IECC Highlights Critical Need for Solar and Storage to Avert Power Shortages in India

The India Energy & Climate Center (IECC) has released a pivotal technical report titled 'Rapid Deployment of Solar and Storage Is the Main Option for Avoiding Power Shortages in India.' The report underscores the urgent need for significant enhancements in solar power and storage solutions to meet the country's rapidly growing electricity demand and avoid potential power shortages.

The report projects that India will face substantial evening power shortages by 2027, ranging between 20-40 GW, despite the planned completion of all ongoing thermal and hydro capacity projects. The summer evening peak demand could increase by 50-80 GW, potentially exceeding 300 GW. This looming shortfall underscores the necessity for immediate action to prevent widespread power outages.

Even with the addition of 100 GW of new Renewable Energy (RE) capacity by 2027, the system is expected to be short by 15-20 GW during the evening peak hours. This scenario suggests that utilities may become reluctant to procure RE alone, as it fails to meet their peak load requirements. Furthermore, the introduction of new RE capacity will exert considerable operational stress on existing thermal assets. According to the IECC, large-scale solar and storage deployment is the primary viable solution to avert these shortages, given their quicker deployment capabilities compared to new thermal and hydro assets. The report recommends installing 100-120 GW of new solar capacity, with 50-100 GW co-located with 16-30 GW of storage, each providing 4-6 hours of power.

The report also highlights the economic benefits of combining solar and storage. Recent gigawatt-scale solar and storage auction results have shown a record low price of INR 3.4/kWh, indicating the cost-effectiveness of this approach. Over the past 2-3 years, battery storage prices in India have plummeted, with standalone battery storage capital costs estimated at around USD 200/kWh and co-located storage costs at approximately USD 150/kWh. 

Co-locating batteries with solar installations offers significant balance of system (BOS) cost savings, reducing overall capital costs by about 20 percent As of July 2024, auction results suggest that the evening peaking storage adder on top of RE Levelized Cost of Electricity (LCOE) would be INR 1.2/kWh, dropping to INR 0.8/kWh when co-located with solar. By 2030, these costs are expected to decrease further by 15-20 percent indicating a major shift in how India should plan future power sector investments.

To ensure the rapid deployment of storage at scale, the IECC report calls for robust policy support, including fiscal incentives and mandates. Such measures are deemed essential to guarantee the security and reliability of the power supply. Additionally, the report anticipates a massive expansion of RE and storage in the long run, with India's electricity demand expected to quadruple by 2047. This growth necessitates a substantial increase in low-cost RE and storage to reduce consumer bills and sustainably power the nation's rapid economic development.

By 2030, with an estimated 240 GW of coal capacity, India will be sufficient in baseload power but will face peak deficits. The optimal energy storage requirement for the country is projected to be 12 GW/52 GWh by 2025 and 67 GW/254 GWh by 2030. The rise of electric vehicles, green hydrogen, industrial electrification, and AI-driven data centres will contribute to a fivefold increase in electricity demand by 2050, from 1500 TWh in 2022 to 3000 TWh by 2030, and 7200 TWh by 2050, including industrial captive power.

The IECC report emphasises that end-use electrification and the transition to a clean power grid will require an enormous scale-up of RE. By 2030, peak demand is expected to surge by around 90 GW from current levels, reaching approximately 340 GW, representing an annual growth rate of 6-7 percent, significantly higher than the global average.