India aims to have 500 GW of non-fossil fuel capacity by 2030. While renewable energy installations are steadily increasing, the country lacks adequate energy storage solutions to support the integration of renewable energy into the power mix.

According to Wartsila and KPMG, supply-side flexibility is needed at the pan-India level to integrate 450 GW of renewables by 2030. The study indicated that by 2030, India would need 38 GW of four-hour battery storage and 9 GW of thermal balancing power projects for cost-efficient and reliable integration of renewables.

India currently has just 20 MW of installed battery storage capacity, with 1.7 GW of battery capacity in the pipeline, according to Mercom India Research.

Here are the significant developments in the Indian energy storage market from 2021:

Boost for manufacturing

 To enhance domestic manufacturing of advanced chemical cell (ACC) battery storage, the Department of Heavy Industry (DHI), Government of India, issued a notification for the performance-linked incentive (PLI) program ‘National program on Advanced Chemical Cell (ACC) battery storage.’ The program’s five-year incentive payout is expected to be ₹181 billion (~$2.47 billion). The department has plans to optimally incentivize potential investors, both domestic and overseas, to set up giga-scale ACC manufacturing facilities with an emphasis on maximum value addition, quality output, and achieving pre-committed capacity level within a pre-defined period.

The program aims to achieve 50 GWh of advanced chemistry cell, and 5 GWh of niche advanced chemistry cell manufacturing capacity. Under the program, battery storage manufacturers would be selected through a competitive bidding process, and the manufacturing facility would have to be commissioned within two years. The incentive will be disbursed after that over five years.

Within weeks of the announcement of the PLI program, the government-owned Bharat Heavy Electricals (BHEL) invited bids to select partners to set up a gigawatt-scale advanced chemistry cell battery storage facility. BHEL intends to bid for a minimum 5 GWh capacity.

Battery storage projects

In 2021, government agencies and private companies invited bids to develop a cumulative 3 GWh of standalone battery storage projects in India. Other significant tenders for storage systems are:

• The Solar Energy Corporation of India (SECI) issued a notice inviting a tender for 2,000 MWh of standalone energy storage systems. The projects have to be set up on a build-own-operate (BOO) basis. SECI would enter into an agreement with the successful bidders for 25 years.
• NTPC Limited invited expressions of interest (EoI) from Indian and global companies to set up 1,000 MWh of grid-connected battery energy storage systems (BESS) on the premises of its power projects across India.

In addition, the Government of India also gave the go-ahead to SECI to invite bids to install a 1 GWh BESS as a pilot project. The project is a joint initiative of the Ministry of New and Renewable Energy (MNRE) and the MoP.

Guidelines for bidding

On the policy front, the Ministry of Power amended the tariff-based competitive bidding process guidelines to procure round-the-clock (RTC) power from grid-connected renewable power projects, complemented with power from any other source. According to the new amendments, the ESS offered with a project must only be charged from renewable energy sources. The same renewable energy would be considered for compensation in case of curtailment or charging ESS. The amendments clarified that ESS charged using any source other than renewable energy will not qualify.

Energy storage is the ideal solution to manage peak demand, save operational costs, mitigate the risk of curtailment, and increase grid stability and resiliency. However, the cost of energy storage systems is the most significant hurdle for adoption among residential, commercial, and industrial customers. According to Mercom India Research, in India, currently, there are around 65 renewables plus storage projects announced, of which only six have a storage capacity totaling 136 MWh.

The National Renewable Energy Laboratory’s detailed analysis suggested that India’s storage technologies’ capacity could reach between 180 GW and 800 GW, representing between 10% and 25% of total installed power capacity by 2050. The storage energy capacity would be between 750 GWh and 4,900 GWh by 2050.

In 2021, India has only taken small in developing energy storage capacity. It needs to do more by establishing a robust policy framework and providing financial incentives to ensure energy storage complements the impressive growth of renewable energy in India.