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Battery storage, green hydrogen and flexible coal-fired power generation can help India address its next big challenge of integrating large-scale variable renewable energy into the electricity grid over the next decade, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).
“The transition to low-cost, variable renewable energy generation requires a flexible grid that can respond rapidly to changes in power demand dynamics,” says IEEFA Research Analyst Kashish Shah.
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“Battery storage can provide a solution to help the grid manage massive amounts of intermittent wind and solar, provide dispatchable power during peak demand periods and other essential grid services. And battery cost deflation is now making utility-scale battery storage projects possible for India.”
The International Energy Agency (IEA) in its India Energy Outlook 2021 says India has the potential to become a world leader in battery storage, predicting that it could add 140-200 gigawatt (GW) of battery capacity by 2040 — the largest of any country and more than 100 times as much as currently installed in the US today.
“Battery storage will likely play an important role in India achieving its renewable energy capacity target of 450GW by 2030. India already has 93GW of on-grid variable renewable energy and is targeting annual additions of 20-40GW,” says Shah.
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Policy support
The Central Electricity Authority (CEA) projects that solar and wind will form 51 per cent of India’s total installed capacity, or 420 GW by 2030, with biomass and small hydro adding another 30GW, while the IEA’s India Energy Outlook 2021 says that India could add 900 GW of renewable capacity by 2040.
“Solar power is now the cheapest source of new Indian electricity capacity, and with record low tariffs of ₹1.99-2/kWh it’s now below the marginal fuel cost of coal-fired power plants.”
The report says coal is likely to remain an important source of Indian electricity generation for some time to come and proposes that flexing its generation to cater to the majority of grid variability requirements should be an important focus area.
The report calls for policy support for a time-of-day pricing mechanism to incentivise capital investment in key grid-firming solutions to ensure flexible, reliable, peak-time power supply.
Green hydrogen
In the battery storage space, Shah says domestic and international developers as well as utilities are eyeing the very positive battery cost deflation trend but need to see a market signal in the form of time-of-day pricing to attract high initial capital investment into such assets.
The report also looks at the experiences of leaders in integrating large-scale renewables, such as Germany, South Australia and California, in the context of the Indian electricity market.
Though yet to be commercially deployed in India, green hydrogen, produced through water electrolysis using renewable energy, has a wide range of potential applications in transport, industrial production of ammonia, methanol, steel and electricity storage, and is an opportunity that India cannot afford to miss, says Shah.
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