Energy storage is becoming the next disruptor in the renewable energy sector and the ESS (energy storage system) market will attract the highest investment among emerging sectors, according to a joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics.

ESS, which is the missing link in India’s power transformation, will be crucial in meeting the country’s non-fossil fuel capacity of 500GW by 2030. Also, grid-scale ESS promises to provide energy that is cheaper than traditional fossil fuel-based generation, as costs fall over lengthy project tenures.

A growing market and incentives for new technologies will smoothen the transition from fossil fuels to a stable, clean energy supply, it said.

ESS is still an emerging sector in India. However, storage is slowly gaining prominence as a crucial component in improving power quality.

Sharp rise

In the past few years, grid-scale ESS tendering in India has seen unprecedented growth. Until 2021, only 1,794 MW of grid-scale ESS capacity was awarded, excluding cancelled or dormant tenders. However, tender issuance has shot up to about 35GW in just two years.

As of November 2023, a cumulative grid-scale ESS capacity of 8 GW has been awarded, over half of which (5GW) was awarded in 2023. Currently, pumped hydro storage (PHS) dominates the ESS market, accounting for more than half the grid-scale tender capacity issued in India in 2023.

Battery-based ESS (BESS) and pumped hydro storage (PHS) are prominent, commercially viable means for implementing energy storage solutions now.

Globally, ESS has been used as ancillary support for the grid, aiding in frequency regulation and grid stability. However, given the rise in variable renewable energy (VRE) penetration in the grid over the past decade, ESS has gained prominence for its energy-shifting and smoothening applications. Since solar and wind power supply fluctuates, ESS plays a crucial role in “smoothing out” intermittency and enabling a continuous supply of energy when needed.

India aims to augment its VRE installed capacity (i.e., solar and wind) from 117 GW in November 2023. Higher VRE penetration has to be supported by a simultaneous growth in ESS capacity. “Renewable energy capacity additions to grid infrastructure cannot sustain long-term without a concurrent equivalent rise in the grid-scale ESS system capacity,” it said.

The Central Electricity Authority’s (CEA) latest optimal generation mix report indicates that India will need at least 41.7 GW)/208.3 GWh of BESS and 18.9GW of PHS by 2029-30.

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