Ratings agency Crisil expects India’s renewable energy (RE) storage capacity to surge 6 GW by fiscal 2028 from less than 1 GW operational as of March 2024. It said the energy storage capacity addition will be driven by a robust pipeline of projects under implementation and expected healthy pace of auctions. Such an increase is crucial to sustainably absorb the rising share of RE in the country’s overall power generation mix.
The analysts said while the project implementation is slow, the government’s push to develop RE power and tariffs for round-the-clock renewable energy improve confidence around energy storage adoption. Notably, tariffs for round-the-clock renewable energy, discovered in the last two fiscals, are comparable with other sources of round-the-clock power.
Storage is becoming crucial with the rising share of solar and wind in the overall power generation mix. This is because RE generation by nature is concentrated, happening at specific times in a day. For instance, solar generation happens largely during daytime. Such a generation profile does not match with demand that typically peaks in the morning and evening.
Hence, to manage absorption of such a profile of generation, surplus generation must be stored and discharged at the time of requirement to keep the grid balanced.
To address this issue, the government is pushing for the deployment of standalone storage systems (such as pumped hydro or battery storage systems) and storage-linked projects that combine RE generation with storage.
The auctions of such projects have been ramped up. About 3 GW of standalone storage and 10 GW of storage-linked projects with 2 GW of storage were auctioned in the past two fiscals, resulting in a healthy pipeline of 6 GW of storage as of May 2024.
Development of at least this much storage capacity is required to sustainably increase the proportion of RE power to 20-22% in the overall power generation, as per government estimates.
Manish Gupta, Senior Director, Crisil Ratings, said, “However, progress on implementation has been tardy. Slow adoption by state distribution companies (discoms) has been a key deterrent to implementation — 60-65% of such projects had not got their power purchase agreements (PPAs) executed until May 2024.”
A major reason for the low traction is higher tariff (INR 4.3-5.5 per kWh) on these projects than with other RE bids (Rs 2.6-3.2 per kWh) because of additional cost of storage.
Going forward, Crisil expects the government push to promote RE power and comparable tariffs of storage projects with other sources of round-the-clock power will provide a fillip to adoption.
The government aims to increase the nation’s RE capacity to 450 GW by 2030 from 130 GW as of March 2024. To promote this, Renewable Purchase Obligations (RPOs) have been stipulated for discoms. [RPOs are a minimum percentage of overall power procurement by a discom through renewable sources.] Discoms must increase the share of RE power in their power mix from 25% at present to 39% by fiscal 2028. This means discoms will need to buy more RE power and as the RE penetration increases, focus will sharpen on storage essential for grid balancing.
Ankit Hakhu, director, Crisil Ratings, said, “Though tariffs of projects with storage (INR 4.3-5.5 per kWh) are above the typical renewable bids (INR 2.6-3.2 per kWh), they are comparable with that of other round-the-clock sources, including tariffs discovered through medium-term power purchase agreements of coal thermal plants (INR 5 per kWh in fiscal 2024). This further provides confidence on increase in the traction of signing of PPAs.”
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
3 comments
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.