India’s road towards self-reliance energy storage, COP26, Net Zero and the need for Carbon Finance

We have celebrated India’s climate ambition with gratitude. The Honourable Prime Minister in Glasgow pledge highlights knowledge over ignorance and light over darkness. To some India’s 2070 net zero commitment may seem too slow – but we strongly believe it is India’s most realistic roadmap. And it is centred on the Common but Differentiated Responsibilities of the Paris Agreement.

As a component of net-zero pledge, India has increased the target of non-fossil-based generation even higher, from previous 450 GW to 500 GW, and making renewables 50% of the total energy mix by 2030. To support the integration of high-capacity renewables, battery storage will be a critical component. According to IEA, India will have battery energy storage capacity of up to 200 GW by 2040.

The 2020s are “the energy storage decade” and the world will surpass a terawatt-hour of installations by the time they are over, according to predictions made by analysts at BloombergNEF.
 

In COP26 summit, the event considered to be the “world’s best last chance” for climate action, India raised its climate targets through the ‘five-mark punch points called as Panchamrit’ – the five commitments announced by Hon’ble Prime Minister of India.

• To increase non-fossil fuel energy capacity to 500 GW by 2030.
• To meet 50% of country’s energy requirement through renewables by 2030.
• To reduce projected Carbon emissions by 1 bn tonne till 2030.
• To reduce carbon intensity to less than 45% by 2030 (below the 2005 levels) and
• To attain Net zero by 2070. The intention is great, and that too, coming from the third largest GHG emitter of the world. But a bigger question to ask is ‘How’?

The speed and scale required to bring this transition is unprecedented. All the above indicate revamping of strategy and execution.
 

With increasing renewable energy (especially solar and wind) deployment across the world, the need for battery storage systems is becoming critically important given the intermittent nature of renewables. With larger deployments and concomitantly lowered costs, battery storage technologies are becoming more technically and financially feasible. However, for this transition to continue, supply of storage systems needs to keep pace with the demand.

Indigenously manufacturing batteries will be a critical if India wants to become self-reliant and wants to reduce billions of dollars on imports. India has also announced a production linked incentive (PLI) scheme for manufacturing of advanced batteries with a provision of 50 GWh. Thus, until India adopts a holistic long-term strategy to secure critical materials and strengthen its domestic manufacturing value chain, deployment of battery storage systems in the country will remain prohibitive.

While battery storage is still a nascent industry in India, it would be perhaps beneficial to draw both technical and policy lessons from the projects in developed countries.

1. Battery storage is highly dependent on the national policy environments and absence of regulations for its deployment can remain a roadblock in the growth of battery storage.
2. Rules governing ownership have long been a point of contention in electricity markets.
3. Controls and monitoring are essential to ensure safety.
4. Utility scale battery storage is almost entirely dependent on the growth of lithium-ion battery technologies. As lithium-ion technology is relatively new, there is a need for continued R&D and innovation.
5. The lack of a proper regulatory framework in India prevents development of battery storage. Finance is yet another barrier as investments in R&D and innovation are critically low. This highlights the need for higher spending on innovation and R&D.

Demand for solar and Li-Ion batteries in the coming years
India’s oil import bill is ballooning and is expected to cross a whopping $100bn this fiscal year and India’s metros, state capitals and industrial towns are becoming lethal gas chambers.

Based on National Renewable Energy Lab (NREL), USA has predicted that the energy storage capacity in India would grow to an impressive 160 to 800 GWh by 2030.

The solar and energy storage industries are therefore poised for unprecedented growth in this decade. Recent market developments with spate of announcements on acquisitions and investments, the booming start-ups in these two spaces are clear indicators of the exciting times ahead. For sure by the turn of the decade India will have the distinction of being among the fastest energy and mobility transitioning countries in the world.

Energy Storage is the Future
Across the world, renewable energy integration is taking centre stage, and annual global storage deployments tripling year-on-year.

In recognition of this unique value of battery storage and many other value streams that battery storage is providing in electrical networks worldwide, Ministry of Power (MoP) & Ministry of New & Renewable Energy (MNRE) in India -- including CEA, CERC, POSOCO, PGCIL & SECI -- all are working towards a target of deploying 4000 MWh of standalone projects at the regional load dispatch centres. The Indian States should take their lead and assess the viability of battery storage in their own portfolios to optimize the average cost of power procurement.

Honourable Union Power Minister Mr. R. K. Singh, reviewed the implementation of 10 GW Renewable Energy Project at Leh along with its evacuation plan.

Major outcomes of the meeting are as under:

• 20,000 acres of land at Pang would be provided immediately by UT of Ladakh for setting up of Renewable Energy Park, while the availability of other 20,000 acres of land at Pang would be explored based on inputs provided by SECI.

• UT of Ladakh will receive revenue per annum on account of leasing of the land allocated for setting up of the Renewable Energy project.

• 5 GW of transmission link from Pang (Leh)-Kaithal (Haryana) along with 12 GWh of Battery Energy Storage will provide 76% utilization of transmission capacity and would evacuate 13 GW of Renewable Energy Generation (9 GWp Solar + 4 GW Wind)

• Out of 12 GWh battery energy storage, about 1- 2 GWh will be developed as part of the transmission element to keep the line charged during the period of no generation, while the remaining battery energy storage could be developed as part of the generation element.

• POWERGRID would revise their DPR for setting up of 5 GW transmission link including 2 GWh of battery energy storage and AC system strengthening in Ladakh and Jammu & Kashmir to provide RE power within Ladakh and also to Jammu & Kashmir.

• MNRE would move a proposal for providing Central Grant for development of the above transmission link as part of Green Energy Corridor.

• The transmission link should be completed within 5 years.

How to navigate this challenge?
To make renewables a significant part of the baseload energy mix, focus on new battery technology is of utmost importance. Therefore, new innovations using more sustainable chemistry without compromising on the performance is the need of the hour. Technologies such as Sodium Ion, Liquid metal and other advanced chemistry of energy storage are some potential candidates in the near future, comprising of materials that are more abundant, cheaper to manufacture and easy to recycle.

Who are the stakeholders?
The imminent need for reducing dependency on fossil-based energy sources has accelerated the innovation process but still needs a larger collaborative effort from nation states and conglomerates aimed towards policy change, funding R&D in academia and bridging the gap between research and the entrepreneurial business world.
 

Financing of clean energy initiatives has been major challenge in the past. However, with increased focus on achieving Net Zero emission targets, a willingness to invest can be seen from Private Equity and other institutional investors.

The real challenge is how to create enough investable net zero projects for all of that money to be invested into. It will require a lot of public funding at first (in some cases tens of millions, hundreds of millions or even billions for individual projects), but as we gain more practice, the costs will fall, and the support will taper.

We believe that backed by sufficient capital, soft cost of capital and innovative business models in different sectoral areas, India’s climate strategy and finance can show the world what leapfrog economics looks like as India illustrates to the developing world how technologies, investment, sustainable growth and energy security can entirely aligned with the need for a collective zero emissions future.

- Omkar N Pandey, CGO, Sanvaru Technology Limited