By Saurabh Kumar, Vice President – India, International Vitality Alliance for Folks and Planet
A significant milestone in India’s vitality transition was marked with the commissioning of the nation’s first utility-scale standalone battery vitality storage system (BESS) undertaking, developed collaboratively by BSES Rajdhani Energy Restricted (BRPL), IndiGrid, AmpereHour Vitality and International Vitality Alliance for Folks and Planet (GEAPP).
With India’s plans to combine 500 GW of renewable vitality tasks into the grid accelerating, an pressing want to ascertain an estimated 47-50 GW of storage capability has emerged. This milestone is thus necessary, as the present put in capability stands at simply 5.3 GW, largely coming from legacy pumped storage techniques, with no important additions being made lately. GEAPP and BRPL have, due to this fact, set a benchmark for storage deployment by finishing this undertaking inside a 20-month timeline, thus establishing a mannequin that different utilities can replicate throughout the nation. This was enabled by a mix of regulatory innovation and a clear procurement course of, which contributed to creating the undertaking each commercially viable and operationally sound.
The undertaking was initially conceived in 2019 and confronted early regulatory roadblocks, because the Delhi electrical energy regulator rejected the proposal twice. It was GEAPP’s intervention, which concerned figuring out key gaps and introducing revolutionary monetisation mechanisms, that led to the undertaking gaining regulatory confidence and thus the approval to maneuver ahead.
Consequently, the initiative grew to become India’s first grid-connected battery storage undertaking to safe approval by means of a two-stage course of. This included an in-principle clearance, which was adopted by ultimate approval publish reverse public sale. That is additionally the nation’s first BESS undertaking utilizing the battery-as-a-service mannequin, with BRPL solely paying a month-to-month service cost decided by means of the aggressive bidding course of. The undertaking additionally monetised a number of worth streams by integrating additional income sources together with ancillary providers, considerably bettering its business viability. Past deployment, the undertaking’s biggest contribution could also be its function as a sectoral template for standardised bidding paperwork, developerutility contracts and regulatory approval codecs. In consequence, the groundwork has been laid for different utilities to copy the mannequin with diminished transaction prices and clearer regulatory pathways.
Scaling battery storage tasks
With a view to scale efforts, GEAPP has been collaborating with the World Financial institution and the Authorities of India to construct a shared technical help facility. Whereas this will not be a pooled fund, it’s a coordinated mechanism that may present assist to over 12 utilities. Below this framework, GEAPP is managing technical assist throughout the taking part utilities by serving to design the construction and put together tasks for deployment. This coordinated help is important for constructing a sturdy pipeline of tasks with a purpose to obtain the goal of creating 40-50 GW of storage capability within the subsequent 5 years. By way of financing, discussions are being held to ascertain a line of credit score for capital expenditure assist by means of the State Financial institution of India. The World Financial institution and IndiGrid are working carefully with the Indian authorities to finalise a $300 million facility. This may allow builders resembling IndiGrid to entry funds at an affordable value, and assist make battery storage-as-a-service reasonably priced for distribution utilities.
Driving down prices
A key spotlight of the not too long ago commissioned BESS undertaking is a big discount in benchmark prices, by practically 55 per cent. This achievement has set a precedent in pricing competitiveness. As such, it’s pertinent to judge the drivers that made such cost-efficiency believable.
One of many major elements was the creation of a extremely clear bidding doc. The undertaking group carried out three rounds of conferences with bidders, addressing all doubts and guaranteeing readability on each clause. This degree of transparency fostered belief amongst individuals and eradicated ambiguity, which helped drive down the danger premiums which are normally factored into bid costs.
Second, the undertaking construction included forward-looking incentives. Whereas arbitrage was the one monetisable stream on the time of bidding, the doc explicitly outlined that future income streams, resembling ancillary providers or capability markets, can be shared with the developer. This allowed bidders to decrease their upfront return expectations, as they had been assured that the long-term revenues may assist offset any preliminary trade-offs.
A 3rd important resolution was to prioritise high quality over amount. Given the significance of getting India’s first grid-scale battery undertaking proper, desire was given to bidders with prior battery storage expertise. Though not one of the bidders had deployed tasks of this scale earlier than, all three had present installations and technical know-how, which ensured competence with out compromising value.
Fourth, the undertaking group ensured that the battery storage service settlement was honest and balanced. Not like typical utility contracts in India, which are usually one-sided in favour of the utility, the settlement recognised risk-sharing. A one-sided settlement usually prompts builders to pad prices as a hedge in opposition to unexpected liabilities. By making a extra equitable contract, the group helped get rid of pointless value buffers. Consequently, these measures had a transparent influence. This was evident when the bids had been opened practically 18 months in the past, because the tariff found was 35 per cent decrease than that seen in different large-scale tenders, resembling SECI 1 GW tender or the five hundred MW Uttar Pradesh and Kerala tasks–all of which had tariffs exceeding Rs 10 per unit. In distinction, this undertaking’s found tariff was within the Rs 4.50-Rs 5 vary. Even after excluding the concessional mortgage part, the overall value was nonetheless about 45 p.c beneath the prevailing benchmark. For reference, the Authorities of India’s Viability hole funding scheme in 2023 had mounted a benchmark tariff of Rs 6.50 per unit. The found tariff was nicely beneath that, primarily as a result of undertaking’s multi-service strategy. Not like standard tenders that solely worth storage arbitrage, this undertaking recognised the broader performance of batteries, which enabled the monetisation of a number of extra grid providers.
Addressing challenges by studying from international experiences
Even because the deployment of India’s first grid-connected battery storage undertaking marks a pivotal shift, a number of coverage challenges proceed to pose limitations in widespread adoption. Probably the most important gaps is the absence of a capability market, which is a vital function in lots of developed vitality techniques.
In markets such because the US and UK, grid flexibility is ensured by means of a capacity market mechanism. Right here, the system operator secures a set quantum of capacity, which is commonly used throughout peak durations resembling early morning or night with a purpose to preserve grid stability. This association permits the system operator to order capability whereas enabling builders to take part within the vitality marketplace for extra income. A key advantage of this mannequin is the provision of a set fee part, which helps decrease undertaking prices and will increase business viability.
Nonetheless, India at present lacks such a mechanism. Accelerating battery storage deployment would require intervention from the Central Electrical energy Regulatory Fee and the Ministry of Energy to ascertain an ancillary providers market that features capacity-based funds. As Spain and Portugal have demonstrated the vulnertalents of techniques that lack sufficient flexibility, it’s essential to handle the rising share of intermittent renewable vitality to make sure grid stability.
Whereas battery techniques have been recognized as producing belongings, the applicability of GST remains to be beneath evaluation.
Regardless of these challenges, international learnings and collaborations beneath GEAPP have enriched India’s battery deployment technique. The Alliance, backed by three founding philanthropic establishments and supported by Alliance companions, has enabled the switch of finest practices into the Indian context.
The idea of monetising a number of battery worth streams was impressed by comparable efforts within the state of California, USA, and different superior markets. Moreover, the design framework for ancillary providers that GEAPP is proposing to the Authorities of India is predicated on real-world fashions adopted within the US, UK and Europe.
One other necessary innovation is the event of an open-source battery administration system (BMS). GEAPP has used worldwide expertise to develop a “Make in India” BMS. At present deployed within the flagship Delhi undertaking, this method is present process testing. As soon as validated, it is going to be made freely obtainable for any utility or developer to undertake, with GEAPP providing technical assist for free of charge.
Such initiatives are designed not solely to bridge present regulatory and technical gaps, but additionally to create a sustainable and replicable battery storage ecosystem in India.
Outlook for India
With the profitable deployment of India’s first grid-scale battery storage undertaking, GEAPP is optimistic concerning the path forward. The organisation is now centered on scaling its influence throughout three core areas which are seen as important to India’s clear vitality transition: battery storage, grid digitalisation and decentralised renewables.
The primary precedence is to quickly scale up battery vitality storage and convey the market to a self-sustaining tipping level. GEAPP envisions a situation within the subsequent two to 3 years the place the battery storage sector capabilities with out the necessity for exterior interventions, like utility-scale photo voltaic immediately.
The second key focus is on the digitalisation of the facility grid. A digitised grid permits for better flexibility by enabling demand response and integrating increased shares of renewable vitality. By unlocking the worth of real-time information, utilities can higher handle variability, scale back losses and plan infrastructure extra successfully.
The third and equally necessary precedence is decentralised renewable vitality. This section stays largely untapped in India, however GEAPP sees huge potential, notably in mild of revolutionary nationwide schemes such because the Pradhan Mantri Suryodaya Yojana (PM Surya Ghar), which goals to put in photo voltaic rooftops on 10 million houses.
In conclusion, these three pillars – storage, digitalisation and decentralisation – acquireively symbolize GEAPP’s strategic imaginative and prescient for accelerating India’s vitality transition. With continued momentum, India will not be solely on observe to fulfill its 2030 goal of 500 GW of non-fossil gas capability, however is well-positioned to exceed it.
