At scale adoption of battery storage technology in Indian power industry: Enablers, frameworks and policies
Introduction
There has been an overwhelming dominance of fossil fuels in Indian power generation with 52.6% percent of generation capacity under coal plants (Jindal and Nilakantan, 2021).
Table 1 indicates the share of coal, lignite, gas, oil, etc. in total installed capacity for India. At present, the installed capacity of renewable energy sources (RES) has about one-fourth share in the total installed capacity in India and is set to reach 100 GW. According to the International Energy Agency (IEA) estimates, India's coal power capacity would plateau in 2030 and the solar capacity could reach 800 GW by 2040 (IEA, 2021). Furthermore, by 2040 or even sooner, the power generation share of coal and solar power would converge (IEA, 2021). Thus, RES is set to emerge as an important generator of electricity in India.
India has ambitious renewable energy (RE) targets, in the short and mid-term – 175 GW by 2022 and 450 GW by 2030. From an economic perspective, this appears plausible given that RE based generation is already cheaper than coal power generation, whether using domestic or foreign coal (Spencer et al., 2018). High penetration of intermittent RE brings up issues around managing system flexibility in terms of steeper ramps and peaking load requirements and provides an argument for flexible coal power (Shrimali, 2021).
According to the Central Electricity Authority (CEA) of India, meeting India's needs in 2030 would require adding about 50 GW of coal power capacity between 2022 and 2027 (CEA, 2020). However, coal capacity that provides power during non-solar hours, including morning and evening peak, would run at very low plant load factors (LBL, 2020). This would not only be operationally difficult but would also result in total costs of more than INR 6–8/kWh (Debnath et al., 2021). As an alternative, battery energy storage systems (BESS) based on low-cost Lithium-ion based batteries could enable use of stored solar energy to meet increased system flexibility demands due to higher RE penetration. RE based power along with BESS could provide a clean, affordable and sustainable alternative to coal-based power generation technology (Govindarajalu et al., 2021).
Multiple studies such as Spencer et al. (2020) and LBL (2020) show that 450 GW RE can be cost-effectively absorbed via a suite of non-fossil options including agricultural load shift, transmission capacity, and battery storage. This is also likely to be the least cost solution, requiring little or no new coal deployment beyond 2022. In this high renewable scenario for India, wind and solar curtailment would be reduced from 4% without storage to less than 0.2% with BESS (Spencer et al., 2020). The experiences of States like Hawaii and California in United States (US) have shown how BESS could facilitate RE integration with ease (Martinot, 2016), and these may have valuable lessons for India.
However, there are multiple barriers which are likely to hinder BESS deployment in India (Bhatnagar et al., 2013). First, while the cost of BESS has been declining and is expected to fall further, BESS are still considered expensive requiring incentives for deployment at scale, including in India. Second, there are no established markets for BESS in India, such as ancillary services related to frequency regulation, ramping, etc., which would generate appropriate demand. Third, even if those markets were to exist, given uncertainty around revenues (demand as well as price), the cost of capital is likely to be high, which would make BESS appear more expensive. Fourth, absence of a regulatory framework for use of BESS which assumes criticality in view of the utility, ownership, and cost recovery mechanisms for various related entities such as generators, transmission operators, and distribution companies (DISCOMs).
Given that there is no focused BESS policy in India, our study is an attempt to address these barriers and focus on deploying BESS in the power sector in India. Developing countries including India, lack policies, regulations and procurement frameworks which could unlock the benefits of battery storage technology (Govindarajalu et al., 2021). With the cost of BESS technologies falling rapidly and combined RE and BESS projects delivering competitive tariffs (de Sisternes et al., 2019), it would be beneficial for India to define targets and policy frameworks for BESS out to 2030. In this context, to address the barriers listed above, our study seeks answers to the following questions, connected to enablers, frameworks, and policies:
- 1
Enablers: Is there an economic case for RE plus BESS compared to new coal power? That is, how does BESS technology cost-competitiveness with respect to the business-as-usual baseload power option enable the case for scale adoption of BESS?
- 2
Frameworks: How to ensure required deployment of BESS given India's RE targets? That is, what overarching (high-level) framework would ensure at scale BESS deployment, in a manner consistent with both policymaker and investor expectations?
- 3
Policies: How to procure BESS cost-effectively while addressing system flexibility issues? That is, how policies can be designed to procure BESS at scale, while addressing competing concerns?
To address the first barrier, given that increasing need for system balancing in presence of higher RE penetrations, we argue that RE can no longer be examined in isolation, and the future procurement needs to be RE plus BESS. To make an economic case for the same with respect to alternatives such as coal power, we show that RE plus BESS will soon be a cheaper solution than new coal power generation in all cases. To address the second and third barriers, we posit that the RE plus BESS should not only be procured under long-term, fixed-price capacity contracts which should also be dispatchable – for energy as well as ancillary services – by either the DISCOMs or by the system operator. The capacity contracts would minimize investor risk perceptions, reducing the cost of capital, and delivering RE plus BESS at least cost whereas dispatchability would address the system flexibility issues. We also posit that this procurement should follow establishment of a BESS target (e.g., 50 GW/200 GWh by 2030), and corresponding BESS targets termed as Battery Portfolio Standards (BPS), like the well-known Renewable Portfolio Standards (RPS). We further posit that, along with economic incentives and mandatory BPS, a well-defined regulatory framework for BESS is needed.
Section snippets
Battery storage technology: an overview
The current state of battery storage technology across the globe can be characterized by four major trends: increasing investments, declining costs, increasing size and scale deployment. While investments in the battery sector continue to increase, the technology costs continue to drop due to rapid manufacturing of electric vehicles and scale deployment in power sector. An International Renewable Energy Agency (IRENA) study points out, by 2030, the installed costs would fall by 50–60% (
Literature review
There is fast growing literature on technical, engineering, and economic aspects of variable RE integration through BESS. However, there are limited studies which deal with the concerns of planning, markets, policies, and contract models that would support the uptake of BESS in the Indian power sector. Despite the lack of direct relevance, below we provide an overview of studies relevant to our work, via different angles.
The electricity regulator in India, Central Electricity Regulatory
Methodology
To answer each of the questions discussed in Section 1, we adopt different methodologies, quantitative as well qualitative, which are explained below in the same order. Section 4.1.1–4.1.3 provide the methodologies for answers to questions 1–3 posed in Section 1.
Results and discussion
This section follows the same order as Section 4.1, with Sections 5.1–5.3 providing results for the three questions posed in Section 1, using the methodologies in Sections 4.1.1–4.1.3.
Conclusions
As the share of variable renewable energy is set to increase in the Indian grid and battery prices expected to fall further, there is a case to scaleup RE deployment with on-site battery storage to provide dispatchability, frequency regulation and balancing services. Battery storage not only reduces the cost of producing and delivering electricity, but it could also substantially change the composition of underlying generation capacity (Govindarajalu et al., 2021). This paper explores the
CRediT authorship contribution statement
Abhinav Jindal: Conceptualization, Methodology, Investigation, Data curation, Formal analysis, Visualization, Writing – original draft, Writing – review & editing. Gireesh Shrimali: Conceptualization, Methodology, Writing – review & editing, Supervision.
Abhinav Jindal holds a PhD in Economics from Indian Institute of Management, Indore and works as Senior Manager (Commercial), NTPC Ltd., a Maharatna Indian Public Sector Enterprise and the largest power producer in India. He has over 18 years of experience in various areas related with techno-economic and commercial aspects of Indian power sector. His research is focused on issues at the interface of economics, energy and environment; and has published papers in well known journals like Energy
References (52)
- et al.
A review of solar photovoltaic levelized cost of electricity
Renew. Sustain. Energy Rev.
(2011) - et al.
The role of the complementary sector and its relationship with network formation and government policies in emerging sectors: the case of solar photovoltaics between 2001 and 2009
Technol. Forecast. Soc. Change
(2014) - et al.
Optimal policy identification: insights from the German electricity market
Technol. Forecast. Soc. Change
(2017) - et al.
Falling efficiency levels of Indian coal-fired power plants: a slacks-based analysis
Energy Econ.
(2021) Managing power system flexibility in India via coal plants
Energy Policy
(2021)- et al.
Are government policies effective in promoting deployment of renewable electricity resources?
Energy Policy
(2011) - et al.
Deliberating the social acceptability of energy storage in the UK
Energy Policy
(2019) - et al.
Exploring emerging battery technology for grid-connected energy storage with Constructive Technology Assessment
Technol. Forecast. Soc. Change
(2017) - et al.
Do state renewable portfolio standards promote in-state renewable generationʔ
Energy Policy
(2010) - BBC. (2020). “The batteries that could make fossil fuels obsolete.”...
Market and Policy Barriers to Energy Storage Deployment (No. SAND-2013-7606)
Report On Optimal Capacity Mix for 2029-30
Scaling-up sustainable energy storage in developing countries
J. Sustainability Res.
A review of challenges from increasing renewable generation in the Indian Power Sector: way forward for Electricity (Amendment) Bill 2020
Energy Environ.
Cited by (9)
Impact of bi-directional electric vehicle and demand response on residential distributed PV capacity planning based on TOU pricing
2024, Journal of Environmental ManagementPolicy design for making India atmanirbhar (self-sufficient) in green energy technologies
2023, Electricity JournalCost–benefit analysis of coal plant repurposing in developing countries: A case study of India
2022, Energy PolicyCitation Excerpt :Another significant criterion for retirement is energy (or variable) costs, as higher energy cost plants are not prioritized in least-cost merit order dispatch and, therefore, operate at lower capacity utilization levels. In Indian context, the tariff for solar plus BESS is expected to reach INR 3.0/KWh in the near future and it is likely to replace coal plant from cost considerations (Jindal and Shrimali, 2022). Accordingly, we chose coal plants with energy costs greater than INR 3.0/KWh for repurposing.
Enhancing Solar Energy Integration: A Techno-Economic Viability Assessment in India
2023, Wireless Personal CommunicationsModelling barriers of battery integration in smart grid
2023, International Journal of Energy Sector Management
Abhinav Jindal holds a PhD in Economics from Indian Institute of Management, Indore and works as Senior Manager (Commercial), NTPC Ltd., a Maharatna Indian Public Sector Enterprise and the largest power producer in India. He has over 18 years of experience in various areas related with techno-economic and commercial aspects of Indian power sector. His research is focused on issues at the interface of economics, energy and environment; and has published papers in well known journals like Energy economics, Journal of Regulatory Economics, Energy & Environment and others. He is also a recipient of Karamveer Chakra Puraskar 2012.
Gireesh Shrimali is a Precourt Scholar at the Sustainable Finance Initiative at Stanford University. He is also a visiting scholar at the Energy Technologies Division at Lawrence Berkeley National Lab as well as at the Center for Climate Finance and Investment at Imperial College. Previously, he was the Director of Climate Policy Initiative's India Program, and a Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University. He has taught at the Middlebury Institute of International Studies, Monterrey as well as the Indian School of Business, Hyderabad. He holds a PhD from Stanford University, an MS from the University of Minnesota, Minneapolis, and a BTech from the Indian Institute of Technology, New Delhi. Prior to his academic/research career, he has over nine years of industry experience designing high-speed networking and computing systems.