Rising Markets for Grid-Linked Battery Storage in India – CleanTechnica – TechnoNews

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

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

India’s electrical energy infrastructure strained to satisfy hovering demand and skilled its best peak energy shortfall since 2010. In the meantime, on the distribution grid, infrastructure additionally reached a breaking level: practically 600 transformers failed in Kerala in the course of the summer time 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 vitality storage programs (BESS).

BESS Serve Vital Grid Wants

World examples present BESS can handle various grid challenges. International locations from China to Australia to the UK are constructing large-scale BESS to steadiness variable renewables era and preserve useful resource adequacy. In the USA, 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 providers. Utilizing BESS to offer these providers 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 programs.

BESS Are Extra Reasonably priced than Ever Earlier than

As BESS prices proceed to plummet worldwide, they’re changing into an more and more enticing choice to satisfy important grid wants. India is not any exception: in simply the previous two years, BESS tariffs dropped 65 % (Exhibit 1). BESS undertaking prices in India will proceed to fall because of business maturation and assist from authorities insurance policies such because the Viability Hole Funding and Manufacturing Linked Incentive Schemes.

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

BESS Worth Should Be Acknowledged and Monetizable to Drive Funding

Falling BESS prices will assist entice funding, however prices are solely half of the equation. For Discoms and impartial energy producers to spend money on BESS, there have to be a approach to monetize the entire vary of BESS providers. As we speak, India’s market guidelines and rules solely clearly acknowledge one worth stream of BESS: shifting internet demand to scale back system vitality 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 vitality, era capability, and transmission and distribution infrastructure in addition to different ancillary providers. Via strategic siting and operation, BESS can usually present these values concurrently, “stacking” the advantages collectively, and maximizing advantages to the grid.

BESS May Develop into Extensively Worthwhile with Valuation Reforms

As we speak, potential BESS investments are teetering on the sting of monetary viability. However comprehensively recognizing and valuing all BESS advantages would make them extensively worthwhile in a single day. Exhibit 2 reveals the undertaking economics for a typical BESS set up in India, evaluating prices from the most recent 4 tenders in opposition to estimated potential revenues. Below an energy-only dispatch technique, undertaking revenues exceed solely the bottom reported prices (GUVNL Part III and SECI). However when optimized throughout the total worth stack of vitality, useful resource adequacy, ancillary providers, and transmission and distribution (T+D) deferral, the script flips: BESS revenue margins are sturdy in opposition to all three reported prices: starting from 24 to 70 %.

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 might subject steering on BESS valuation for Discoms. Steering can embody readability across the scope of grid providers BESS can present (together with vitality, useful resource adequacy, ancillary providers and different balancing providers, and transmission and distribution deferral). Steering might additionally embody a technique that state regulators and Discoms can use to calculate the worth of a undertaking’s mixed providers.
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 can provide specific steering 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 rules to extend transparency and supply BESS larger entry. By regulation, BESS can present each Tertiary (TRAS) and Secondary (SRAS) Reserve Ancillary Service. Nevertheless, steering on BESS participation and liquidity in ancillary service markets operations has been restricted. Regardless that market-based procurement for TRAS was initiated in June 2023, the market costs for it are nonetheless opaque. SRAS are at the moment procured out-of-market. Growing accessibility and transparency to markets for these providers is critical to incentivize BESS investments and unlock the substantial financial savings made potential by using BESS for ancillary providers.

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

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