Energy Oil and Gas and Utilities
Market drivers and trends fueling the growth of the energy storage industry in India
04 Aug 2021
The Government is progressing toward achieving net-zero carbon emissions or carbon neutrality in the next few years. Advancements in 24x7 renewable energy constituting solar, wind, hydro, and other renewable sources are the keys to it. The need to store energy to use it at non-renewable generating hours has grown significantly, and efficient energy storage is the answer.
24X7 renewable power energy storage demand has picked up significantly in the past few years. The intermittent nature of solar and wind energy makes it tough to have a 24X7 power supply where energy storage can fill this gap by storing power for a few hours during peak time and providing the energy for a few hours during non-peak time.
Globally, five different types of energy storage technologies are in use currently, including mechanical, electrochemical battery, thermal, electrical, and chemical storage. Out of these, electrochemical batteries or Battery Enabled Storage Systems (BESS) in the form of Li-ion batteries are the most commonly used method of energy storage worldwide.
Lithium-ion or Li-ion batteries are widely used for both industrial and consumer applications. As industrial products, it is applied in stationary storage and Electric Vehicles (EV) charging stations. While as consumer products these batteries find their usage in day-to-day electrical appliances and tools, stationary storage can be used by utilities (GRID) and commercial & Industrial (C&I), residential customers for their green energy requirements.
BESS - Stationary storage
Applications of stationary storage across the utility-scale, C&I & residential consumers are as follows:
India is relied upon to lead the battery storage market throughout the coming decade because of powerful solar-based energy units and a strong end-client interest.
Li-ion batteries are proving to be critical innovation for BESS. Utilizing the sciences of NCM and LFP in Li-ion batteries, the manufacturing costs of BESS are expected to reduce in the coming decade.
The overall decline in battery prices for LFP batteries is expected to be less than US$ 100/kWh and NCM would be at about US$ 100/kWh by the end of the decade. Further, the Total Cost of Ownership (TCO) is expected to drop down to half from current levels.
The cost economics on account of the falling prices will result in the LFP batteries tariff for electricity to range between INR 7.0 – INR 7.7 (US$ 0.09 – US$ 0.10 per unit) per unit by 2030, while NCM batteries tariffs are expected to range between INR 7.8 – INR 8.7 (US$ 0.10 – US$ 0.12 per unit) per unit by 2030 from their current high rates.
When comparing this in the actual use-case scenario, BESS emerges strongly in minimizing DG electricity. As the prices of diesel have soared, users of diesel gensets are now turning toward solar and BESS for their lower costs. Thus, resulting in an existing market for the C&I as well as residential categories that are willing to shift. However, the conversion has been slow as battery availability (maximum of 4 hrs) creates the bottleneck for BESS adoption. Further, falling battery prices have the potential to create a strong case to replace grid electricity with solar and BESS in the future. On the business model front, both utility-scale and end-consumer models exist globally for battery storage; utility-scale models target grid and large C&I customers.
Governments internationally are advancing their energy storage strategies to help businesses. India too is pushing for the additional turn of events and backing on energy storage. Sufficient prerequisite of motivators to balance higher assembling costs and decreased dependence on imports of crude materials are a few doorways for the development of cutting-edge BESS. Additionally, with the PLI (Performance-Linked Incentives) scheme in assembling and a couple of players pushing forward to foster energy storage limits, the market in India is relied upon to observe critical traction in the years to come.
Savio Monteiro, Senior Vice President, Energy Oil & Gas Utilities