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1、Business guideto energy storage adoption in India Contents1Energy storage market overview in India|9Possible ESS and BESS use cases&ownership models|26Foreword|3Executive summary|6AnnexesConclusion|39231.Decoupling energy demand and CO2 emissions growth|102.Indias energy transition:renewable energy|
2、103.Indias energy transition:energy storage|124.Status of ESS deployment in India|155.Market drivers|166.Leading states for front-of-the-meter storage adoption in India|227.Leading states for C&I storage adoption in India|238.Estimation of FTM storage potential in India|259.Estimation of C&I market
3、potential in India|251.ESS use cases for distribution utilities|272.Value stacking of applications by distribution utilities|313.Use cases for C&I consumers|324.BESS ownership models|345.Project examples|38Business guide to energy storage adoption in India 3 lndias power demand,already high at 1,375
4、 TWh is expected to increase at the highest annual rate globally until 2040.The energy transition is a key part of lndias planned climate action during the current decade.As lndia plans to make renewable energy a predominant part of its power mix with a threefold increase in renewable power capacity
5、 between 2020 and 2030,energy storage will play a central role in the power system transformation.The Government of lndia has made concerted efforts to encourage the adoption of renewable power and recognizes the need for balancing sources like energy storage to support this shift while ensuring a r
6、esilient and reliable power grid.Renewable Energy is intermittent in nature-solar energy and wind energy are driven by the forces of nature.Without storage,these forms of energy can only be supplementary and cannot function as a reliable base load.Currently,storage is expensive and till the cost of
7、storage declines,Renewable Energy cannot be used to support the base load.lf we truly wish to transform the global energy sector,then countries must work towards large scale deployment of storage technologies which will help bringing down electricity prices.The Ministry of Power recently announced a
8、n energy storage obligation trajectory until 2029-30.This mandates distribution utilities,captive power producers and open-access consumers to purchase a minimum percentage of their annual power consumption from energy storage.Several other measures undertaken by the Government of india,such as prod
9、uction-linked incentive(PLl)scheme for manufacturing of giga-scale advanced chemistry cell battery storage with an allotment of INR 181 billion,guidelines for procurement and use of battery energy storage systems and large-scale bidding to procure more stable renewable power coupled with energy stor
10、age,are expected to boost the deployment of energy storage solutions.Our collaboration with the private sector has been critical in leading the nation in adoption of renewable power.We hope this will be replicated in the case of energy storage adoption as well.Businesses play a crucial role by innov
11、ating both energy storage solutions aligned with power grid requirements and financing mechanisms,to deploy those solutions at scale in a most competitive manner.Business guide to energy storage adoption in India 4Business guide to energy storage adoption in India 5ForewordIndias commitment to comba
12、t the climate crisis is evident from the various policy announcements made by the government of India over the past two years.It comes as no surprise that focus on increasing renewable energy production is at the heart of this journey,and the pace and efficiency at which renewable energy is integrat
13、ed with the existing power grid systsems shall determine success.In this context,the release of WBCSDs Business Guide to Energy Storage Adoption in India could not be more timely.The Guide,which is an outcome of deliberations amongst policy makers,renewable energy companies,corporates,and financial
14、institutions,will enable a nuanced understanding of the complex challenges associated with energy transition.Energy storage is crucial to power system transformation and to fast-track the deployment of energy storage assets in India,a conducive market environment will need to be put in place by poli
15、cy makers and supported by corporate leadership in adoption.Further,banks and the world of finance will play a pivotal role in this effort.Congratulations to WBCSD for this reference manual,which is a worthy addition to the must-reads for all stakeholders in Indias power sector transformation.Regard
16、s,Sanjay SinghHead of Territory and CEO,India,BNP ParibasBusiness guide to energy storage adoption in India 6Executive summaryEnergy storage is central to Indias power system transformation.The projected cost reductions in energy storage systems that will come with economies of scale and technologic
17、al advancements will likely make them cost-competitive with thermal alternatives for most applications by 2025-27.Fast-tracking the deployment of energy storage assets in India will require policy and regulatory authorities to put a conducive market environment in place and corporate leadership to a
18、dopt it.With 1,375 terawatt hours(TWh),India has the worlds third largest power demand.The International Energy Agency expects this to increase at 4.7%a year until 2040,the greatest increase in the world.The power sector is the largest contributor(around 50%in 2019)to Indias CO2 emissions,mainly bec
19、ause of a high dependency on coal as a power source(coal-based power generation met around 71%of the countrys electricity needs from April 2021 to March 2022).The pace at which India deploys renewable energy(RE)and integrates it into its power grid,especially this decade,is critical to the countrys
20、competitiveness and global climate action.Energy storage will play a central role in the successful integration of RE.Due to expected electricity demand growth and variability,i.e.,wider fluctuations in daily peak power demand and a high share of fluctuating renewable power in the electricity mix,th
21、e hour-to-hour flexibility needs of the Indian power system are likely to increase three-fold between 2020 and 2030 compared to an average increase of 40%in most other large markets.1 To ensure a resilient power grid,it will be critical to build energy storage installations alongside other solutions
22、,including the flexible operation of existing thermal fleets and demand-side responses.In line with this,the Central Electricity Authority(CEA),which formulates plans for the development of electricity systems,estimates in its Draft National Electricity Plan that the country will need almost 71 giga
23、watts(GW)/392 gigawatt hours(GWh)of energy storage systems(ESS)by 2032,around 4%of Indias power requirements by then.2Adding to the requirement for energy storage from a power grid perspective are the net-zero emissions targets set by major commercial and industrial(C&I)companies,most of which are t
24、o be achieved much in advance of the national net-zero emissions target of 2070.To achieve their targets,companies must rapidly increase the share of renewable sources in their power consumption.Since renewable power generation is variable,storing excess energy is a suitable solution for companies.A
25、s a result,their demand for renewable power increases the need for energy storage solutions.WBCSD has prepared this business guide to support electricity distribution utilities and C&I companies in India in developing strategies and action plans for investments and deployment of ESS solutions.The gu
26、ide provides an overview of major market drivers,use cases that make or are likely to make ESS adoption commercially viable,and ownership models and contracting arrangements for ESS adoption.While this guide focuses on the relevance of energy storage solutions for distribution utilities and C&I cons
27、umers,it can also prove useful for other stakeholders,such as RE developers,ESS solution providers and financial institutions.The ultimate objective of this business guide is to enable the accelerated deployment of ESS in India.Business guide to energy storage adoption in India 7MARKET DRIVERS FOR E
28、NERGY STORAGEThe Government of India has taken several supportive policy and regulatory measures to boost energy storage deployment by distribution utilities and C&I companies.These include energy storage obligations,the draft resource adequacy guidelines and government tenders to procure renewable
29、power for meeting peak load requirements,among others.Still,a few regulatory and market barriers keep energy storage from realizing its full value.These include a lack of market-based mechanisms for ancillary services(AS),provisions for evaluating non-wired capital investments as an alternative to t
30、ransmission planning and effective time-of-use tariffs.The economic drivers,including the expected decline in ESS costs,the increasing cost of thermal electricity generation and the growing adoption of internal carbon pricing by companies,are likely to further boost ESS adoption.REGIONAL POTENTIAL F
31、OR ENERGY STORAGEWe assessed state by state potential for energy storage adoption by distribution utilities based on the share of renewable power,deviation penalties paid,and the need for additional generation capacities.The analysis reveals that the states with high-potential for storage adoption a
32、re Telangana,Tamil Nadu,Karnataka,Maharashtra,Madhya Pradesh,Gujarat and Kerala.For energy storage uptake by C&I consumers,the analysis shows that Maharashtra,Gujarat,Karnataka,Uttar Pradesh and Tamil Nadu would be early adopters.This analysis is based on parameters including renewable power sourcin
33、g potential,conducive open access policies and the spread between the cost of more firm renewable power(including energy storage)and the retail industrial tariff.ENERGY STORAGE APPLICATIONSAt present,it makes commercial sense for distribution utilities to adopt ESS for peak shaving and make renewabl
34、e power more dispatchable.ESS provides a commercially viable alternative to contracting baseload thermal power plants to meet a utilitys peak load when surplus capacities are insufficient.For instance,if a utility contracts a coal-based power plant to meet its peak load(which occurs around 3%of the
35、time),the system cost of meeting that peak load could be as high as INR 55/kilowatt hour(kWh).Alternatively,the utility can deploy battery energy storage systems(BESS)at INR25/kWh.Applicability of various ESS use casesDiesel abatement by using energystorage as a power back up sourcePeak power procur
36、ementthrough renewable sourcesMore stable procurement of REScaling up of peak power procurementthrough renewable sourcesScaling up of more stable RE procurementParticipation in the ancillary marketEnergy arbitrageParticipation in capacitymarketsCommercial and industrial companiesDistribution utiliti
37、esBothNear term(0-2 years)Use cases which are viableat current ESS costsMedium term(2-4 years)Long term(4years)Business guide to energy storage adoption in India 8Since there are only limited use cases for which energy storage adoption makes commercial sense,given the current ESS costs and regulator
38、y framework,stacking multiple use cases is critical to optimize the usage of ESS and unlock its full potential.If deployed at appropriate voltages,ESS can provide ramp support,arbitrage benefits,capital expenditure(CAPEX)deferral and loss reduction benefits,and increase grid use,thereby reducing the
39、 per unit capacity cost.For C&I consumers,it makes commercial sense to adopt energy storage solutions for two main applications:capacity firming of renewable power and diesel abatement.For C&I consumers facing average power cuts of an average of 45 minutes per day,commercially viable energy storage
40、solutions already exist to substantially reduce reliance on diesel generation sets.Moreover,industries with a fairly stable demand profile are increasingly adopting energy storage to firm up their renewable power supply.JSW Energys bid in the Solar Energy Corporation of Indias latest 500 megawatts(M
41、W)/1000 megawatt hours(MWh)BESS tender and Arcelor Mittals partnership with Greenko for the use of energy storage are two examples of such investments by C&I consumers.OPERATING MODELSDistribution utilities,renewable power producers and C&I consumers can either directly own the storage installation(
42、direct ownership)or use the services of a third party that will be responsible for the assets development(third-party ownership).Going forward,we envisage that most ESS installations in India will happen under third-party ownership,in which end consumers can pass on the technical and operational ris
43、ks to the project developer.Energy storage is central to solving the renewable power procurement challenges that both distribution utilities and C&I consumers face in India.Expected cost reductions and a conducive market environment will enable both to develop business cases that capture several val
44、ue streams and therefore improve the projects commercial viability and bankability.C&I consumers,in particular,can drive this market forward as they work to fulfill their RE procurement targets.The accelerated deployment of energy storage will ultimately benefit the Indian power grid as a whole.CALL
45、 TO ACTION:While future price reductions and policy and regulatory support will determine the pace of energy storage adoption in India,we recommend the following for distribution utilities and C&I companies in order to make efficient use of energy storage while progressing on their power procurement
46、 targets in the short-term:Distribution utilities in India should evaluate the business case for energy storage before contracting new thermal power plants for peak power requirement.Both distribution utilities and C&I companies should issue technology-agnostic tenders for procurement of more stable
47、 renewable power,to enable achievement of their renewable power procurement targets in the most cost-effective manner.Collective efforts should be made to standardize contracts between ESS project developers and RE generators/distribution utilities/C&I companies.Business guide to energy storage adop
48、tion in India|9Energy storage market overview in India1Business guide to energy storage adoption in India 10Energy storage market overview in India1DECOUPLING ENERGY DEMAND AND CO2 EMISSIONS GROWTHIndias per capita power consumption is one-third of the global average.Despite such low per capita powe
49、r consumption,the countrys CO2 emissions are the third highest in the world.As per a recent modeling exercise undertaken by Deloitte on pathways to net-zero emissions in India by 2070,estimates show energy demand will double by 2050 from 2020 levels.The transition to a low-carbon energy future is on
50、ly possible if India decouples its emissions growth from energy demand growth in the future.RE has the potential to decouple the countrys energy demand growth from increases in CO2 emissions.A variable RE-based energy transition to reduce carbon emissions and reach net-zero emissions by 2070 would r
51、equire the deployment of energy storage solutions 2 to ensure that the power grid remains stable and resilient.INDIAS ENERGY TRANSITION:RENEWABLE ENERGY The large-scale adoption of RE sources is the cornerstone of Indias energy transition.This assumes significance as the country has committed to red
52、ucing projected carbon emissions by 1 billion tons by 2030 and achieving net-zero emissions by 2070.The rapid addition of RE resources at a compound annual growth rate(CAGR)of some 17%over the last decade has made India the fourth largest in the world in terms of installed RE capacity.3 This has bee
53、n a result of falling equipment costs and a decisive push by the government.The new target for 2030 is to achieve a capacity of 500 GW of renewable power(including hydro)by 2030.4India is making rapid progress in adding renewable power capacity to the power mix.Over the last decade,it has added RE c
54、apacity at a CAGR of about 17%.Figure 1:Projected energy demand and emissions growth Source:Deloitte analysis;International Energy Agency(IEA)(2021).India Energy Outlook 2021.This section includes an assessment of expected growth in the front-of-the-meter(FTM)and behind-the-meter(BTM)ESS market,stat
55、es with a potential to lead in adoption and market drivers and barriers.202020252030203520402045205002,000Demand(BAU)4,0006,0008,00010,00012,00014,00016,0005001,0001,5002,0002,5003,0003,5004,0007,353Energy demand(TWh)8,3699,52710,63012,02613,08714,2482,7222,8752,9963,0783,2623,2823,4032,7222,7072,65
56、93,5662,5702,3832,288Emissions(Mt CO e)2Emissions(BAU)Emissions(accelerated)Business guide to energy storage adoption in India 11FY14FY15FY16FY17FY18FY19FY20FY21FY25.FY30FY22768089102114 0GW152Installed capacity(GW)16%CAGR Figure 2:Cumulative RE installed capacity of India and target for
57、2030 Note 1:Installed capacity also includes large hydro|Note 2:Financial year(FY)April to MarchFigure 3:Projections for installed capacity of power in India(GW)20500%20%40%60%80%100%20302020Emissions:1,080 Mt CO e;39%of total2Emissions:1,125 Mt CO e;40%of total2Emissions:381 Mt CO e;17%of total2The
58、rmalWindSolarHydroOthers47304,3208449033Source:CERC(2022)“Report on short-term power market in India:2021-2022”;CEA(2022)“All India installed capacity report March 2022Source:CEA(2020),Monthly installed capacity reports,Deloitte analysisBusiness guide to energy storage adoption
59、 in India 12INDIAS ENERGY TRANSITION:ENERGY STORAGEIndia is on the cusp of a potential energy storage revolution.The country must add an energy storage capacity of more than 200 GW by 2040,which is the largest of any country 5,to achieve net-zero emissions by 2070.The unpredictable nature of RE sour
60、ces leads to variability in the demand-supply balance,fluctuating power grid frequency levels and sudden changes in voltage profiles.Energy storage solutions can well address power grid stability,given their inherent capability to respond within a few seconds.As countries reduce their numbers of coa
61、l-based power stations to open the way for renewable power,long-duration energy storage solutions will enable these renewable energies to supply the base load in the future.However,in the next 3-5 years,energy storage is likely to be a preferred solution to cater to peak loads and provide more firm
62、renewable power supplies(meaning a greater supply of power from renewable sources than available naturally over a defined period of time)to distribution utilities and C&I consumers.Recent tenders from several distribution utilities and power procurement nodal agencies have indicated their inclinatio
63、n to procure energy storage solutions,bundled with the hybridization of renewable energies.Table 1 provides examples of such tenders issued by various utilities in 2022.Table 1:Tenders issued by various utilities in 2022 Source:Tender documents-MSEDCL,SECI,NREL,News ReportsProcurerCapcityLocationSta
64、tusDetailsMSEDCL(Maharashtra State Electricity Distribution Company Limited)250 MWMaharashtraTender openMSEDCL issued the tender for procurement of flexible and schedulable power from grid-connected RE projects with an energy storage facility on a long-term basisSECI(Solar Energy Corporation of Indi
65、a Ltd)500 MW/1000 MWhRajasthanProject allotted to JSW Energy SECI acted as the implementing agency and will procure power on behalf of the utilitiesSECI has contracted 60%of the project capacity,with the remaining 40%capacity being available for the developer to participate in the merchant market NT
66、PC Renewable Energy 3000 MWh capacity with min.500 MWAnywhere in IndiaTender openNTPC intends to use an energy storage facility to meet its round-the-clock(RTC)RE requirement,with a wind-solar profile under service model from inter-state transmission system(ISTS)-connected ESS projectsBusiness guide
67、 to energy storage adoption in India 13The government is renewing its focus on ensuring the availability of power 24/7 by introducing states to resource adequacy as a framework and bringing in electricity market reforms.As surplus energy availability ceases to exist in most states due to higher than
68、 usual demand increases and a lack of new procurement tenders,states are exploring ways to procure more firm and peak power solutions from renewable sources to meet their deficit situations and long-term demand obligations.Figure 4:Load curve of a typical distribution utility in India with various l
69、oad requirementsSource:Deloitte analysisNote:This figure is illustrative of an annual load curve of a distribution utility 4-80Existing tie-ups4209201,4201,9202,4202,920Power demand(MW)0%10%15%35%45%55%65%75%85%20%15%25%30%40%50%60%70%80%98%95%90%ZONE 4ZONE 3ZONE 2ZONE 10.02%0.38%4.6%95%70%DemandEne
70、rgy shareTop 8%Instantaneouspeak demandAdditional LTArequired2nd peakdemandIntermediatedemandBasedemandUp to 15%Up to 30%40-50 hours(0.5%of time)6,760 Hours(77%of time)250 hours(3%of time)1,700 hours(2.85%of time)Peak shifting or peakingresources energystorage,demand,response,etc.Short-term(powerexc
71、hange,banking,etc.)Baseload thermal.RERTC hydro,nuclear,etc.A predominantly RE-led future will require the significant deployment of energy storage.This,coupled with renewable power,will be key to helping distribution utilities meet 24/7 power supply obligations with increasing share of renewable po
72、wer going forward.Business guide to energy storage adoption in India 14Figure 5:Potential role of energy storage in power grid support and integration along different timescalesAs RE will meet future distribution utility load growth,spanning the requirement to meet base load,peak load,seasonal load
73、differences,hourly load differences and ramp requirements,energy storage will be a crucial resource in providing the required flexibility and adaptability to meet load preferences.Real timeProvision of inertiaFast frequencyresponseLoad followingand time shiftingLong-durationelectricity supplySub-sec
74、ondsRE capacity firmingand deviation penaltyreductionAncillary services:Transmission infrastructureservices:Fast-frequencyresponse Primary/secondary/tertiary reserve Voltage support Black startDistribution infrastructureservices:Residential applicationCommercial applicationCustomer energymanagement
75、services:Destribution upgradedeferral Distributioncongestion relief Deviation penaltyreduction Voltage support Ramp support Power reliability Retail electric energytime shift Power quality Deman-sidemanagement Transmission|upgrade deferral Transmissioncongestion reliefRE dispatchabilityParticipation
76、 inancillary marketEnabling two-shiftoperations ofcoal-based plantsSecondsMinutesHoursDays/Weeks/Months4OperationalreserveBusiness guide to energy storage adoption in India 15STATUS OF ESS DEPLOYMENT IN INDIAThere are multiple ESS technologies under different stages of commercialization and lab-scal
77、e development.Pumped hydro storage is one of the oldest storage technologies and still has massive technical potential in India.The estimated potential of pumped hydro storage in India is 90.30 GW.At present,eight plants with aggregate installed capacity of 4.75 GW are commissioned.Out of these,only
78、 six plants with aggregate installed capacity of 3.3 GW are operational.Other than pumped hydro,battery energy storage systems(BESS),especially lithium-ion(Li-ion)based BESS,are seeing increasing deployment for power grid-related applications over pumped hydro storage.Although the levelized cost of
79、electricity for pumped hydro storage projects(PSP)is lower than most BESS applications,the Li-ion BESS possesses higher energy,power density and round-trip efficiency and has fewer geographic risks in its development cycle.PSPs have the inherent disadvantage of being site-specific and of limited pot
80、ential because of the availability of such sites in India being scarce.They also require a long gestation period to develop,owing to the rehabilitation challenges associated with such projects.Naturally,estimates show that BESS,with reducing cost curves will dominate energy storage deployments in th
81、e next decade until the use of green hydrogen becomes commercially proven to provide seasonal storage.Driven by the need to offer higher performance and reduced supply chain and environmental risks,other technologies such as fuel cells,super-capacitors,solid-state batteries,sodium-ion and metal-air
82、battery storage solutions are in early stages of development.This report does not cover these evolving technologies.Annex 1 presents a detailed list of ESS installations in India.Annex 2 provides a review of ESS technologies.PSP474547BESSShare of BESS and PSPinstallations(MW)71.3Remainingpotential3.
83、3Operational1.4Non-operational1.6Underconstruction18.9Early stagedevelopmentPSP Status(GW)Figure 6:Status of pumped hydro storage in India Source:CEA(2022),“Status of Pumped Storage Development in India”,Niti Aayog(2022),“Need for advanced chemistry cell energy storage in India”Business guide to ene
84、rgy storage adoption in India 16MARKET DRIVERSThe following sections provide details on the key drivers that will ease the adoption of BESS in India for both the front-of-the meter(by generation,transmission and distribution utilities)and behind-the-meter(by C&I consumers in their own premises)marke
85、t.FRONT-OF-THE METER MARKETRegulatory driversRecognizing the importance of energy storage solutions to support the scaling up of Indias renewable power,the Ministry of Power has recently notified distribution utilities and other entities,including large C&I consumers,of the hydro purchase and energy
86、 storage obligation which is in effect until the financial year 2030.It has calibrated the energy storage obligation from 1%in 2023-24 to 4%in 2029-30 of the total electricity consumption and treats the obligation as fulfilled only when the utility procures at least 85%of the total energy stored in
87、the energy storage asset from RE sources.The Indian governments notification of energy storage obligations and its direction to all states to consider energy storage as an integral part of their optimal portfolio planning process will be a key market driver in promoting ESS.Table 2:Regulatory driver
88、s for energy storage adoption in the FTM marketDriverSummaryStringent renewable purchase obligation(RPO)regulations In addition to resetting the RPO target to 43.33%by 2030,the government recently released the energy storage obligations trajectory,which will go from 1%in 2023-24 to 4%in 2029-30.The
89、mandate to procure this minimum percentage of total power procurement from renewable power bundled with energy storage sources will ease the development of the energy storage market in India.Penalty proposed in draft amendment to EA 2003 and Tariff Policy 2016 for not meeting the RPO target specifie
90、d by central government:INR 0.25-0.50/kWh in 1st year of default INR 0.5-1/kWh in 2nd successive year of default and INR 1-2/kWh continuing after 2nd year of default.The government expects compliance with these obligations to be high,given increasing instances of imposition of penalties on distribut
91、ion utilities and captive consumers for non-compliance.Recent examples include that of DERC(Delhi Electricity Regulatory Commission)penalizing TPDDL(Tata Power Delhi Distribution Limited),BYPL(BSES Yamuna Power Limited)and BRPL(BSES Rajdhani Power Limited);and Chhattisgarh State Regulatory Commissio
92、n(CSERC)for penalizing captive power producers in the state for non-compliance.Scientific resource planning procedure to meet power demand reliably The draft Resource Adequacy guidelines and Indian Electricity Grid Code(IEGC)have put a renewed focus on integrating RE into power sector planning and f
93、ulfilling resource adequacy using energy storage solutions.Resource adequacy would ensure that distribution utilities undertake a scientific study(integrated resource plan)to have an adequate supply of generation or demand-responsive resources to serve expected peak demand reliably over the next 5-1
94、0 years.Resource adequacy targets are set by adopting appropriate loss of load indices.Adhering to such targets would require a reduction in load shedding by distribution utilities and ensuring adequate capacity to meet load using the generation mix with the least cost.Resource adequacy exercises wi
95、ll provide the basis for appropriate regulatory commissions to approve distribution utility investments in energy storage solutions,as scientific modeling exercises based on least-cost principles would guide the requirement.Business guide to energy storage adoption in India 17Increasing renewable po
96、wer procurement and conducive regulatory provisions make way for distribution utilities to increase energy storage installations.DriverSummaryTransparency in BESS procurement process The government issued the guidelines for procurement and use of BESS as part of generation,transmission and distribut
97、ion assets along with ancillary services for the procurement of energy from BESS through competitive bidding from grid-connected projects under build-own-operate or build-own-operate-transfer models.These guidelines provide standardization and uniformity to the BESS procurement process.The minimum i
98、ndividual project capacity specified is kept low,at 1 MW for intra-state energy storage projects and 50 MW for inter-state BESS projects,to ensure maximum participation.Guidelines have set a minimum battery energy storage purchase agreement term of eight years,which offers developers future visibili
99、ty for planning.A standardized procurement process will make the bidding process easier for BESS developers and will make it more convenient for them to bid for multiple BESS tenders in different states.Stringent deviation settlement mechanism regulations The Deviation Settlement Mechanism Regulatio
100、ns 2022 increases the penalty rates for deviations from electricity injection and withdrawal schedules and links it to either the weighted average of the market clearing price of the day-ahead market,real-time market or ancillary services markets,whichever is highest.The tolerance band where a penal
101、ty is not applicable for RE generators has gone down from 15%to 10%.This would lead to the increased need for the accurate forecasting and adoption of energy storage systems by RE players to avoid paying hefty penalties.Earlier,generators who over-injected power into the grid during off-peak hours i
102、f frequency rose above specified levels were paid to do so.The revised regulations reduce the payment for such generators,encouraging them to store the additional energy for later use.Participation in the ancillary services market According to the latest ancillary services regulations,the procuremen
103、t of secondary ancillary services(response within 30 seconds)would take place through an administered mechanism and tertiary ancillary services(response within 15 minutes)through a market-based mechanism.The mechanism for procuring secondary services prioritizes resources with fast ramping capabilit
104、y in the following ways:Payment of incentive done corresponding to the extent of compliance with automatic generation control signals sent by the system operator Preference for dispatch given to resources with higher ramp rate and lower cost Repeated non-compliance with automatic generation control
105、signals leads to disqualification in participation for one week.The regulations have created an additional avenue for storage providers to participate in secondary response and tertiary response services.Providing an avenue for RE to participate in market-based platforms RE can participate in the da
106、y-ahead segment and term-ahead power exchange segment.This provides an additional avenue for renewable power procurers other than long-term PPAs and RE certificates.This would enable increased RE absorption in the grid and enhance the role of storage to manage their intermittency.Need for inertia in
107、 the transformed power systemConventional power plants have large rotating generators,which have the tendency to remain in rotation for a few seconds following a power failure.This enables conventional power plants to store energy in their rotating parts and temporarily make up for any power failure
108、,a mechanism called inertia.Renewable sources of energy do not synchronize with the grid in a way that provides inertia,so as older coal and gas plants come off the system,it is important to find new ways to provide the requisite grid support in case of a power failure,which was covered by inertia i
109、n the conventional power system.Energy storage,which has an inherent ability to respond quickly,provides an ideal solution in this case.Easier regulatory mechanisms for ESS adoption Standalone ESS business is no longer licensed,making energy storage adoption easier.A generating company,transmission
110、licensee,system operator or ESS provider can develop,own,lease and operate an ESS,providing business model clarity to potential investors.Business guide to energy storage adoption in India 18BEHIND-THE-METER MARKETGreen energy transition of C&I companiesMajor C&I companies have set targets to achiev
111、e net-zero emissions before 2050.For example,ITC aims to achieve net-zero emissions by 2030,Mahindra,Infosys,Wipro by 2040,and Arcelor Mittal and Akzo Nobel by 2050.Companies in hard-to-abate energy-intensive sectors,such as Vedanta,Tata Steel,ACC,Ambuja Cement,Aditya Birla and JSW Energy,have also
112、set a net-zero emissions timeline of 2050.To achieve the targets,these companies would need to transition to low-carbon electricity sources much faster than the power grid would.Therefore,the development of a round-the-clock renewable power-led procurement strategy is necessary.The hybridization of
113、RE with ESS is the most efficient way to replace grid power with a firm power supply and thus would act as a primary driver in this segment.A case in hand is the recent government tender issued by the Solar Energy Corporation of India(SECI)for 500MW/1000 MWh BESS procurement,where JSW Energy has eme
114、rged as the winning bidder.While SECI will procure 60%of the tendered capacity for further use by distribution utilities,JSW Energy will use the remaining 40%of the merchant capacity of BESS,which is 400 MWh,to provide firmer RE solutions to group companies,including JSW Steel.The groups internal ca
115、rbon pricing scheme for investments and net-zero emissions goals makes this possible.One of the primary drivers of the growing requirement for energy storage for C&I companies in India is linked to servicing firm green electricity for industries.Electricity demand from such C&I businesses provides a
116、 substantial opportunity for RE players to service this demand.The adoption of energy storage is an enabler in providing more firm renewable power to businesses and enabling them to optimize the use of existing and planned renewable power plants.C&I consumers with significant dependence on captive t
117、hermal power consumption offer considerable opportunity in terms of replacing captive consumption with reliable and firm RE to meet their individual net-zero emissions targets.While the complete replacement of thermal fleets with firm RE is not commercially viable at present,a few businesses have be
118、en replacing part of their thermal fleet with a mix of RE capacity and bundling it with PSP/smaller-sized batteries and exchange-traded power.As BESS becomes economical,more such thermal captive with RE replacements bundled with energy storage solutions are expected.Source:CEA(2021),General Review 2
119、021Table 3:Distribution of installed captive generation capacity Installed capacity rangeNo.of generating industries 1&10&20&30&40&50&100 MW9335,138.3746.72%127,697.659.93%Total6,05175,207.13213,073.7Aggregate(MW)Aggregate(in millions of units MUs)%of totalcapacity%of total generationInstalled capac
120、ityGross energy generationBusiness guide to energy storage adoption in India 19Source:CEA(2021),“General Review 2021”Figure 7:Share of RE in total captive power generation capacity of industrial consumers0100.00%80.00%60.00%40.00%20.00%0.00%Iron&steelAluminiumCementChemicalMineral Oil&pet
121、roleumTextileSugarPaperNon ferrousFertilizerElectricalLight engineeringAutomobileCollieriesRubberMining&quarryingFood productsHeavy engineeringPlasticJuteMiscellaneousRE capacity as%of total capacity%of consumption from captiveNumber of companiesThe salient features of the current market are as foll
122、ows:Some 82%of the installed captive capacity is greater than 10 MW,with only 990 generating industries;these generating industries cumulatively account for about 96%of the total energy generation by captive industries.Only 93 captive industries have installed capacity greater than 100 MW,accounting
123、 for about 47%of the total installed captive capacity in India and collectively generating some 60%of total captive energy generation.The share of RE remains below 5%of the installed captive power generation capacity for most industries.The infirm nature of RE,capacity utilization factors being lowe
124、r than thermal,and regulatory challenges in procurement of RE through open access and group captive routes are some of the reasons for the low uptake of RE.As energy storage would make RE more firm and as these industries adopt more RE to move forward on their decarbonization targets,energy storage
125、would be a key solution for these captive consumers.Business guide to energy storage adoption in India 20REGULATORY DRIVERS Table 4:Regulatory drivers for energy storage adoption by C&I companiesDriverSummaryReduction in RE procurement cost through open access The revised renewable power procurement
126、 rules for electricity(Promoting RE Through Green Energy Open Access,2022)are likely to further accelerate corporate procurement of renewable power.The reduction of the open access transaction limit from 1 MW to 100 kW and appropriate provisions for cross-subsidy surcharges,additional surcharges and
127、 standby charges will incentivize a larger group of C&I consumers to get green power at reasonable rates.Time-bound processing by setting the mandatory approval timeline of 15 days,failing which the application will be deemed approved,will substantially support the timely implementation of projects,
128、as a lack of open access project approval was a major barrier in renewable power adoption by C&I consumers earlier.Additionally,the Draft Electricity(Amendment)Rules 2022 provisions that:The open access surcharge(cross-subsidy surcharge and additional surcharge)shall not be more than 20%of the appli
129、cable tariff;The cross-subsidy surcharge shall be applicable for a maximum period of 1 year from the date of opting for open access.As RE procurement costs through open access reduce further with these provisions,renewable power developers will have more fiscal space to make energy storage bundled w
130、ith RE competitive with thermal alternatives.Scientific resource planning procedure to meet power demand reliably States such as Karnataka have reduced energy banking periods or withdrawn the facility.Some states,such as Tamil Nadu and Gujarat,have high banking charges,which makes saving excess RE o
131、n the grid for later use commercially unviable.Going forward,with more and more states implementing forecasting and scheduling regulations and 15-minute energy accounting,energy banking may disappear completely.Many states,such as Maharashtra,Tamil Nadu and Haryana,also impose restrictions on net-me
132、tering.With reduced means on the grid to save excess renewable power for later use,C&I consumers will be drawn to adopt energy storage technologies behind their meters for optimal renewable power use.Business guide to energy storage adoption in India 21COST DRIVERSThe above market,regulatory and cos
133、t drivers are instrumental in creating C&I company demand for energy storage technologies and solutions.RE developers that enter power purchase agreements(PPAs)for firm power supply with C&I consumers will prefer to adopt energy storage solutions to ensure firmness in supply to end-consumers.Wind,so
134、lar and energy storage solutions can most efficiently structure power availability of around 85%throughout the year for the next 5-10 years.In the absence of energy storage,the oversizing of wind and solar achieves similar outcomes but with a much-inflated risk element of surplus power sales in the
135、merchant market.As energy storage solution costs are currently prohibitively high,most developers are providing firmer RE by oversizing renewable power plants,barring a few successful closures using energy storage solutions effectively.Arcelor Mittal has formed an alliance with Greenko Group as part
136、 of its strategy to reduce its carbon footprint.Under this alliance,Arcelor Mittal will invest USD$600 million to own and fund a 975 MW RE project in Andhra Pradesh.The project will leverage Greenkos pumped hydro storage plant to provide continuous green energy to ArcelorMittal Nippon Steel India.Th
137、e optimal use of existing and planned renewable power plants,falling RE and storage costs and the realization of net-zero emission targets are fueling the need for energy storage adoption in the C&I segment.Table 5:Cost drivers for energy storage adoption by C&I companiesDriverSummaryIncreasing cost
138、s of thermal generation With the Ministry of Environment,Forest and Climate Change order,it has become compulsory to install flue gas desulfurization(FGD)systems in existing and new thermal power plants to curb SOx emissions.This would see a generation cost increase of about INR 0.25-0.75/kWh.With c
139、heaper renewable power on the grid,many existing coal generation plants with high variable costs will be forced to shut down for a period of 4 to 6 hours when renewable power generation is at its peak.Daily hot starts to meet the evening peak could be reality for many such generation plants by 2025-
140、26.This would have a significant financial impact on unit operations in terms of additional cost of oil and additional operation and maintenance(O&M)costs due to cycling-induced equipment and system damage.The estimated additional impact of daily starts on the cost of generation for 200 and 500 MW u
141、nits ranges from INR 5 to INR 7 per kWh.Apart from additional costs due to cycling,significant changes are envisaged in operating procedures,which require investment in training and skill development.Decreasing costs of energy storage The National Renewable Energy Laboratory(NREL)has forecast that b
142、attery energy storage may experience a 28-58%reduction in capital cost by 2030 and 28-75%capital cost reduction by 2050.Prices for lithium-ion batteries rose 10%-20%,to USD$110 per kWh in the latter half of 2021,predominantly for LFP(lithium-iron-phosphate)cells,which is the favored technology for g
143、rid energy storage.The anticipated rise in global LFP cell production capacity by the end of 2023-24 will temper these price hikes,which soaring raw material costs and demand from automakers are driving.Many states,such as Maharashtra,Tamil Nadu and Haryana,also impose restrictions on net-metering.W
144、ith reduced means on the grid to save excess renewable power for later use,C&I consumers will be drawn to adopt energy storage technologies behind their meters for optimal renewable power use.Increasing adoption of internal carbon pricing mechanisms In India,85 companies have introduced an internal
145、carbon pricing framework or are planning to do so in the next year.As an increasing number of companies are expected to adopt this framework,it will further improve the commercial aspects of energy storage adoption going forward.Savings on captive procurement Captive consumption of power presents ad
146、ditional savings on cross-subsidy surcharges and additional surcharges(when compared to third-party open-access power procurement).This presents a lucrative option for consumers to switch their power procurement source from distribution utility.Business guide to energy storage adoption in India 22LE
147、ADING STATES FOR FRONT-OF-THE-METER STORAGE ADOPTION IN INDIASome of the states offer greater potential for energy storage adoption than others,depending on both the need for such solutions and existing policy and regulatory frameworks.This section identifies the leading states for energy storage ba
148、sed on our analysis and provides a direction of travel for distribution utilities and C&I consumers.We believe that the leading states with maximum grid-scale energy storage deployment potential within the next 5-7 years are Maharashtra,Telangana,Tamil Nadu,Karnataka,Madhya Pradesh,Gujarat and Keral
149、a.We have considered the following parameters to identify these potential states with high FTM BESS attractiveness.Annex 3 provides a detailed methodology and state results.Based on the parameters in Figure 8,we prepared a shortlisting framework to perform a state ranking of the potential for adopti
150、ng FTM BESS in the country.It is worth noting that Tamil Nadu already has 400 MW of pumped hydro storage projects(PSP)operational and an additional 500 MW under construction.The state has plans to develop 2,000 MW of PSP in the future.Deloitte conducted a detailed analysis of the potential of grid-s
151、cale energy storage for three states in the country:Madhya Pradesh,Gujarat and Tamil Nadu.The analysis suggests that,depending on BESS price curves in future,these states could see a total of 15,000 to 30,000 MWh of BESS deployed by 2030,or 6 to 12%of the total BESS demand estimated by the CEA Draft
152、 National Electricity Plan for 2031-32(258 GWh).By virtue of their demand-supply patterns and share of renewable power in their capacity mix,the southern and western states would be the front runners for grid-scale energy storage adoption.Figure 8:Parameters to identify potential statesRE Share in o
153、verallenergy mix1DSM penaltyPPA replacementopportunityGeneration adequacy4High portion of RE in overallenergy mixPayment of high deviationcharges over the last 3 yearsHigh quantum of PPAs expiringbefore 2030Instance of installed capacityfalling short of meeting 70%of the load well before 203023Busin
154、ess guide to energy storage adoption in India 23The top five states for energy storage installation by C&I companies are Maharashtra,Gujarat,Karnataka,Uttar Pradesh and Tamil Nadu.To identify these leading states for C&I companies,we considered the following parameters.1.Present C&I demand and share
155、 of RE in captive capacity in the state(weight-30%):States with high C&I demand would indicate a market that may potentially shift toward green energy procurement much faster compared to other states.Figure 9 highlights the state distribution of RE captive generation;Annex 4 provides further detail.
156、2.Favorable open access policy,conducive to RE procurement in the state(weight-30%):To present C&I segment consumption trends and non-utility consumption,we have considered favorable state-level open access policies and business environment to shortlist high-potential states.Annex 5 illustrates the
157、distribution of non-utility-based consumption across states along with total C&I demand.3.Tariff spread of RE with industrial tariff in the states(weight-40%):Table 6 summarizes the approximate current cost of captive RE supply compared to the industrial tariff category for the distribution utilitie
158、s in key states.Figure 9:State distribution of C&I demand and share of RE captive power capacity,,0001,200N of industries%share of RE1,400400200025%20%15%10%5%0%Tamil NaduHaryanaGujaratKarnatakaRajasthanPunjabMaharashtraOdishaAndhra PradeshTelanganaWest BengalUttar PradeshMadhya Prade
159、shHimachal PradeshChhattisgarhUttarakhandKeralaPuducherryAssamBiharChandigarhNumber of industriesRE as%of total captiveSource:CEA(2021),“General Review 2021”LEADING STATES FOR C&I STORAGE ADOPTION IN INDIABusiness guide to energy storage adoption in India 24Table 6:Summary of state distribution comp
160、any tariff and landed cost of captive RESource:CEA(2021),“General Review 2021”A net-zero emissions target and cost arbitrage offered by RE against thermal captive will drive C&I demand in states with favorable open access policies and practices.States(FY2020)Total C&I sales(MUs)HT industrial sales(M
161、Us)Energy tariff industrial(INR/kWh)Landed cost for RE captive(INR/kWh)RemarksMaximum storage cost at which RE+storage remains attractiveGujarat83,03061,4106.10Hybrid:4.34Favorable hybrid policy1.76Maharashtra64,89039,1887.52Solar:4.98One of the most favorable industrial state2.54Odisha61,50958,8234
162、.25Solar:4.30Low share of utility sale;market not openedTN54,48633,9216.35Solar:4.0 Wind:3.95Long history of C&I market2.32-2.4Chhattisgarh35,13933,0186.20-7.30Solar:3.80Low share of utility sale;incentives capped up to first 500 MW2.4-3.5UP33,72122,6526.80Solar,non ISTS:4.22 Solar,ISTS:4.33Favorabl
163、e policy2.47-2.58Karnataka31,13122,3477.75Solar:5.05 Wind:4.07Favorable C&I market2.7-3.68MP30,73526,1395.20 7.10Solar:5.66Low share of utility sale;market not opened1.44Business guide to energy storage adoption in India 25ESTIMATION OF FTM STORAGE POTENTIAL IN INDIA Multiple studies estimate the en
164、ergy storage potential in India,the most recent and relevant being the National Electricity Plan,published by CEA in September 2022.The objective of the Draft National Electricity Plan 2032 was to find the optimal generation capacity mix to meet the projected peak electricity demand and energy requi
165、rement in blocks of 5 years from 2022,meaning 2027 and 2032.CEA has estimated that almost 52 GW/260 GWh of BESS is required by 2032.However,there is no such BESS requirement by 2027 as prior to that PSP will be able to cater to the storage demand and the economics of BESS will make sense only in the
166、 latter half of the decade.A recommended 19 GW/114 GWh of PSP should be added in the system by 2032 compared to 7 GW/42 GWh of PSP by 2027.Estimates show the energy storage requirement will pick up toward the end of the decade due to the increased potential of energy arbitrage as battery prices decl
167、ine and the cost of conventional thermal(coal)increases and greater quantities of cheaper RE are available for charging at low cost.Greenfield PSP sites are limited in the country and new projects require a long gestation period.This poses a challenge in adding scaled amounts of PSP in the country,t
168、hough the current costs are not as high as BESS.Challenges in site acquisition and rehabilitation expenses can increase project expenses,making these projects unviable(greater than INR 6-7/kWh);there is an increased focus on developing PSP in closed-loop operations(off-river PSPs),which should keep
169、prices competitive.CEA has considered a major addition of such closed-loop PSP projects by 2032.ESTIMATION OF C&I MARKET POTENTIAL IN INDIAIndustrial electricity consumption is 43%of the countrys total electricity consumption and it has grown at a rate of 6.6%(CAGR)from FY2001 to FY2020.Captive cons
170、umption has mostly been restricted to high voltage industrial consumers.Commercial consumption is another 10%of the countrys demand and has grown at a CAGR of about 8.5%from FY2001 to FY2020.RPO obligations,regulatory drivers for open access and cost arbitrage offered for captive consumption have dr
171、iven an increase in industrial consumers shifting to consumption from RE sources.The C&I potential for energy storage in the country ranges from about 10.8 GWh to 13.2 GWh/about 2.7 to 3.3 GW by 2030.We have estimated energy storage demand through following steps:1.Estimation of total C&I demand2.Id
172、entification of share of captive consumers3.Estimation of RE demand for captive consumers4.Estimation of round-the-clock RE demand and corresponding energy storage demand for captive consumers.Annex 6 provides our detailed approach.Business guide to energy storage adoption in India 26Possible ESS an
173、d BESS use cases&ownership models2Business guide to energy storage adoption in India 27Possible ESS and BESS use cases&ownership models2Three of the six use cases mentioned above stand out based on superior commercial prospects of adopting energy storage solutions as well as criticality of use cases
174、 for power transition:peak load management,enabling renewable power dispatchability and avoiding power outages.The recent power procurement tenders on behalf of distribution utilities also validate this,including SECIs standalone 500 GW/1,000 MWh tender and RE bundled with energy storage,1,200 MW pe
175、ak power supply tender and 400 MW round-the-clock(average annual capacity utilization factor of 80%)tender.The following sections explain each of the three use cases.Figure 10:Possible energy storage use cases for distribution utilities or load-serving entitiesPeak loadmanagementAPPLICATIONUSE CASEV
176、ALUESTREAMTo meet peak load,DISCOMs often enterinto contracts withpeaking/costliersources of powerESS can be dischargedduring time of highdemand and chargedwhen there is surplusgeneration in the systemand prices are lowReduction in peakpower procurementcostUtilities are subject tostringent penalties
177、 fornon-adherence tocommited shedulesReduction in DSMpenaltiesEnsuring grid reliability&adequacy by reducingoutages and loss of loadESS can offer localizedpower supply to a groupof consumers duringoutage/congestionESS can ramp up almostinstantaneously to meetthe ramping requirementfollowing a change
178、 insolar/wind generation:and help utilities tocomply with commitedschedulesAdditional revenue andmeeting LOLP(loss ofload probability)targetsDistribution utilities haveto upgrade their networkdue to congestion evenif the same occurs for avery short timeESS can be used asnon-wire alternative fortrans
179、mission anddistribution networkplanning and avoidinvestments in additionaltransformers and lines.Savings in infrastructureupgrade costsAncillary services isprocured throughregulatory mechanismBESS can effectivelyparticipate in bothenergy market and ASmarketAdditional revenuefrom energy&ASmarketsTo m
180、ake renewablepower available whenneeded by the gridESS can be hybridizedwith infirm renewablepower to provide round-the-clock RE supply toDISCOMsReduction in powerprocurement costAlignment withelectricity drawaland injection scheduleAvoidingpoweroutagesNetworkupgradedeferralParticipation inancillary
181、 servicemarketEnabling REdispatchabilityESS USE CASES FOR DISTRIBUTION UTILITIES ESS installations offer use cases throughout the entire power system value chain,be it in generation,transmission,distribution or to end-consumers.This chapter delves into the critical use cases that are likely to make
182、energy storage adoption commercially viable for distribution utilities and C&I consumers and lists suitable contracting arrangements for ESS adoption.Business guide to energy storage adoption in India 28The peak demand for any distribution utility can be broken into three sub segments(Figure 11):a)I
183、nstantaneous peak demand,which for most distribution utilities in India typically occurs for around 40-50 hours in a year,meaning 0.5%of the time;b)Second peak demand,which lasts for around 250 hours in a year,2.85%of the time;andc)Intermediate peak demand,which lasts for around 1,700 hours,about 20
184、%of the time in a year.To meet instantaneous peak and second peak demand(3.35%of the time i.e 300 hours in a year),if a utility contracts a base load coal-based thermal station,the effective cost could be as high as INR 55/kWh(fixed charge of INR 2/kWh calculated at 85%when used for about 3.35%,tran
185、slates to INR 51/kWh+variable charge of INR 4/kWh).Alternatively,a standalone BESS can be deployed to cater to instantaneous peak and second peak demand at a lower price of INR 25/kWh(Assuming 1hr BESS at AFC INR 8 million per year used to meet only 300 hours of peak load).If a distribution utility
186、contracts a coal-based thermal station to meet its entire peak load(a+b+c above),meaning around 25%of the time in a year,the cost could be as high as INR 12/kWh(fixed charge used at 25%+variable charge).While a standalone ESS may not be a commercially viable option in this case,the utility can procu
187、re energy from a hybrid renewable power plant(solar+wind)coupled with an ESS deployed to meet its peak demand at a reduced cost.This is evident from a recent peak power procurement tender issued by SECI 6 in which the successful bidders Greenko and ReNew had bundled hybrid renewable power with PSP a
188、nd BESS,respectively,at a tariff ranging from INR 6.12 to INR 6.85/kWh for peak periods and INR 2.88/kWh for off-peak periods.With the success of such procurement,SECI announced in November 2022 a similar procurement of a 1,200 MW inter-state transmission system(ISTS)-connected wind-solar hybrid pow
189、er project with assured peak power supply.Source:Deloitte analysisNote:This figure is illustrative of a daily load curve of a distribution utilityPEAK LOAD MANAGEMENT4-80Existing tie-ups4209201,4201,9202,4202,920Power demand(MW)0%10%15%35%45%55%65%75%85%20%15%25%30%40%50%60%70%80%98%95%90%ZONE 4ZONE
190、 3ZONE 2ZONE 10.02%0.38%4.6%95%70%DemandEnergy shareTop 8%Instantaneouspeak demandAdditional LTArequired2nd peakdemandIntermediatedemandBasedemandUp to 15%Up to 30%40-50 hours(0.5%of time)6,760 Hours(77%of time)250 hours(3%of time)1,700 hours(2.85%of time)Peak shifting or peakingresources energystor
191、age,demand,response,etc.Short-term(powerexchange,banking,etc.)Baseload thermal.RERTC hydro,nuclear,etc.Figure 11:Load curve of a typical distribution utility in India ith various load requirementsBusiness guide to energy storage adoption in India 29ENABLING RENEWABLE POWER DISPATCHABILITYThe planned
192、 rapid increase in the share of renewable power generation,excluding hydro and biomass,in the power mix(about 75%of new capacity addition by 2027)will require energy storage to make renewable supply more dispatchable,meaning available on demand to meet grid requirements.7 At current ESS price points
193、,specifically BESS,renewable power companies have been able to enhance the dispatchability of renewable power generation mainly by oversizing hybrid(solar+wind)power plants and including a relatively small component of BESS to store surplus renewable power for later use.This is evident from the resu
194、lts of SECIs 400 MW round-the-clock renewable power tender in 2020,which put forth a competitive levelized tariff of INR 3.6/kWh to supply renewable power at an average annual capacity utilization factor of 80%by oversizing the hybrid power plant at an estimated capacity of 3 to 4 times and installi
195、ng smaller BESS capacity for just a part of the peak generation.Companies with access to favorable locations for PSP installations,which are rare given the complex requirement of environmental permissions,have been able to increase the ESS size and reduce the need for oversizing renewable power plan
196、ts to meet the same requirement.For BESS to make renewable power more dispatchable and available for at least 70%on a monthly basis without requiring significant oversizing of the hybrid renewable power plant in a commercially viable way will require a 45%reduction 8 in BESS costs from current level
197、s.AVOIDING POWER OUTAGESReliability is key to power system operations and ensuring the adequacy of supply is an integral part of power system planning.A robust resource planning exercise by distribution utilities should ensure that power outages(loss of load events)are restricted within acceptable l
198、imits.CEA sets such limits,as measured by metrics such as the loss of load probability(LoLP)and the expected energy not served,at 0.2%and 0.05%.Distribution utilities currently emphasize accurate demand forecasting and make good on any short-term deficiency by procuring electricity from spot markets
199、 and selling any surplus electricity back to the same spot market.With this practice,distribution utilities have been able to manage minimal or no power outages for preferential C&I consumers while resorting to power outages for other consumers in the absence of any penalty imposed for such power cu
200、ts.However,the increasing shares of variable RE sources being integrated into the grid,distribution utilities seeking to transition away from long-term power purchase contracts,and the government considering imposing penalties on utilities for power outages required a fresh look at the way distribut
201、ion utilities contract power.In line with this,CEA has already put a draft resource adequacy framework to be followed by distribution utilities in place to ensure that there is an adequate supply of generation or demand-responsive resources to serve expected peak demand reliably.9 The framework enco
202、urages utilities to add resource types in their power portfolio after equating the cost of resource additions with the assessed value of lost load.Any loss of load beyond the specified LoLP targets and expected energy not supplied would carry a penalty in terms of the value of lost load.For example,
203、one unit loss of load for an industrial consumer could be as high as INR 190/kWh,10 which is treated as a punitive value while planning for resource addition.The country should institutionalize its resource adequacy framework by the end of 2023,providing another revenue stream for ESS adoption.Distr
204、ibution utilities are likely to then scale up ESS adoption through standalone adoption and contracting renewable power coupled with ESS to avoid penalties for power outages.Business guide to energy storage adoption in India 30Figure 13:Projected BESS cost decline trajectory Figure 14:Energy charge r
205、ate for marginal thermal vs.levelized cost of BESS(INR/kWh)20220.000.100.200.300.400.500.600.700.800.901.00Ratio with respect to 2022 prices2023 2024 20252027 2028 2029 203020262022024681012142023 2024 20252027 2028 2029 20302026LCOS of 4-hr BESSECR of marginal thermalLCOS of 1.5pu CCOTHER USE CASES
206、One of the major barriers to the adoption of energy storage for other use cases is its current high price.For BESS solutions,the surge in raw material prices is emerging as a major challenge in cost reductions and adoption.India currently lacks a strong domestic manufacturing industry and is depende
207、nt on imported lithium cells for BESS solutions.In recent years,the global price of both cobalt and nickel has increased by 85%and 55%,respectively,while battery-grade lithium prices have gone up over 700%since early 2021.The winning tenders for 2-hour stand-alone BESS(SECI 500 MW/1000 MWh tender 11
208、 and Kerala State Electricity Board Limited(KSEBL)10 MW/20 MWh 12 tender)indicate that the levelized annual fixed costs of current systems are around INR 13 million/year per MW.Considering the use of 1.5 cycles per day,this works out to a levelized cost of storage(LCOS)of INR 13.6 per unit of discha
209、rge(not considering the cost of charging).This cost is higher than the costs of most thermal stations in the country,suggesting that BESS is not yet viable for most other use cases.YEARAFC(Rs MN)BESSthroughput301111Start of yearEnd of yearAverage capacity100%97.5%98.
210、75%97.5%95.0%96.25%95.0%92.5%93.75%92.5%90.0%91.25%90.0%87.5%88.75%87.5%85.0%86.25%85.9%82.5%83.75%82.5%80.0%81.25%80.0%77.5%78.75%77.5%75.0%76.25%75.0%72.5%73.75%72.5%70.0%71.25%LCOSTotaldischarge(MWH)2 cycles p/day1.5 cycles p/day5797295086211
211、81040780Rs 10.2/kWhRs 13.6/kWhFigure 12:Levelized cost of 2-hour BESS Source:CEA(2022).Draft National Electricity Plan 2022.The market is likely to see steep reductions in BESS costs by 2030,making it viable by the end of the decade.This is illustrated by comparing the levelized cost of a
212、 4-hour BESS 13 with that of a marginal thermal station with a variable cost of INR 7/kWh.Considering a 3.45%14 year-on-year escalation of the marginal thermal energy charge rate,the LCOS of 4-hour battery storage will reach parity by 2025.Considering an additional cost of INR 1.5/kWh for charging p
213、er cycle,the cost parity is achieved in 2027,making BESS a large-scale viable option for peaking power supply(beyond the instantaneous and second peak,as well as energy arbitrage in general).The availability of higher discounts,reductions in the goods and services tax(GST)or import duties on batteri
214、es and higher than projected reductions in BESS costs may make the large-scale adoption of energy storage solutions commercially viable by 2025.Business guide to energy storage adoption in India 31VALUE STACKING OF APPLICATIONS BY DISTRIBUTION UTILITIES The stacking of multiple use cases is critical
215、 to unlocking the full value of energy storage.Figure 14 illustrates the value stacking of benefits for a distribution utility from the same energy storage asset.As shown,BESS can provide ramp support,energy arbitrage benefits,CAPEX deferral and minimize energy loss for distribution utilities if dep
216、loyed at appropriate voltages and increase use efficiency,thereby reducing the per unit capacity cost.While each of these individual use cases may not provide adequate revenue streams to justify investment in ESS,joining these together can support the commercial viability of adoption by increasing r
217、evenue streams,resulting in more efficient use of the ESS.For instance,if a BESS with a cycle life of 5,000 to 7,000 cycles configured for only 1 use case is used for 300 to 350 cycles a year(1 cycle operation on average in a day),at current costs,the capacity charge could be upwards of INR 14 to 15
218、/kWh;15 whereas,if it is possible to configure the same BESS for 2-3 use cases and the use increases to more than 550 to 600 cycles a year(2 cycle operations on average in a day),the capacity charge could decrease to about INR 10/kWh.16 For a value stack to become a reality,it is necessary to activa
219、te the various revenue streams of an energy storage asset by putting in place a conducive regulatory framework.For instance,there is a need to:1.Create formal structures for the procurement of reactive power and voltage control services;2.Estimate the amount of secondary frequency regulation require
220、d in day-ahead and real-time markets and introduce a performance and market-based mechanism for the procurement of secondary frequency regulation.050000000250003000000:0004:0008:0012:0016:0020:00Excess REExcess generation which can be used to charge BESSRamping requirementEnergy arbitrage
221、/peak shiftingLoadSolarOther must runEnergy arbitrage/Peak shiftRamping requirementThermalBenefits from ramping support:Coal-based thermal power generators cannot be used when there is a sudden reduction in renewable power generation due to ramping constraints.Benefits from energy arbitrage:BESS wil
222、l run at slots with peak demand and help in peak reduction.The BESS will charge when the energy cost is low and dispatch during peak power demand.Excess generation:As the country shifts to more RE generation,there will be excess of generation at certain time intervals which can be used to charge the
223、 BESS at low costCapacity deferral:The battery system is used for deferring distribution capacity enhancements.41234Figure 15:Value stacking of various use cases of an energy storage asset by a distribution utility Business guide to energy storage adoption in India 32USE CASES FOR C&I CONSUMERSThere
224、 are six ESS uses cases that are appliable for C&I consumers.At current ESS costs,the commercial viability of ESS is restricted to a few C&I consumers for just two of the use cases mentioned below:diesel abatement and enhanced renewable power procurement.Figure 16:Possible energy storage use cases f
225、or C&I companiesDIESEL ABATEMENT A large number of C&I companies in India depend on diesel as a power backup source.The adoption of ESS makes commercial sense to reduce diesel consumption as a backup source for those C&I consumers who face power cuts upwards of an average of 45 minutes/day.17 This i
226、s mostly the scenario for an industry operating in tier 2 and 3 cities(with relatively lower population-20,000-100,000)or located in remote locations that are not well connected by the transmission and distribution network.A BESS coupled with captive RE generation(INR 20/kWh)would be more economical
227、 than burning diesel,which would cost INR 30-35/kWh if such power disruptions are consistent on a daily basis.ENHANCED RENEWABLE POWER PROCUREMENTMajor C&I companies have shown a commitment to achieving net-zero carbon emissions before 2050,much in advance of the national target by 2070.To achieve t
228、hese targets,such companies will need to shift to a greener portfolio much faster than the grid will.This will require the appropriate bundling of renewable power with ESS to enhance the use of existing and planned renewable power project installations by C&I consumers.However,at current BESS price
229、points,consumers have the option to resort to procuring more renewable power through open access routes(although an option that comes with regulatory uncertainty)or through green tariffs(by paying a flat premium over the retail tariff to notionally consume more renewable power)at a much lower cost t
230、han installing behind-the-meter storage to optimally use existing renewable power plants.DemandchargereductionAPPLICATIONUSE CASEVALUESTREAMReduce contracteddemand fromdistribution utilitiesESS provides a part ofpeak demand and eases reductionof contracted demandfrom distribution utilityto that exte
231、ntReduction in demandcharges in electricity billsFrequent power supplyfluctuations can lead torevenue lossSavings in revenue lossdue to improved powerquality Diesel abatement forproviding uninterruptedpower supplyESS can help in providinguninterrupted powersupply to C&I consumerswho have tight suppl
232、ytolerancesESS can provide reliablepower supply to consumers who arelocated in areas whichare prone to supplyquality issuesReplacement of costiliersources of alternatesupplyIncrease utilization ofexisting and plannedrenewable power plantsESS saves surplusrenewable power forlater use by consumerReduc
233、tion in powerprocurement costEnergy arbitrage by ESSprovides an additionalrevenue streamESS can be charged atnegligible cost duringsurplus hours and canprovide energy servicesduring peak timesTime-of-userate/market-basedarbitrageThere is a need for localreactive power supportin tail-end of distribut
234、ionnetwork to maintainadequate voltage profileESS inverter/converterhas the ability to locallycompensate the reactivepower,hence,influencethe supply voltageReduction in costs ofreactive powercompensatorsEnhancedpowerqualityDieselabatementEnhancedrenewablepowerprocurementEnergyarbitrageReactivepowers
235、upportBusiness guide to energy storage adoption in India 33The increasing adoption of internal carbon prices,which places a monetary value on carbon emissions,will make ESS adoption more commercially lucrative by apportioning a value to carbon emissions saved and adding a revenue stream for energy s
236、torage use.For instance,JSW Energy recently won a SECI tender of 500 MW/1000 MWh BESS procurement.JSW Energy will use 40%of the merchant capacity of BESS to provide more firm renewable power supply to group companies,including JSW Steel.The groups internal carbon pricing applicability to investments
237、 and net-zero emissions goals justify the investment.18 While behind-the-meter installations by C&I companies are unlikely to make commercial sense in the next 2-3 years beyond diesel abatement and enhancing renewable power procurement to meet decarbonization targets,there is strong merit for most C
238、&I companies to consider renewable power procurement bundled with energy storage through a renewable power project developer.For instance,in Karnataka,the retail industrial tariff is INR 9.4/kWh.19 In comparison,the landed cost of renewable power procurement on a round-the-clock basis with a minimum
239、 average capacity utilization factor of 70%(through oversizing and without energy storage)is INR 3.5 4.5/kWh for procurement under captive/group captive models.This would lead C&I consumers to effectively increase their RE offtake to a substantial extent but will restrict them from completely transi
240、tioning to RE.The resulting cost-savings of around INR 5.50/kWh over the retail tariff is currently inadequate to justify further investments in ESS to improve the renewable profile beyond an 80%capacity utilization factor.With a higher and monthly/block availability rather than annual criteria from
241、 C&I consumers,bundling ESS with RE could become a necessity and help these consumers transition to RE round-the-clock(RTC)profiles,even if the delivered tariff in such cases is 20-30%higher than RTC with annual availability requirements.Organizations are currently exploring such solutions as they s
242、till provide a sizeable benefit and economic rationale to shift away from grid power and structure a captive/group captive solution.Arcelor Mittal and Greenko joining hands to construct 975 MW of wind and solar bundled with pumped hydro storage to provide 250 MW of uninterrupted renewable power is a
243、 similar example.Apart from BESS cost reductions,a change in market regulations may also support ESS adoption by C&I companies.An example is enabling aggregators to aggregate distributed energy resource(DER)providers like C&Is ESS installations to participate in energy and ancillary markets:current
244、ancillary services regulations allow resource providers connected at 132 kV and higher voltages to participate in the ancillary services market(market-based procurement of tertiary reserves and administrative-basis procurement of secondary reserve regulation services).The introduction of aggregators
245、 that can aggregate behind the meter energy storage systems(installed at lower voltage levels)and participate in the energy and ancillary services market could add a supplementary value stream for C&I consumers.Business guide to energy storage adoption in India 34BESS OWNERSHIP MODELS Power system e
246、ntities can reap different benefits from ESS installation via varying ownership models,depending on the type of user a distribution utility or a C&I consumer or an RE project developer,as considered in our report,and relevant use cases.This section covers major ownership models and contractual arran
247、gements used globally and in India for ESS installations and the suitability of various ownership models for distribution utilities and C&I consumers in India.BESS installation setups globally have two predominant ownership models:Direct ownership Third-party ownershipAccording to the US Department
248、of Energy database20 of 775 grid-connected BESS installations globally(some 1.800 MW to September 2021),utilities,generators or C&I consumers have installed around 78%under direct ownership and the remaining 22%under the third-party ownership model.The global tilt toward direct ownership is mainly b
249、ecause of the design of various government incentive programs,which provide part of the CAPEX investment required for ESS,with the user paying the remaining CAPEX to own the asset.However,in recent years,the third-party ownership model has started gaining momentum.With a limited understanding of the
250、 technology solutions,and when some of the technologies are still in their nascent stage of deployment,most utilities and C&I consumers prefer third-party ownership or procuring battery-as-a-service,as these models transfer the majority of the operational and technical risks to the developers.78%Dir
251、ect ownershipOutright purchase of the BESS byutility,generator or any individualBuyer operates it as per the desiredusageCan be operated either by owneror a third-party22%Third-party ownershipIncludes“service-contracting”withoutthe need of owning a BESSThird-party develops and operatesBESS facilityS
252、ervices offered as a per definedagreementFigure 17:Prevailling ownership models and their global shareBusiness guide to energy storage adoption in India 35DIRECT OWNERSHIP This model is generally suitable for procurers or consumers with large demand or generators owning a large generation asset.In t
253、his model,the end-user benefitting from the ESS actually owns the asset.The owner can decide to either outsource the operation of the ESS to a third party or handle the operations on its own.This business model could be suitable for businesses having adequate existing or potential load requirements
254、and relevant uses cases to optimally use a dedicated storage asset and having the ability to make an upfront CAPEX payment to the developer.CONTRACT TYPES UNDER THE MODEL The most prominent contracting arrangement under this model is the turnkey arrangement.In this arrangement,the procurer,which may
255、 be a distribution utility,C&I company or RE project developer,completes a turnkey purchase of an ESS asset from a contractor,which may be an energy storage project developer or a system integrator,at an agreed upon price.Under this arrangement,the contractor takes responsibility for all key paramet
256、ers,such as performance guarantees,technical specifications of the BESS,safety guidelines and operation and maintenance.The procurer provides the contractor with access to the site and pays for its services as per the agreed-upon terms.Figure 18:Direct ownership modelESS developerOwner(generationcom
257、pany/DISCOM/C&I)Third partyor ESS developerESS supply&installationO&MUpfrontpaymentESS developer(Owner)User(generation/company/DISCOM/C&I)Energy storageservicesFixed+variablepaymentsO&MpaymentServices flowMoney flowServices flowMoney flowKey pros and cons for end users adopting direct ownership mode
258、l:Enables higher flexibility to use the storagesystem as per owner requirements Allows additional revenue recognitionopportunities that might come up fromemerging use cases with time High capital investment due to upfrontpayment by the procurer Procurer needs to undertake technologyevaluation Requir
259、es procurer to acquire technicaland operational competencies in theabsence of an O&M contract witha third party High capital investment due to upfrontpayment by the procurer Procurer needs to undertake technologyevaluation Requires procurer to acquire technicaland operational competencies in theabse
260、nce of an O&M contract witha third party Enables higher flexibility to use the storage system as per owner requirements Allows additional revenue recognition opportunities that might come up from emerging use cases with time High capital investment due to upfront payment by the procurer Procurer nee
261、ds to undertake technology evaluation Requires procurer to acquire technical and operational competencies in the absence of an O&M contract with a third party Business guide to energy storage adoption in India 36THIRD-PARTY OWNERSHIP In this model,a third party an energy storage project developer de
262、velops and owns the ESS facility and provides energy storage-as-a-service to the distribution utility or the C&I consumers as per a pre-defined agreement.The third party is responsible for developing,owning,operating and maintaining the system.The end-user of the ESS pays the ESS developer two charg
263、es:a fixed capacity charge for its right to use the storage systems capacity and a variable operating charge for actual energy dispatched from the system.The variable operating charge may differ as per the use by the user.For instance,there might be provisions for the user to pay an additional charg
264、e over the base charge for using the BESS system above the agreed-upon limit in the contract between the developer and the user.While developers provide a standard agreement,it is necessary to tailor the provisions according to the use of the end-user,requiring the end-user to be well-versed in the
265、existing and potential use of the asset for the duration of the contract.This model would generally be favorable for customers that are not willing to invest high CAPEX in an asset and foresee a limited set of use cases for the energy storage asset in the near future.This model is akin to the third-
266、party open access as well as the captive and group captive models prevalent for the sale and purchase of renewable power in India.Figure 19:Third-party ownership model ESS developer(Owner)User(generation/company/DISCOM/C&I)Energy storageservicesFixed+variablepaymentsServices flowMoney flowBusiness g
267、uide to energy storage adoption in India 37CONTRACT TYPES UNDER THE MODEL Multiple contracting arrangements are feasible under this ownership model,including tolling agreements,capacity agreements and hybrid PPAs.Under tolling agreements,the developer is responsible for developing,owning,operating a
268、nd maintaining the energy storage project and retains technical operational control.In return,the end-user pays the ESS developer a fixed capacity charge for its right to use the batterys capacity and a variable operating charge for dispatching the energy.Under capacity agreements,only the capacity
269、and capacity attributes of the storage project are sold to the utility,generator or C&I company.The ESS developer is free to use the energy storage asset for its own requirements,provide ancillary services to the grid or sell energy on the power exchange.It also retains operational control of the sy
270、stem as well as full authority over system charging and discharging.The utility,generator or C&I company pays the ESS developer a monthly capacity charge but no variable or energy charge.The utility,generator or C&I company thus receives the assurance that capacity is there when its needed.Under RE
271、bundled with ESS,the developer is responsible for the installation of RE generation project,which is bundled with the ESS(typically co-located).ESS is charged and discharged to moderate the variability associated with the RE to adhere to the power output requirement of the buying utility/consumer.Th
272、e developer retains full authority over the charge and discharge of ESS.The developer sells the contracted energy and receives a per-unit tariff(could be fixed or with an annual escalation)from the utility/consumer.The developer is free to participate in the energy market to adjust any surplus/defic
273、it resulting from the hybrid project.Pros and cons for the end-users adopting third-party-owned ownership models:Enables higher flexibility to use the storagesystem as per owner requirements Allows additional revenue recognitionopportunities that might come up fromemerging use cases with time High c
274、apital investment due to upfrontpayment by the procurer Procurer needs to undertake technologyevaluation Requires procurer to acquire technicaland operational competencies in theabsence of an O&M contract witha third party High capital investment due to upfrontpayment by the procurer Procurer needs
275、to undertake technologyevaluation Requires procurer to acquire technicaland operational competencies in theabsence of an O&M contract witha third party Lower operational risk as the third party is responsible for ownership and operation Lower capital risk as ESS deployment incurs no heavy capital ex
276、penditure As ESS use is limited to the agreed contract conditions,users may miss out on additional revenue opportunities from unforeseen use cases(this will depend on the contract structure)Since the predefined terms of the contract between the developer and ration of the system,the end-user has to
277、be over-vigilant in drafting the contract terms and may need to invest in a third-party subject expert to review it Business guide to energy storage adoption in India 38PROJECT EXAMPLES BESS installations worldwide reap the benefits of the potential use cases for different power system entities.Tabl
278、e 7 provides a snapshot of some global BESS installations developed under different ownership models.Annex 8 provides the details of each of these installations.Table 7:Global BESS installations as per ownership modelsGlobal/domesticOwnership modelProject SpecificationsGlobal Direct ownership(utilit
279、y)San Diego Gas&Electric Escondido Substation Project California 30MW/120 MWh Li-ion battery system Services provided:energy arbitrage,balancing variable generation,energy time shifting,flexible peaking capacityGlobal Direct ownership(C&I consumer)Inter-Continental Hotels Group Storage System Califo
280、rnia 54 kW batteries each for two hotels Services provided:energy cost reduction,demand charge management,time-of-use mitigationGlobal Third-party ownership(utility)Alamitos Battery Energy Storage System Southern California Edison 100 MW/400 MWh Li-ion battery system Services provided:energy arbitra
281、ge,grid stabilizationGlobal Third-party ownershipMoss landing battery storage project Pacific gas&Electric Company Phase 1:300 MW/1,200 MWh Li-ion battery system Phase 2:100 MW/400 MWh Li-ion battery system Services provided:grid stabilization,grid balancing,peaking capacityDomesticDirect ownership(
282、C&I consumer)BESS at Bharat Heavy Electricals Ltd.(BHEL)R&D Center Battery system:500 kWh Li-ion 300 kWh advanced lead-acid 200 kWh flow battery Services rovided:capacity firming,ramp-rate controlDomesticDirect ownership(C&I consumer)Big Baskets behind-the-meter installation 150 kW/281 kWh Li-ion ba
283、ttery system Services provided:Power backupDomesticThird-party ownershipPuducherry Battery Energy Storage System PGCIL Package 1:500 kW/250 kWh advanced lead-acid system Package 2:500 kW/250 kWh Li-ion battery system Services provided:Under operation:frequency regulation,energy time shift Under impl
284、ementation:dynamic frequency regulation,RE capacity firming,load following renewable peak shaving,voltage/reactive power support,integrated applicationsDomesticThird-party ownershipAES and Mitsubishi Corporation TPDDL Project 10 MWh Li-ion battery system Services provided:deviation settlement mechan
285、ism(DSM)penalty reduction,frequency regulation,grid balancing service,RE integration&energy time shiftDomesticThird-party ownershipNexcharge Community Energy Storage System TPDDL 150 kW/528 kWh Li-ion battery system Services provided:reactive power support,peak shaving,volt-amps reactive(VAR)compens
286、ation,frequency response,emergency backupBusiness guide to energy storage adoption in India 39Conclusion3Business guide to energy storage adoption in India 40ConclusionAs countries and businesses devise their action plans to meet their respective decarbonization targets with a high percentage of the
287、ir power requirements coming from renewable power,energy storage will become a critical solution for both power grids and C&I companies.The attributes of energy storage solutions,including fast response capabilities,suitability to meet peak power load requirements and the ability to make renewable p
288、ower supply firmer,make them critical to solving the renewable power procurement challenges of distribution utilities and C&I companies in India.While the need to adopt energy storage solutions is evident,the biggest barrier to large-scale adoption is their existing price levels,specifically of more
289、 advanced technologies such as BESS.At current price levels,energy storage makes commercial sense for distribution utilities for two use cases:meeting peak load requirements and procuring more firm renewable power from RE generators.Given the cost differential of contracting thermal power plants at
290、INR 55/kWh compared to ESS adoption at INR 25/kWh to meet instantaneous and second peak load requirements,distribution utilities should not even consider contracting new thermal power to do so.For C&I companies,the commercial viability of energy storage applications at current costs has been mostly
291、restricted to diesel abatement and,in some instances,the procurement of more firm renewable power(supplying power for more than 70%of the time in a year).With the government and C&I companies issuing increasing number of tenders to procure more firm and peak power from renewable electricity solution
292、s enabled by ESS bundling,many industries are actively exploring the procurement of more firm renewable power.Going forward,C&I companies should include requirements for monthly and daily power supply availability from renewable sources to be met in a technologically agnostic manner in their power p
293、rocurement tenders.This is likely to yield promising results in terms of RE bundled with ESS projects.3Business guide to energy storage adoption in India 41For both distribution utilities and C&I companies,value stacking of various use cases to increase ESS use is currently the best bet to optimize
294、revenue streams from the same ESS asset and make it commercially more attractive to adopt.Based on our analysis,we call on:Distribution utilities in India to evaluate the business case for energy storage before contracting new thermal power plants for peak power requirement.Both distribution utiliti
295、es and C&I companies to issue technology-agnostic tenders for procurement of more stable renewable power,to enable achievement of their renewable power procurement targets in the most cost-effective manner.RE generators,distribution utilities,C&I companies and ESS project developers to work collecti
296、vely to standardize energy storage procurement contracts.Looking ahead,with the expected reductions in BESS prices(28-58%by 2027)due to rapid technological advancements and economies of scale,a number of other use cases,such as energy arbitrage,participation in the ancillary services market,network
297、upgrade deferral and ramping up support,will also become applicable for their large-scale adoption by distribution utilities and C&I companies.Apart from price reductions,which will play a crucial role in enabling the large-scale adoption of energy storage,a more conducive market and regulatory fram
298、ework can also help accelerate deployment and bring forward the large-scale adoption of energy storage.21India is currently at a major turning point in its electricity transition.Energy storage systems are poised to be one of the main enablers of the transition from a fossil fuel-dominant electricit
299、y market to a RE-dominant market in the future.As this new solution makes inroads into the Indian power system,stakeholders on the supply and demand sides need to increase their understanding of the solutions and ways to evaluate the benefits compared to the costs of adoption.Business guide to energ
300、y storage adoption in India 42Annex 1:List of PSP and BESS projects and installationsOperational pumped hydro storage projects in IndiaName of the projectStateInstalled capacity(MW)KadamparaiTamil Nadu400BhiraMaharashtra150Srisailam LBPHTelangana900Purulia PSSWest Bengal900GhatgharMaharashtra250Kada
301、na St.I&IIGujarat240Nagarjuna SagarTelangana706Sardar SarovarGujarat1,2004,745Source:CEA(2022),“Status of Pumped Storage Development in India”,Interactions with concerned state utilities.Pumped hydro storage projects in India that are under-construction or under planningProjectLocationSize(MW)Status
302、Expected commissioningTehri St.-IIUttarakhand1.000UnderconstructionBy 2030Kundah(Stage I,II,III&IV)Tamil Nadu500UnderconstructionKoyna Left BankMaharashtra80Construction is held upTurgaWest Bengal1.000detailed project reportcon-curredbyCEABeyond 2030BanduWest Bengal9004 prospective developers select
303、ed through invitation of request for quotePinnapuramAndhra Pradesh1.200UnderexaminationinCEAUpper IndravatiOdisha600Undersurvey&investigationUpper KolabOdisha320Undersurvey&investigationBalimelaOdisha500Undersurvey&investigationUpper SileruAndhra Pradesh1.350Undersurvey&investigationKodayarTamil Nad
304、u500Undersurvey&investigationSillahalla St.-ITamil Nadu1.000Undersurvey&investigationSharavathyKarnataka2.000Undersurvey&investigationSaundattiKarnataka1.260Undersurvey&investigationMP30 Gandhi SagarMadhya Pradesh1.440Undersurvey&investigationWarasgaonMaharashtra1.200Undersurvey&investigationSource:
305、CEA(2022),“Status of Pumped Storage Development in India”,Interactions with concerned state utilitiesAnnexesBusiness guide to energy storage adoption in India 43BESS projects in IndiaProject developer/sponsorCapacityLocationStatusCentral Electronics Ltd.(CEL)500 kWh/1,000 kW(electrochemical)Uttar Pr
306、adeshTenderedNational Thermal Power Corporation(NTPC)17 MW solar PV+6.8 MWh/6.8 MW BESSAndaman&Nicobar IslandsTenderedRailway Energy Management Com-pany Ltd.(REMCL)14 MWh/7 MWNagpurTenderedSECI160 MW wind-solarHybrid+20 MWh/10 MW BESSAndhra PradeshTenderedSECI20 MW floating PV+60 MWh BESSLakshadweep
307、TenderedSECI20 MW solar PV+50 MWh/20 MW BESSLeh,LadakhTenderedSECI100 MW solar+150ChhattisgarhTenderedSECIMWh/50 MW BESS 2,000 MWhTenderedSECI1,000 MWh/500 MW(electrochemical)Pan-IndiaTenderedSolar Energy Corporation of India(SECI)Ltd.HPSEBL2.5 MW solar wind hybrid project+1,000 kWh/100 kW BESSHimac
308、hal PradeshTenderedTamil Nadu Generation and Distri-bution Corporation Ltd.(TANGEDCO)1 MW solar PV+3 MWh/1 MW BESSTamil NaduTenderedSECI2 x 21 MWh/7 MWLeh&KargilAnnouncedNTPC4 MW solar PV+1,000 kWh/1,000 kW BESSDelhiAnnouncedACME Cleantech Solutions Pvt.Ltd.270 kWh/250 kW(electrochemical)Gurgaon,Har
309、yanaCommissionedGram Power3,000 kW(electrochemical)RajasthanCommissionedImergy Power Systems120 kWh/30 kW(vanadium flow battery)KarnatakaCommissionedSciEssence International5 GJ(1,400 kWh/15,000 kW)giga capacitor-based(electrochemical)TelanganaCommissionedBharat Heavy Electricals Ltd.(BHEL)500 kW(Li
310、-ion),100kW(advanced lead-acid),50 kW(flow)TelanganaCommissionedCELExicom160 kWh/40 kW(advanced lead-acid)Uttar PradeshCommissionedCELRaychem RPG350 kWh(Li-ion)and 150 kWh(flow battery)Uttar PradeshCommissionedCELRaychem RPG500 kWh/1,000 kW(Li-ion)Uttar PradeshCommissionedElectricity Department of G
311、overn-ment of Puducherry1,000 kWh/250 kW(electrochemical)PuducherryCommissionedNeyveli Lignite Corporation Ltd.(NLC)and Larsen&Toubro(L&T)20 MW solar PV+8 MWh/16 MW BESS(Li-ion)Andaman and Nicobar IslandsCommissionedPGCILZhejiang Narada250 kWh/500 kW(advanced lead-acid)PuducherryCommissionedPGCILZhe
312、jiang Narada250 kWh/500 kW(Li-ion)PuducherryCommissionedTata Power Delhi Distribution Limited(TPDDL)AES(Fluence)10,000 kWh/10,000 kW(Li-ion)DelhiCommissionedBusiness guide to energy storage adoption in India 44Project developer/sponsorCapacityLocationStatusAndhra Pradesh Eastern Power Distribution C
313、ompany Ltd.(APEPDCL)5 MW solar PV,4 MWh BESS(Li-ion)Andhra PradeshAnnouncedSECI2 x 21 MWh/7 MWLeh&KargilAnnouncedNTPC4 MW solar PV+1,000 kWh/1,000 kW BESSDelhiAnnouncedNTPC8 MW solar PV+3.2 MWh/3.2 MW BESSAndaman&Nicobar IslandsAnnouncedNTPC1,000 MWhPan-IndiaAnnouncedPanasonic India Pvt.and AES Indi
314、a Private Ltd.10,000 kWh/10,000 kW(electro-chemical)HaryanaAnnouncedSECI&Andhra Pradesh Southern Power Distribution Company Ltd.(APSPDCL)2,500 kWh/5,000 kWAndhra PradeshAnnouncedSECI and Karnataka Solar Power Develop-ment Corporation Ltd.(KSPDCL)4 X 2,500 kWh/5,000 kWKarnatakaAnnouncedSun Source Ene
315、rgy4 MW solar+1 MWh/2 MW BESSAndaman&Nicobar IslandsAnnouncedTamil Nadu Generation&Distribution Com-pany(TANGEDCO)Larsen&Toubro(L&T)125 kW(electrochemical)Tamil NaduAnnouncedTata Power100 MW solar+120 MWh/40 MW BESSChattisgarhAnnouncedSunCarrier Omega Pvt.Ltd.&Gildemeister45 kW(electrochemical)Madhy
316、a PradeshTata Power and Delectrik 40 kW(vanadium redox flow)DelhiTMEIC Industrial Systems India Private Ltd.750 kW(Li-ion)KarnatakaSource:IESA(2021),“Overview of ESS Tenders&Projects India”,Shakti Foundation(2022),“Energy Storage at the Distribution Level Technologies,Costs and Applications”,Interac
317、tions with concerned state utilitiesBusiness guide to energy storage adoption in India 45Annex 2:Concessions on open access charges for RE procurementConcessions on open access charges for RE procurementStateOpen access charges(applicable for both 3rd party and captive)Banking provisionCross subsidy
318、 sur-charge(applicable only for 3rd party)Additional surcharge(applicable only for 3rd party)Gujarat Captive(hybrid):50%of wheeling charges&losses Captive(wind and so-lar):no concessions Third party:no con-cessions Wind:monthly Solar:intraday for high tension(HT)/extra-high voltage(EHV);monthly for
319、low tension(LT)Banking charges:varies between 1.10-1.50 per unit Wind and solar:no conces-sions Hybrid:50%of cross-subsidy surcharge and additional surcharge Wind and solar:No concessions Hybrid:50%of cross-subsidy surcharge and ad-ditional surchargeOdisha20%of normal charges and 100%of normal losse
320、sNot definedExemptedZeroTamil Nadu50%of normal charges and 100%of normal lossesMonthly No banking charges 70%of normal chargesZeroChhattisgarhCharges exempted Total losses capped at 6%Yearly,drawl not al-lowed in peak months 2%of banked energySolar:exemptedWind:50%of chargeZeroUttar Pradesh50%of nor
321、mal charges and 100%of normal losses100%exemption of in-tra-state transmission sys-tem transmission charges for ISTS projectYearly6%of energy bankedNo concessions100%exemption for ISTSZeroKarnatakaSolar projects:100%of normal charges and losses Wind projects:25%of transmission and wheeling charges,1
322、00%of losses AnnualBanking charges 2%of the energy injectedNo concessions25%of normal chargesMadhya PradeshNo concessionsBanking charges 2%of the energy injectedNo concessionsNo concessionsSource:State open access policiesBusiness guide to energy storage adoption in India 46An understanding of batte
323、ry technologies is vital for end-users to grasp their suitability for different applications.The following section highlights the various battery technologies,their pros and cons,key technical features and cost projections.BATTERY TECHNOLOGY LANDSCAPE Following is a high-level summary of key chemist
324、ries and their market maturity stages.The Li-ion battery technology dominated the energy storage market among advanced technologies in 2020 and 2021,across the total global BESS installations.22 There also has been a move toward Li-ion battery technologies as observed from recent stationary storage
325、installations in India.The market for various Li-ion chemistries is split as per the required use cases of battery energy storage systems,as explained in the table below.Source:Deloitte analysis Figure 20:Stages of maturity and commercialization of key battery technologiesAnnex 3:Existing and emergi
326、ng battery technologies Commercialized&maturedCommercialized&continuous R&DNote:Along with the improvement in cathodechemestry,research is also taking place inimproving the anode material of the batteriesFuturistic(Under R&D/Limited commerciallization)NiCdNiMHLead-acidLi-ion(LFP,LTO,NMC,NCA,LMO)Flow
327、batteriesNaS(sodium-sulphur)Advancedlead-acidMetal-airbatteriesLithium metalbatteriesSolid-statebatteriesBattery typeCharacteristicsKey applicationsEnergy cell(NMC,LCO,NCA)Can deliver a steady amount of power but enough energy to operate for longer periods of timeCan store large amount of energyEmer
328、gency backup servicesPeak shavingContinuous discharge to meet expected deviations from schedulesEnergy arbitragePower cell(LFP,LMO,LTO)Can deliver a quick burst of power in a short time frame and a lot quicker than energy cellRamping support to meet load variationsFirming variable output from genera
329、tionFrequency regulationDemand charge reductionBusiness guide to energy storage adoption in India 47The choice of battery chemistry depends on the application required.However,it is possible to alter battery materials in one battery type to improve performance,for instance by mixing power cell mater
330、ials with that of an energy cell to achieve improved performance and serve multiple applications.There are other promising technologies,such as lithium-polymer,metal-sulfur,lithium-metal and metal-air,which show promising energy density and cycle life.These technologies have,however,certain shortcom
331、ings as highlighted below,which have restricted their large-scale commercialization.In spite of that,continuous R&D and pilot deployments have been done to test such technologies.980 MWh sodium-sulfur batteries are operational in various locations,such as Japan,Italy and the United Arab Emirates.Ter
332、na has deployed such batteries in Italy.NGK,Kyushu Electric Power Co.and Futamata Wind Development Co.have deployed sodium-sulfur batteries in Japan.Hokkaido Electric Power installed a 60 MWh flow battery in Japan.Companies such as Guodian Longyuan(Shenyang)Wind Power Co.,Ltd.,State GridCorporation
333、of China(SGCC)and State Grid North China have installed a cumulative 26 MWh flow battery in China.Antigua and Barbuda have seen the installation of 12 MWh flow batteries.A total of 920 MWh in flow batteries are under construction in China,Canada and Kazakhstan.Raychem installed a flow battery system for CEL in Uttar Pradesh,India for a capacity of 150 kWh.Key technical characteristics of some of t