Supercharging Energy Storage: Time for a lucid policy road map to create efficient energy storage systems

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By Pranav Master , Director, Energy and Natural Resources, CRISIL Infrastructure Advisory

Energy storage – the next big step in electricity market transition – is crucial to bridge the foreseeable demand-supply gap in electricity, ensure sustained growth, and maintain a stable grid. 

That entails a clear, long-term policy and enabling regulatory framework focused on grid management and upscaling flexible sources. 

Why flexibility? 

The electricity market is in transition, on both, demand and supply sides. 

On the demand side, the push towards universal electricity access and 24×7 Power for All has brought about a shift in the consumer profile. Adoption of distributed generation and use of electric vehicles is set to increase. And rapid climate change is leading to significant seasonal variability. 

On the supply side, the share of renewables in the energy pie is estimated to rise substantially to 12%-15% by 2025, led by strong government thrust and economic attractiveness. 

Ergo, a mismatch between the demand and supply curves is inevitable. This warrants building flexibility in the grid to ensure system reliability. 

CRISIL Infrastructure Advisory believes, a conducive environment needs to be created to ensure uptake of storage solutions. 

Following are certain measures that could be implemented in this regard. 

Suggested measures to charge up the energy storage space

Mooting ‘storage-as-a-service’ 

Merely having energy storage is not enough, its design is crucial for meeting cost efficiency. 

So far, Rs.60 MWh battery based energy storage capacity has been deployed on a pilot basis in India. Recently, a large-scale, 1.2 GW renewable energy project with storage was auctioned by the Solar Energy Corporation of India (SECI) to meet peak requirements. 

All of these projects are designed for a specific application and service duration. However, deployment of storage for single application may hinder optimal utilisation of storage capacity leading to higher cost of stored energy. For instance, tariff discovered in the above cited SECI tender ranged between Rs 6.1 – 6.9 per unit for peak power supply, which would be higher than that from most thermal and hydro sources. 

How can the issue of high cost or affordability be addressed? We believe that energy storage projects could be designed and deployed on ‘storage-as-a–service’ basis across power systems for multiple applications such as frequency control, black start, voltage support, capex deferral, etc. That would extract maximum value and drive down energy costs. 

Moreover, ‘As-a-service’ concept augurs well for capital intensive and technology led industries since these risks are not assumed by end-users. In fact, parallels such as these can be found in different industries including software-as-a-service, transport or mobility-as-a-service, etc. 

Thus, incorporation of such learning as well as policy and market facilitation, highlighted earlier, would ensure deployment of storage solutions on a large scale thereby enabling electricity market transition.

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