Rising Markets for Grid-Related Battery Storage in India – CleanTechnica – Uplaza

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Energy sector regulators maintain the keys to unlock the trillions of rupees of battery storage funding essential to make sure the expansion of a versatile, reasonably priced, and dependable grid.

Though the summer season of 2024 is now behind us, it stands as the most well liked summer season on document. Over the past week of Could, temperatures in elements of northwest India exceeded 50 levels Celsius (120 levels Fahrenheit). Rising temperatures led to document energy demand. On Could 30^th, nationwide demand hit a document excessive of 250 GW.

India’s electrical energy infrastructure strained to fulfill hovering demand and skilled its best peak energy shortfall since 2010. In the meantime, on the distribution grid, infrastructure additionally reached a breaking level: almost 600 transformers failed in Kerala throughout the summer season heatwave. These challenges threaten the affordability and reliability of India’s energy system, particularly as rising heatwaves and local weather occasions are anticipated to persist within the coming years. Happily, an answer is rising: battery power storage methods (BESS).

BESS Serve Important Grid Wants

International examples present BESS can deal with various grid challenges. International locations from China to Australia to the UK are constructing large-scale BESS to steadiness variable renewables technology and keep useful resource adequacy. In the US, BESS are actively used to enhance distribution system reliability and resiliency in addition to handle grid stability. In Texas, BESS are actually the major supplier of frequency regulation, and a considerable supplier of different ancillary companies. Utilizing BESS to supply these companies helped the Texas grid save US$750 million (INR 6,255 crore) over a two-day chilly stretch this winter. Internationally, BESS are enabling extra environment friendly, lower-cost energy methods.

BESS Are Extra Inexpensive than Ever Earlier than

As BESS prices proceed to plummet worldwide, they’re changing into an more and more enticing possibility to fulfill important grid wants. India isn’t any exception: in simply the previous two years, BESS tariffs dropped 65 p.c (Exhibit 1). BESS venture prices in India will proceed to fall as a result of trade maturation and help from authorities insurance policies such because the Viability Hole Funding and Manufacturing Linked Incentive Schemes.

Exhibit 1: Price trajectory of 2-hour length BESS in India

BESS Worth Should Be Acknowledged and Monetizable to Drive Funding

Falling BESS prices will assist appeal to funding, however prices are solely half of the equation. For Discoms and unbiased energy producers to spend money on BESS, there have to be a solution to monetize the entire vary of BESS companies. In the present day, India’s market guidelines and laws solely clearly acknowledge one worth stream of BESS: shifting internet demand to cut back system power prices. The result’s that BESS are inspired to function an “energy only” dispatch technique. BESS homeowners obtain restricted remuneration, and India’s grid receives just one profit. However world examples present BESS can present a number of worth streams, together with deferring investments in power, technology capability, and transmission and distribution infrastructure in addition to different ancillary companies. Via strategic siting and operation, BESS can typically present these values concurrently, “stacking” the advantages collectively, and maximizing advantages to the grid.

BESS Might Turn into Broadly Worthwhile with Valuation Reforms

In the present day, potential BESS investments are teetering on the sting of economic viability. However comprehensively recognizing and valuing all BESS advantages would make them extensively worthwhile in a single day. Exhibit 2 exhibits the venture economics for a typical BESS set up in India, evaluating prices from the newest 4 tenders in opposition to estimated potential revenues. Underneath an energy-only dispatch technique, venture revenues exceed solely the bottom reported prices (GUVNL Part III and SECI). However when optimized throughout the complete worth stack of power, useful resource adequacy, ancillary companies, and transmission and distribution (T+D) deferral, the script flips: BESS revenue margins are strong in opposition to all three reported prices: starting from 24 to 70 p.c.

Exhibit 2: Advantages and prices for 2-hour length BESS at this time

India’s Energy Sector Regulators Can Unlock the Marketplace for BESS

India’s energy sector regulators maintain the keys required to unlock the marketplace for BESS and the substantial systemwide advantages that come from low-cost, dependable grid flexibility. We advocate three actions:

1. The Discussion board of Regulators may problem steerage on BESS valuation for Discoms. Steerage can embody readability across the scope of grid companies BESS can present (together with power, useful resource adequacy, ancillary companies and different balancing companies, and transmission and distribution deferral). Steerage may additionally embody a technique that state regulators and Discoms can use to calculate the worth of a venture’s mixed companies.
2. State regulators can acknowledge the useful resource adequacy worth of BESS in long-term planning. States can undertake the Discussion board of Regulators’ Useful resource Adequacy Mannequin Regulation. The Central Electrical energy Authority may give specific steerage on capability accreditation of BESS and guarantee mechanisms are in place for Discoms to contract BESS capability in service of assembly built-in useful resource planning/useful resource adequacy necessities.
3. CERC can replace ancillary service laws to extend transparency and supply BESS higher entry. By regulation, BESS can present each Tertiary (TRAS) and Secondary (SRAS) Reserve Ancillary Service. Nevertheless, steerage on BESS participation and liquidity in ancillary service markets operations has been restricted. Despite the fact that market-based procurement for TRAS was initiated in June 2023, the market costs for it are nonetheless opaque. SRAS are at present procured out-of-market. Rising accessibility and transparency to markets for these companies is important to incentivize BESS investments and unlock the substantial financial savings made potential by using BESS for ancillary companies.

To keep up reliability over the approaching a long time, India’s grid requires substantial new capabilities. Planners already acknowledge the necessary position that BESS can play in cost-effectively assembly grid wants: the Central Electrical energy Authority’s cost-optimized mannequin of the 2030 grid consists of over 40,000 MW (200,000 MWh) of latest BESS. To realize essential BESS deployments, India’s energy system regulators and Discoms can acknowledge and supply mechanisms to monetize the complete worth of BESS. This can incentivize large-scale funding, unlocking the complete potential of BESS to contribute to an reasonably priced, dependable future.

By Jesse Cohen, Benny Bertagnini, Sonika Choudhary © 2024 RMI. Revealed with permission. Courtesy of RMI.