility. However, questions remain about the opportunities for energy storage in India and South Asia due to uncertainty about the technology costs, rules governing energy storage operations and ownership, and compensation mechanisms.

Researchers at NREL conducted scenarios-based capacity expansion modeling to assess energy storage deployment in India through 2050. The analysis relied on modeling approaches to uncover and compare the value streams of battery storage with different durations like 2-hour, 4-hour, 6-hour, 8-hour, and 10-hour battery storage, and pumped storage hydropower (PSH). Simulations are run for 2030 and 2050 to understand how system operators will utilize energy storage to help integrate RE, reduce operating costs, optimize cross-border energy trading, and optimize the use of domestic resources.

The study was funded by the U.S. Department of State’s Bureau of Energy Resources.

Key Findings

The researchers found that energy storage can provide a range of grid services and has the potential to play an essential role in the development of a cost-effective power sector for India. They predict that energy storage becomes cost-competitive with other technologies due to projected cost declines through 2030. The scenarios-based capacity expansion model results show that cost-effective energy storage capacity multiplies with an average year-over-year growth rate of 42% between 2020 and 2030. Battery storage investments would also be cost-effective in 26 of the 34 Indian states and union territories by 2030. According to the reference case, Jammu and Kashmir, Gujarat, and Karnataka would have over 10 GW of battery storage capacity by 2030, which represents the standard set of assumptions used in this study.

Source: NREL

The capacity of storage technologies reaches between 180 GW and 800 GW, representing between 10% and 25% of total installed power capacity by 2050. The energy capacity of storage reaches between 750 GWh and 4,900 GWh by 2050. This is per the findings of several scenarios run by the researchers representing different trajectories for technology costs, regulatory rules, and policy changes. In all cases, energy storage grows to play a significant role in India’s power system.

In all cases, energy storage grows to play a significant role in India’s power system. The capacity of storage technologies reaches between 180 GW and 800 GW, representing between 10% and 25% of total installed power capacity by 2050. The energy capacity of storage reaches between 750 GWh and 4,900 GWh by 2050.

Researchers also found that in the scenario where energy storage does not receive revenue for energy time-shifting, overall investments in energy storage technologies fall by 65%. This could happen in a contract structure where a single tariff does not correctly account for the changing price of energy throughout the day. In scenarios where energy storage does not receive revenue for capacity adequacy, overall investments in energy storage technologies fall by 22%.;

Researchers found that new pumped storage hydropower is cost-competitive with battery storage technologies at ₹69 million/MW (~$ 0.92 million/MW) in the near term. Further reductions in pumped storage hydropower costs result in additional capacity and delayed investments in BESS projects. Pumped storage hydropower capacity will reach 52 GW with 630 GWh energy capacity by 2030. However, given rapidly declining costs for BESS, the researchers see no new investments in pumped storage hydropower projects after 2030 across the capacity expansion scenarios evaluated for this report.

It was observed that India’s maximum hourly net load ramp could reach 60 GW. Energy storage can meet most of these needs by storing excess generation during high-renewable energy periods and discharging to meet evening ramp needs. The role of storage to integrate RE becomes increasingly crucial by 2050 when coal, gas, and hydro contribute only 20% toward the country’s generation mix. The results also show that energy storage is primarily charged during the daytime, enabling higher solar penetration. Further, on some days, storage reduces its generation during the evening when wind generation picks up, helping to absorb higher levels of wind in the grid.

The way forward

A clear stage has to be set for energy storage to compete with conventional technologies to increase RE integration and reduce air emissions from the power sector.

Cost-effective energy storage can compete with fossil-fueled capacity resources through tariff design or other mechanisms such as capacity auctions or capacity payments. Regulators can begin by establishing clear and agreed-upon methods to quantify and compensate all resources for contribution to reliable capacity.

Regulators can help ensure that market rules governing operating reserves and other ancillary services enable energy storage to provide multiple grid services from the same device. India, the Central Electricity Regulatory Commission has issued draft regulations that explicitly allow energy storage to participate in the proposed ancillary services markets.

Policymakers can include energy storage in national energy policies and master plans and acknowledge the complementarity between solar PV targets and increasing opportunities for energy storage technologies.

Recently, NREL had published the report ‘Economic Potential of Diurnal Storage in the U.S. Power Sector.‘ The multi-layered research project led by NREL explores how storage adds the most value to the grid.

In 2018, the Ministry of New & Renewable Energy(MNRE)  had constituted an expert committee under the chairpersonship of the Secretary of MNRE to propose a draft for setting up National Energy Storage Mission. The expert committee had proposed a draft to create an enabling policy and regulatory framework that would encourage manufacturing, deployment, innovation, and further cost reduction in the energy storage sector.