The country’s power sector is in for a major transformation. The energy demand is much lower than the current installed capacity and the rapid growth of the renewable energy sector has dramatically changed the sector dynamics.

Going by some recent tenders, there has been a steady trend of falling prices in both solar and wind. The recent quote of ₹2.44 per unit at Bhadla solar park in Rajasthan, down from ₹4.63 in November 2015, has proved the point further.

Adding to the positive outlook are the latest predictions of battery technology becoming the next big game changer down the years. One of strongest voices arguing this trend is Dr Ajay Mathur, Director General of The Energy and Research Institute (TERI). According to him the renewable energy sector when backed with battery technology could make a huge impact sooner than one may possibly expect.

To make his point he places it in an overview of the power sector and how renewables are set to drive it. The current installed capacity of about 315 GW, 190 GW is coal based and the maximum demand has been about 160 GW. The current installed capacity and the 50 GW under construction would be adequate to meet the projected demand till 2026-2027. Coal requirement may stabilise at about 800 million tonnes.

The cost of generation of power from renewable energy sector, particularly solar, which has dipped below ₹3 per unit, is already cheaper than power from coal fired plants. However, the challenge in the renewable energy sector is to ensure that there is round-the-clock robust supply and this can happen only by providing battery back up technologies.

“Our expectation is that within 8-10 years, the cost of battery backed renewable power such as solar or wind could be as low as ₹5 a unit,” says Mathur. “This will drive us to a situation where all future power generation may come from renewable energy.”

According to TERI’s estimate, even if all households are connected and provided with adequate electricity and steady penetration of electric vehicles occurs, the current coal based capacity, including now under construction, will be sufficient to meet the demand till 2026.

Therefore, for rapid growth of the renewable energy one has to ensure that the solar or wind power generated is supplied through battery back up. As cost of batteries come down and solar plus battery backed power gets popular, the power distribution companies (Discoms) will buy power from such sources.

During the phase that such a transition takes place, the cost of coal fired power is likely to go up due to various environmental regulations and move towards gradual phasing out of fossil fuels.

Affordable technology

A key regulatory development would be the creation of a market for electricity from batteries and other storage sources that can provide electricity immediately when solar and wind starts declining. Similarly, time of the day pricing and tariffs, which are remunerative for distribution companies are essential.

Therefore, TERI is engaged with various stakeholders to see how it could get closer to cheaper and affordable battery technologies for backup of renewable energy sources. In its report, Transitions in India Electricity Sector, it estimated that beyond 2023-24 all new power generation capacity could be from renewables. This would be based on cost competitiveness as well as grid ability to absorb large amounts of renewable energy with battery-based power balancing facility.

Other reports too point to the same trend. According to an IFC study on Energy Storage Trends and Opportunities in Emerging Markets, “The varying drivers and barriers for energy storage around the world stem from numerous factors, including differences in the physical structure of the grid, needs and desires of end users, and the regulatory and market structure in a given country or region.”

The report further mentions, “Energy storage deployments in emerging markets worldwide are expected to grow over 40 per cent annually in the coming decade, adding approximately 80 GW of new storage capacity to the estimated 2 GW existing today.”

Consultancy firm McKinsey & Company in a report on The New Economics of Energy Storage mentions, “...there is considerable near term potential for stationary storage due to falling costs.... As the technology matures, we estimate that the global opportunity for storage could reach 1,000 GW in the next 20 years.”

Diverse applications

Such predictions have led to several companies playing a pivotal role in developing storage technologies for diverse applications such as electronics, automotive and energy storage. However, the challenge is to make them cheaper and better to ensure large scale adoption. And when storage systems do get implemented, it would require a shift in the way we handle power generation and supply.

Some pilot projects have also been initiated in India where battery storage will be deployed to grid connected solar PV projects. While energy storage is a global challenge, we are now at an inflection point to achieving a major breakthrough. Indian Space Research Organisation has developed efficient lithium ion batteries for space applications indigenously. “The batteries developed by us help run up to 10-12 years and even more. This technology is being shared for commercialisation, for cost effective batteries in the automotive sector and other applications,” AS Kiran Kumar, Chairman and Secretary, Department of Space, ISRO, had said recently.

Reasonable probability

It is also argued that a high renewables scenario may not be a certainty, but it has reasonable probability. This calls for timely implementation of transmission systems, setting up of green energy corridors, improvement in forecasting renewable power generation and demand and backing them with supportive policies and regulations.

As the renewable energy sector grows, there would also be a strong momentum to encourage hybrid energy where solar and wind power projects can co-exist. This means one would be able to generate more power in the same space by harnessing the power of wind and solar from the same location.

“We foresee a situation where the cost of battery back up would become cheaper,” says Mathur. “While battery technologies are old, the challenge is to meet the requirements of larger renewable project installations at affordable cost.”

“With the Government also actively pushing to make the use of electric vehicles popular by 2030, we believe that by that time renewable energy would be a major contributor to the power scenario and it would be the right trigger for mass adoption of electric vehicles,” he added.

The TERI research indicates that a quantum jump in capacity addition in renewable energy sources in the next decade is likely to significantly alter the energy mix, impacting the operation of coal -based power plants.

“As a research organisation, which plays a role in policy direction and engages with policy-makers, we are also working with various stakeholders including battery technology companies to facilitate smoother transition, says Mathur. “While the technologies may be costlier now, once mass adoption takes place they will become cheaper. We foresee a scenario where the prices will come down like what happened with LED lighting systems.”

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