High Time for Policymakers to take Decisive Action
If we really want to tap into the country’s estimated 300GWh of storage opportunity in the next four years for domestic manufacturing, this is high time for policymakers to take decisive action, believes Dr. Rahul Walawalkar, Executive Director, India Energy Storage Alliance (IESA), a membership driven alliance aiming to promote energy storage, electric vehicle & micro grid technologies and their applications in India. In conversation with Manu Tayal, Sub Editor, Saur Energy International, Dr. Rahul shared his views on various issues which the power sector is currently dealing with along with his expectations from the government in the New Year. Following are the excerpts from that exclusive interview.
Q. First of all congratulations on getting a new responsibility to Chair Global Energy Storage Alliance (GESA)! To begin with kindly tell our readers about the idea behind formation of IESA and its vision.
It’s a privilege for us to be appointed as the chair of GESA. As a Chairman of GESA, I would like to build on the strong foundation laid in the past four years under the leadership of Janice Lin. I will strive to enhance collaboration within GESA members and various international agencies working on various aspects related to energy storage technologies.
Since 2004, we started working on energy storage, when Electric Power Research Institute approached us for a joint project to evaluate economics of energy storage in US electricity markets. Meanwhile then we have continued to work on this area, and were convinced that energy storage technologies coupled with the distributed renewable energy resources have potential to transform the electric grid. We are confident that the value proposition for storage is stronger in developing countries such as India, and thus incorporated India Energy Storage Alliance (IESA) in 2012. After its inception, IESA has worked diligently with policy makers, industry stakeholders and consumers to create awareness of energy storage technologies for transforming India’s electric grid in the coming decade. IESA’s experience and expertise cuts across all segments such as energy storage, electric vehicles, charging infrastructure, microgrid, renewable energy etc.
IESA is working with a vision to make India a global hub for adoption as well as manufacturing of advanced energy storage technologies by 2020. Energy storage plays an important role into renewable integration, micro grids, electric mobility, smart grid and smart cities initiatives by the Government. I have been fortunate that we entered this area at a time, when rapid innovation was taking place in terms of new energy storage technology developments as well as creating policies that can help in unlocking the value of storage to grid.
Q. As in 2018, India achieved its ambitious target of 100% rural electrification. How do you think energy storage can help in remote/ distant areas where grid connectivity is difficult?
Rural electrification was one of many ‘unique’ issues in India where we believed that emerging technologies can help India in leapfrogging development. Over 200 million rural Indians do not have access to the grid access, whilst just over another 200 million have a poor connection to the grid. These far-fetched places have the largest potential for micro-grids to give a return. The right answer has been found in innovative utilisation of renewable energy. But, the generation of energy through clean sources like solar and wind comes with the challenge of regularity and a mismatch between energy production and demand. A sound solution for this is the development of bulk energy storage solutions for electricity that are cost effective, energy dense and reliable.
With the rapid reduction in the cost of wind, solar and energy storage, customers can see RE + storage as an alternative for peak power from the grid at the same time, utilities can avoid investments in leaker capacity or eliminate load shedding by utilizing these resources.
The National Electricity Plan (NEP) highlights the role of energy storage in maintaining grid security with increasing penetration of RE in addition to addressing the intermittency of RE to a large extent.
Solar + Storage is anticipated to become a viable solution for off grid as well as for managing peak loads within the next 12-18 months. This can fuel exponential growth for storage.
Through the fast scale- up of solar anticipated under National Solar Mission, energy storage can play a critical role in India. Firstly, energy storage would be required for smoothing of the short duration intermittency caused by cloud/dust and secondly, it can provide options to shift solar energy for 2-4 hrs per day to meet the evening demand. Through the right policy support, large scale solar parks with 100 MW and above could easily integrate energy storage to help improve the power quality and reliability issues that grid can face with rapid integration of solar energy.
Work also needs to be done on developing hybrid solutions. Combination of solar and wind integrated with a hydrogen based power storage system can provide cost effective, efficient, viable and reliable solutions. Other countries are also testing various combinations to identify the best suited technology. Substantial efforts and investment are being employed in this direction to develop a solution which can reduce or eliminate the use of fossil-fuels for generating energy in these areas.
Q. What are your expectations from 2019 as Indian government has set ambitious target for renewable energy capacity addition by 2022. What will be the major bottlenecks?
India has an ambitious plan of 175 GW renewables by 2022 including 60 GW for wind and 100 GW of solar. The key challenge for reaching these targets would be the ability of the grid to integrate variability associated with these renewables as well as huge investment required for upgrading the T&D infrastructure. Energy storage can help in better integration of these renewable by providing multiple values to the system such as optimizing T&D investments, addressing forecasting errors in solar generation for more accurate scheduling, addressing local reliability issues by providing reactive power support and also enabling end users for managing peak load and more efficient utilization of distributed renewables etc.
With the rapid reduction in cost of both solar and storage, customers can see solar + storage as alternative for peak power from grid. At the same time, utilities can avoid investments in Peaker capacity or eliminate load shedding by utilizing these resources. This transition is supported by significant push for Giga factories for advanced energy storage technologies such as li-ion that is driving down the cost of energy storage at a pace even faster than the solar PV cost reductions witnessed in past decade. Grid scale energy storage projects have witnessed costs to fall below $300 / kWh from over $1000 / kWh just 5-6 years back. It is anticipated that with scale up of deployment and also setting up of local manufacturing we can witness further reduction by at least 20-30 % with in next 3-5 years. As a result we are seeing range of projects at 100s of MWh scale getting implemented globally from US, Europe, China, Japan, Australia and even in South East Asia.
Through the fast scale up of solar anticipated under National Solar Mission, energy storage can play a critical roles in India. Firstly, energy storage would be required for smoothing of the short duration intermittency caused by cloud / dust and secondly it can provide options to shift solar energy for 2-4 hrs per day to meet the evening demand.
By the right policy support, large scale solar parks with 100 MW and above could easily integrate energy storage to help improve the power quality and reliability issues that grid can face with rapid integration of solar energy. Many government projects which were cancelled are expected to move forward with a rise in private sector opportunities, and SECI’s consultation on a 160MW solar-wind-storage hybrid in Andhra Pradesh. Just in Andaman and Nicobar, there are also 4-5 other solar-plus-storage projects being executed for the military engineering services (MES).
MNRE has now constituted an Expert Committee on energy storage with a goal of releasing a ‘National Energy Storage Mission’ in 2019, which would seek to follow the success of the National Solar Mission (NSM). According to India Energy Storage Alliance (IESA) research estimates, by 2020 there will be at least 3 companies globally with 25 GWh + annual production capacity and another 5 companies with 10+ GWh annual production capacity for Li-Ion batteries. The new projected capacity for 2020 is now over 400 GWh based on latest projections by IESA Research. India is targeting 5-10 GWh of manufacturing by 2020. 1 GWh cell manufacturing would need an investment of $200-250 million. Looking at the potential India has to create a 10 GWh capacity, India could attract investments to the tune of $3 billion by 2020. And as this happens, ancillary development including module development, containers, transformers, inverters could need an equal amount of investment, taking the total potential to $6 billion.
We are confident that with platforms like Energy Storage India 2019, energy storage ecosystem will open new avenues, thought exchange and effective roadmaps for advanced energy storage technologies, regulatory and policy issues, renewable integration, future of solar power in India, make in India, rural microgrid and off grid and a lot more.
Q. In your view, what major steps should be taken by the government in coming New Year, so that India’s 30% vehicles run on electricity by 2030?
An Indian think tank revised its electric vehicle penetration target from 100% EVs to 30% within one year of announcement. As of now, India has no formal policy announcements or notifications on electric vehicles. Although in the past there seem to be some confusion on the exact details of this goal, with some departments suggesting relaxing the target to 30% by 2030. Even 30% EV penetration by 2030 would be a huge achievement for the industry. Most of the developed countries have taken more than a decade to even get to 10% EV penetration. At the same time, in next 5 years, it is anticipated that with the continued drop in price of key components, EVs would become cost competitive to ICE vehicles even on the upfront capital cost. So, it is highly desirable that Indian policy makers set an ambitious target for EVs.
Depending on how the charging infrastructure is created and associated policies are developed, this may or may not require substantial new generation capacity. E.g. with 100 GW of anticipated solar capacity added by 2022, India is expected to have a net load curve which has sufficient capacity for taking additional load during afternoon. If we can have sufficient public charging facilities which can be used for charging EVs during the day, then this can actually solve a problem of low net loads during the times when maximum solar energy is being produced.
Energy Storage is a key component of this and there are number of ways in which EV adoption could be transformative for the grid. With better tariff structures and use of right storage technologies in EVs, we could also use EVs as distributed storage and provide grid balancing services. This transformation will not only help in greening the transportation fleet by reducing diesel / petrol consumption and associated emissions, but will also help in greening the grid if EVs are used for better integration of renewable resources in grid.
The EV market is slated to be driven by both incentives and also other market dynamics that will bring down the cost of Electric Vehicles (EVs) comparable to gasoline powered vehicles. Similarly the growth in the manufacturing sector with added incentives like export credit can help India turn into an export market for EVs. NITI Aayog has already evaluated the policy option of providing feebates to promote adoption of EV.
Q. Do you think grid stability can be a threat in coming years as India is aggressively adding on to its renewable energy capacity and how energy storage can help in this?
The national grid faced major failures in July 2012. Since then, there has been a demand for bringing in the framework which can take care of power quality and grid security & stability. Over the past 3-4 years, Central Electricity Regulatory Commission has introduced ancillary services and is now evaluating additional changes including 5 mins scheduling and real time markets. The anticipated launch of ancillary services market can create 1-2 GWh opportunity for energy storage technologies in India.
We need a stable, robust and flexible grid for significant renewable energy integration. The Government of India has set up a target of 175 GW of renewable energy deployment by 2022 and it is evident that energy storage technologies have to play a key role in achieving this goal.
Technology choice: Environmental Impact
Manage renewable variation by fossil generators varying output
- Decreases efficiency
- Increases fuel consumption
- Requires more maintenance
- Increases emissions
Smarter Solution: Storage
Store energy when supply exceeds load; Inject energy when load exceeds supply
- High round trip efficiency
- Low operating cost
- Near instantaneous response
- Zero direct emissions
- Frees up generation capacity
Key applications at grid scale include the provision of fast response ancillary services such as frequency regulation, renewable ramp rate control, smoothening and firming up of renewable power as well as optimization of transmission & distribution investments.
Energy storage is also the key which can help in improving rooftop solar penetration on distribution networks. It is also an essential part of microgrids for providing energy access to every citizen by 2018. IESA is working with various government agencies of demand aggregation programs for use of energy storage for income generating activities for rural areas as well.
Q. Please shed some light on distributed advanced storage deployment in the country.
Sterling and Wilson, an Indian multinational engaged in engineering, construction, manufacturing and energy services has bagged its first large scale hybrid and energy storage turnkey engineering, procurement and construction order in Western Africa. Three battery sites totalling 30MWh including single largest installation of 17MWh part of a hybrid micro grid powered by Solar, Diesel and Battery Energy Storage.
IESA member company, Amara Raja Batteries Ltd, India’s second-biggest traditional battery maker by value, is in the process of building a 100 megawatt-hour assembly plant in the southern state of Andhra Pradesh. Another member company Bharat Energy Storage Technology (BEST) has commenced on the thermal batteries plant in Andhra Pradesh, which will produce thermal batteries from next year. The plant will initially have an annual capacity of 1000 megawatt and will be ramped up to 10 Gigawatt in the next 6-7 years.
Q. What opportunities do you think 2019 will bring for the country’s energy storage sector?
Energy storage can play an important role in renewable integration, energy access, electric mobility and smart cities initiatives by the Government. IESA estimates the market for energy storage would grow to over 300 GWh during 2018-25. India is expected to attract investment in 2-4 Giga factories for advanced Li-ion batteries, attracting over $3Billion in investments in the next 3 years. We expect 2019 to be a year of opportunities for energy storage sector especially in terms of manufacturing, assembling, energy storage project developments, equipment supply, R&D of technology enhancement etc. More and more foreign as well as Indian technology players are going to explore this sector in the coming years.
In India, with the ever-rising fossil fuel imports and rapid urbanization choking many cities with harmful pollution, the need for adoption of clean energy became more a compulsion than a choice. India is moving rapidly towards RE and e-mobility. With the government moving on top gear to reach the 2022 RE goals, the RE capacity would rise to 25% of the total and grid instability will become a real issue. Central to the successful growth of RE and EVs is Energy Storage. The government of India is fully aware of this and is putting in place the Electrical Energy Storage Mission. In the next few years, a lot of moving and rapid change in the market is expected.
If we really want to tap into the country’s estimated 300GWh of storage opportunity in the next four years for domestic manufacturing, this is high time for policymakers to take decisive action. Electric vehicles, behind the meter and grid scale energy storage, are key applications to help the Indian government meet wind and solar targets as well as meeting the energy access goals. Cost is seen as one factor derailing rapid adoption of storage in the country.
We also need the removal of barriers such as higher GST (18% for batteries versus 5% for solar) and import duties for kick starting the market for advanced energy storage in India. The government of India also has a goal of at least 30% of its vehicles running on electric by 2030. If we can have sufficient public charging facilities which can be used for charging EVs during the day, then this can actually solve a problem of low net loads during the times when maximum solar energy is being produced.
With the forthcoming launch of National Energy Storage Mission, we expect 2019 to be a year of action than mere discussions and promises. Over past 2-3 years, we have a number of mixed signals from policy makers that have prevented major investments to flow in India for energy storage sector. Still we have a wonderful opportunity to tap investments and fuel innovation with domestic ingenuity and global partnerships.