India has one of the most ambitious targets of renewable energy deployment globally. This has made renewable power extremely competitive and electricity storage is expected to play a huge role in enabling the next phase of energy transition. Not only will storage promote renewable energy production, but it will also enable increased decarbonisation in key segments of the energy market.
As electricity systems grow, they will require greater flexibility and will need to have an option for the storage of electricity for days, weeks, or even months. By providing these essential services, we can drive electricity decarbonization and help transform the whole energy sector. Today, there is a high demand for electricity storage applications as the push for distributed systems and electric mobility has increased.
Reports suggest that globally, energy storage will account for around 16 TWh by 2030, with the Indian energy storage market expected to grow upwards of 2 TWh by 2030. Energy storage is sure to play an important role in enabling renewable energy penetration without an over-reliance on transmission corridors, which could require huge capital investments.
Currently, various battery technologies have been developed at the global level that are suitable for both stationary and transportation markets. For example, Lithium-ion batteries have high power and energy density, along with a competitive cycle and calendar life. They are used for a wide variety of applications ranging from electric mobility to off-grid applications. Li-ion batteries claimed 97% of the global market share in 2018 and will soon overtake sodium-sulphur, nickel, and lead-acid-based storage systems. By 2030, Li-ion batteries are predicted to be priced as low as $74 per kWh. Although Li-ion has overtaken the energy storage market, other better-performing batteries are available at the research stage. These include electrolyte batteries, solid-state batteries, and metal-air batteries.
At the moment, however, India has no major producers of Electric Vehicle (EV) batteries and lacks the state-of-the-art facilities to produce sufficient capacity of these batteries. The country also does not have reserves of some of the most critical Li-ion components. Apart from this, the batteries also require regular maintenance and replacement as EV batteries have a shelf like of less than 10 years. India also does not have any policy framework for mechanisms for battery recycling and second-hand use.
Although there are many barriers to the adoption of energy storage in the country, there is an opportunity for the country to foray into a new segment in the energy sector by addressing these challenges.
One solution that India can capitalize on could be battery management. This is primarily driven by anticipated EV demand, shortage of or restricted access to critical minerals, and useful capacity left in used EV batteries. The estimated cost of a reused battery is 78% lesser than that of a new battery. An estimated 11 million tonnes of Li-ion batteries will be discarded by 2030, creating a potential market opportunity of $11.8 billion.
To make energy storage an attractive business opportunity in the country, the initial focus should be on-demand creation. The government can introduce incentives to promote large-scale adoption. They can also provide financial help by setting up a fund to accelerate the deployment of grid-scale energy storage projects by discoms. They can then explore learnings from these projects to address technology, policy, and other commercial risks. They can also reduce dependence on imports by sourcing essential elements like lithium and cobalt from outside and using them to manufacture home-made batteries. With a regularised policy framework and supply chain linkages, the country can supply the market with all the batteries it needs.
Summarized from the Powerline Magazine Article on Energy Storage.