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 Climate Change

Energy
Published on: Nov. 10, 2021, noon
The battery boom
  • Tata Power’s upcoming storage project in Ladakh will be India’s largest battery

By Business India Editorial

India is soon to witness a boom in battery market as the country makes rapid strides towards its ambitious green energy targets. Encouraged by government policy and private ventures, two markets critical for India’s renewable future and energy security – battery storage and green hydrogen – are poised to see a rapid scale up, according to a note by the Institute for Energy Economics and Financial Analysis (IEEFA).

Domestic enterprises and global giants, attracted to India’s market potential and buoyed by government support, are assessing local battery manufacturing.

In August 2021, India crossed a milestone of 100 gigawatts (GW) of installed renewable energy capacity. Solar (45GW) and wind power (40GW) comprise the majority of the installed renewables capacity. A transition in India’s electricity sector is underway with growth of low-cost renewable energy capacity, targeted to be 450GW by the end of this decade. The challenge of installing 450GW of variable renewables by 2030 will be accompanied by another big challenge of integrating them into the grid.

“Grid-scale energy storage technologies will play a critical role in India’s decarbonisation journey, helping to integrate the 450 gigawatts (GW) of variable renewable energy capacity targeted by 2030 into the grid,” says the note’s author Kashish Shah, an IEEFA analyst.

“The Government of India is giving the right push for the Battery Energy Storage Systems (BESS) market through production-linked incentive schemes, big battery storage capacity tenders and improving the market structure to be more competitive.”

What has given the country’s clean energy landscape a fillip is the recent entry to the sector by Indian conglomerate Reliance Industries with plans for battery manufacturing and green hydrogen production.

“By acquiring Norwegian solar module manufacturer REC and a 40 per cent stake in India’s Sterling and Wilson Solar, Reliance is already showing it’s serious about delivering on its ambition to lead renewable energy investment in India,” notes Shah.

“India’s battery market could boom quickly,” Shah adds, “just as we have seen happen in other markets such as the US and Australia.”

Till now the cost of grid-scale battery storage has been prohibitive for India which does not yet have a domestic battery manufacturing value chain, but globally the cost of battery storage has reduced dramatically – from $1,100/kWh in 2011 for a standalone lithium-ion battery set-up, the price is projected to drop to $58/kWh by 2030.

Momentum in the energy storage market

The market in India is gearing up for batteries with growing momentum from private power companies. Tata Power’s 10MW/10MWh (1-hour storage) battery in its Delhi distribution network is currently the only grid-scale battery operating in the country but the company’s upcoming storage project in Ladakh – comprising 50MWh of storage capacity co-located with 50MW of solar capacity – will be India’s largest battery.

State-owned entities have also now come into the fold for facilitating grid-scale battery storage development. Solar Energy Corporation of India (SECI) and NTPC have called for tenders to develop 2,000MWh and 1,000MWh of battery storage capacity.

The Central Electricity Regulatory Authority (CERC) aims to bring battery storage and pumped hydro storage (PHS) into the ambit of the frequency control and ancillary services (FCAS) market.

“Valuing the speed and accuracy of grid balancing services that batteries and PHS could provide at competitive market prices will allow a clear revenue stream for the owners of these storage assets,” says Shah.

Steel giant ArcelorMittal has plans to build 4.5GW of solar capacity in Rajasthan and green hydrogen production capacity backed by solar and wind in Gujarat. Also, ACME Solar, one of India’s biggest solar developers, has commissioned the world’s first commercial pilot of an integrated green hydrogen and green ammonia production facility in Rajasthan.

“As with batteries, the green hydrogen industry will require the building of a domestic hydrogen production value chain,” Shah says. “The most important part of this value chain is the electrolysers for which the costs have come down across the globe, led by makers in the US, China and Scandinavia.”

The government plans to implement a green hydrogen consumption obligation (GHCO) mechanism in fertiliser production and petroleum refining, similar to the renewable purchase obligation (RPO). To further encourage usage of green hydrogen by industries, the fuel has been included under the RPO regulations.

There is also interest in developing industrial clusters that pair green hydrogen production with its industrial use, such as hubs of steel, coal, fertiliser, biogas, and heavy transport.


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