India is well poised to become a USD 5 trillion economy by 2025 and the third largest economy in the world by 2027. India is also the 3rd largest global emitter of CO2 despite low per capita emissions. The installed power capacity in the country is over 400 GW as of December 2022. Out of this,the installed non-fossil fuel capacity in the country is about 175 GW.
India has set a target to a) reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade b) expand India’s RE installed capacity to 500 GW by 2030. Under the current government policy: renewable energy is the main driver for energy transition, and regional grid integration and RE grid integration are important. RE will meet the incremental power demand after 2025.
Higher penetration of renewables generation capacity without the ability to store energy can result in stability issues in the grid thereby inducing a great deal of variability.The uncertainty of generation from renewable resources because of their intermittent nature affects both grid planning and operations. Secondly, with advancement of Electric Vehicles adoption with a national vision of “100% electrification of transportation by 2030” will further affect the grid stability.
The Russia-Ukraine War has highlighted the risk and cost of relying on imported fossil fuels, and the impacts on energy security and affordability. Much has been written about India’s Renewable Energy potential and the low cost of wind and solar. Solar reached tariffs as low as Rs. 1.99/kWh, though prices have stabilized around Rs. 2.5/kWh with the recent supply chain challenges. Landmark tenders issues by SECI (500 MW/1000 MWh), NTPC (500 MW/3000 MWh) and won by JSW and Greenko respectively have provided real data on the actual competitive costs of grid storage in India.
What many don’t yet understand is the transformative potential of energy storage to unlock greater penetration of wind and solar. The Central Electricity Authority’s draft National Electricity Plan released in September 2022, called for approximately 52 GW or 258 GWh of Battery Energy Storage. As can be shown in the below figure, even a small amount of storage can allow a large amount of wind and solar integration, at least in the 2030 timeframe where there is significant coal, hydro, biomass, and gas resources for balancing as well.
Figure 1: Source CEA Draft National Electricity Plan September 2022
Cost of Renewable Energy + Energy Storage Today and in 2030
In fact, using the current price for solar (~ ₹ 2.4/unit) and wind (~ ₹ 2.9/unit), the weighted average cost of new renewables is ~₹ 2.6/unit, well below the Average Power Purchase Cost (APPC) of conventional (mostly coal) generation at ₹ 3.85/unit. In fact, Renewables are only expected to continue to decrease as coal costs rise.Greenko’s winning bid in the NTPC tender works out to ₹ 5/unit. At first glance, this makes power from energy storage seem quite expensive (2.6+5=7.6). However, it is important to note that a combination of wind + solar can cover most hours of the day, with storage only used to fill in the remaining 3-6 hour peak (CEA assumes 5 hour storage). If storage costs ₹ 5/unit and is used about a fifth of the time (~5 hours/day), then it’s cost adder to RE is 5 x (1/5) or ₹ 1/unit. This means the combination of wind, solar and storage is already lower than the APPC and certainly new coal options today.
Given that solar + wind + storage is already cheaper than new coal, it is crucial to focus on deploying increased amount of solar, wind and storage urgently to avoid power outages and lower costs to consumers. For example, at today’s natural gas costs, imported natural gas costs ~ ₹ 21/unit, while imported coal costs ₹ 8-10/unit. During the summer of 2022, imported fossil fuels were relied upon to help ensure a reliable source of power. RE + storage can ensure a reliable source of power much cheaper. While pumped storage takes a few years to deploy, Battery Energy Storage Systems can be deployed today. While it is important to develop domestic manufacturing, even imported BESS can displace $40-$45 of imported fossil fuels for every $1 of imported Lithium over their life, even if the Lithium is not recycled.
Further Research and Development
In addition to a focus on deployment, there is still room to explore innovative storage technologies. The NTPC tender (above) won by Greenko relies primarily on Pumped Hydro. Pumped Hydro is currently the cheapest and most common form of energy storage worldwide, but takes years to develop and is limited geographically. In contrast, Battery Energy storage systems(BESS) can be deployed in a matter of months, ensuring peaks are met in the near and medium-term without relying on expensive natural gas peakers.
The most common form of BESS comes in the form of Lithium-Ion batteries. However, alternative chemistries such as Sodium-Ion, Sodium Sulphur, Zinc, Iron Air, etc. have the potential to drastically lower costs and avoid reliance on imported Lithium. Many of these technologies are currently undergoing research at institutions like NETRA (NTPC’s research wing), but are also commercially available in India and abroad.
Non-battery technologies may also hold potential such as thermal storage, gravity-based systems and compressed air. These are currently being deployed around the world and there is a tremendous opportunity for India to take leadership by investing in research into alternative storage technologies
Finally, an increasing share of India’s electricity consumption is used for cooling in the form of air conditioners and refrigerators. For such applications, it is cheaper and more efficient to store the energy thermally (eg.As chilled water or ice). With correct price signals, commercial, industrial and even residential consumers may be able to “charge” their cooling during the day when solar is cheap and save the cooling for evening when power is more expensive. Similarly, as EV adoption increases, smart tariffs and chargers can incentivize users to charge when power is cheaper during the day or night rather than evening and morning peaks.
Conclusion
The costs of new Renewable Energy + energy storage is already cheaper than new thermal generation, and emphasis should be placed on deploying as rapidly as possible to lower costs to DISCOMs and Indian power consumers. At the same time, there should be a renewed focus on research, development, and deployment of innovative technologies to further India’s energy affordability and access goals.
This article is jointly authored by Mr. Alex Hogeveen Rutter&Mr. Sunil Dayal.
Alex is a Renewable Energy and Power systems expert who has worked in a public sector transmission/distribution utility, consulting and for multilateral agencies. He is currently the Private Sector Specialist for the International Solar Alliance. Rutter is an alumnus of the University of Waterloo and Indian School of Business
Renewable Energy plus storage has the potential to lower DISCOM procurement costs in India – EQ Mag
