India is projected to emerge as top market for energy storage

Talking about the challenges faced by the energy storage market in the power sector, Venkat Rajaraman, Founder & CEO, Cygni, says that it is the perception that Battery storage systems are very expensive, despite the fact that over the last decade the prices of Lithium-ion batteries have dropped steeply, by over 90 percent. 

Present market trends impacting the demand for energy storage systems in India 

Till the first decade of this century, the power demand supply gap in India was ever widening. It was a huge 12 percent in 2009-2010 and power shutdowns, most of which were unscheduled, especially during the long summer months, were common place. Data centers, telecom, critical manufacturing and critical health care sectors had to deploy in house emergency generation and battery energy storage systems. Flooded lead acid batteries were widely used until the advent of the more robust and maintenance free VRLA batteries. 

Over the past decade RE integration to the grid has risen spectacularly, and it totals more than 100GW with solar constituting 45 GW. With installed RE, that is inherently infirm, touching 25 percent of total installed power generation capacity, grid management has become complex and the deployment of energy storage on large scale has become inevitable. Over the same decade, the prices of lithium Ion battery, that possessed far more attractive battery parameters than the lead acid battery, started declining steeply. As per the oft quoted Bloomberg report, the price fell by 89percent between 2010 and 2020 – from $1,100/KWh to $137/kWh in 2020. We are now witnessing the slow expansion of the EV market to the passenger vehicle segment as well. In the coming years, the large utility scale battery storage and the EV market would burgeon and India would emerge as the top market for storage as it has in solar and wind.

Increasing power demand, for energy storage for industrial, commercial and residential spaces

Energy costs are a significant part of the total operational cost, especially for energy intensive industries and large commercial facilities, and they are rising year-on-year. Containing the energy cost is one of the major issues faced by the enterprises. Reliability and quality of power that can adversely impact production volume and the life of critical equipment are other major concerns. All of these concerns can be addressed by deploying energy storage systems. 

As for saving energy cost, the demand charges and higher tariff for power drawl during tariff peak could be minimised charging batteries during periods of low tariff or charging them through renewable sources like solar and utilising the stored energy to keep power demand below the declared quantum and utilising the stored power during peak tariff period. Power outages, poor quality of power including surges, harmonics etc could all play havoc in the smooth operation of the C&I enterprises. Well-designed energy storage system coupled with an energy management system could save lakhs of rupees and many leading C&I enterprises have already opted for storage solutions.

Individual home owners and apartment complexes can also reap the benefit of reduced energy cost and enhanced security through reliable lighting and monitoring devices using energy storage, particularly in conjunction with solar. 

Government’s response and support in dealing with energy storage systems 

One of the important challenges facing the energy storage market in the power sector is the perception that battery storage systems are very expensive, despite the fact that over the last decade the prices of lithium-ion batteries have dropped steeply, by over 90 percent. However, this perception is changing. Secondly, with batteries becoming a key element

in enabling energy and mobility transition, there is intense competition among nations and corporations to develop low-cost battery technology with all desired operational parameters and material considerations. This has led to uncertainty and confusion around technology and deferred investment decisions. Thirdly, Energy storage is in its early stage of adoption and the regulatory and policy measures that are critical for any market development are also evolving. For the same reason, financing models of energy storage have not evolved. The government, critically aware of the need, is working with all stakeholders to evolve a robust framework. 

Opportunities to increase domestic manufacturing and localisation in energy storage systems

Government of India’s announcement in May, to implement ₹18,100 crores Production Linked Incentive (PLI) under the National Programme on Advanced Chemistry Cell (ACC) battery storage for setting up manufacturing capacity of 50GWh is a significant step in making India a leading Energy Storage manufacturing centre. This will enable India to build a robust manufacturing base not only to meet the growing domestic demand but also to cater to the demands outside, especially among the ISA member countries in Africa. 

The plan is to set up Tesla-style giga factories to manufacture batteries by attracting investments totaling ₹45,000 crore. Each selected ACC battery storage manufacturer would have to commit to set up an ACC manufacturing facility of minimum 5GWh capacity and ensure a minimum 60 percent domestic value addition at the project level within five years. 

The incentive will be paid out on the basis of sales, energy efficiency, battery life cycle and localisation levels. The beneficiary firms have to achieve a domestic value addition of at least 25 percent and make the mandatory investment of ₹225 crore /GWh within 2 years (at the mother unit level) and raise it to 60percent domestic value addition within 5 years. 

Which products and services do you offer to meet the storage requirements? 

Cygni has designed about 15 different products for the EV2W, EV-3W and BESS (Battery Energy Storage System) market. Among them 6 of them are ARAI certified and balance certification in progress. Cygni’s Battery products caters to various EV, Commercial and Industrial customers. We have an integrated platform (with Software, BI, Analytics etc) for battery modeling. We offer modular, scalable batteries for higher capacities. Battery Pack ranges from stand-alone batteries to BTM grid-level storage batteries. Cygni’s advanced battery packs support application specific design, chemistry agnostic bms, quick product design turn-around, support battery degradation modelling, supports firmware/adaptive modelling and protect against thermal, surge conditions. 

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 startups 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.