As part of its efforts to cut emissions, India is looking to install 175 gigawatts (GW) of renewable energy capacity by the year 2022. A big problem with renewable energy like solar and wind is intermittency or variability of energy output from these sources. Unlike energy produced from coal whose steady supply to power generation plants means steady output, variance in the amount of sunshine or wind speed can disrupt the output. Dan Steingart, Stanley-Thompson associate professor of chemical metallurgy at Columbia University, says while ambitious targets are a good start, “innovation in energy or specifically in batteries” is important. Zahurancik says renewable storage will play a far more important role in the future as the government starts putting more and more restrictions on thermal power plants.

This is where battery storage can be of huge help. On lean days when the variance is high, excess energy that is stored can be used to make up for the fall in output and steady the flow of power to the grid. “What we are doing is converting intermittent variation prone solar and wind energy into schedulable and dispatchable power to the grid with the assistance of battery storage,’’ says Raja. Zahurancik says besides the benefit of generating power in a fraction of a second, storage facilities can be installed nearly anywhere.

“What storage does is provide very rapid power... and [it] can be put into places where it can help the power network be most reliable and cost-effective,” he adds. More importantly, with storage renewable energy can also become a primary source of power—providing power 24x7—instead of just complementing thermal power.

A key reason for the battery manufacturing industry’s success and the adoption of green energy in recent years has been the fall in prices of lithium. Nearly 92% of all storage batteries use the metal. Lithium-ion batteries are of two kinds. A smaller version is used in smartphones, electronic items, and electric cars—whose proliferation is likely to propel the market for lithium from $13 billion in 2017 to $41 billion by 2024, according to a report by energy consultancy Wood Mackenzie. Others are factory-sized, grid-level devices storing massive amounts of energy for large-scale generation, transmission, and distribution companies, as well as commercial projects, industrial plants and residential quarters. Today, many factories, industrial plants, and residential colonies are turning to distributed energy—putting up hundreds of solar panels on rooftops or setting up wind farms—not just to cut power bills but also to reduce their carbon footprint and do their bit for the environment.

Between 2011 and 2019, the cost of lithiumion batteries fell by 80%. “It is expected to further go down by 8% every year for the next three years,’’ says Raja. Other items in the battery facility such as inverters and the air conditioning system can be localised to further cut costs. In a recent blog, Logan Goldie-Scot, head of energy storage at Bloomberg New Energy Finance, said the price of an average battery pack will be $94 per kWh by 2024 and $62 per kWh by 2030. In 2018, it was around $200 per kWh. Grid-level batteries can also solve some of the country’s more complex goals.

As Rupesh Sankhe, vice president, institutional equity research, Elara Capital, points out: “Cheaper energy storage opens up opportunities to accelerate the transition to sustainable energy systems, including electric vehicles, urban power consumption, rural energy access, electricity distribution, grid integration and a complete replacement of coal power plants.” But regulators and policymakers must protect existing investment in the renewables sector while developing a framework conducive to synergies between renewables and energy storage, he adds.

The uniqueness of battery storage to which most people turn a blind eye is its versatility. “Unlike other power assets like generation, transmission, and distribution that work in silos, battery storage can benefit all these three areas in the electricity value chain,” argues Raja, who has a degree in international business from Thunderbird School of Global Management in the U.S.

Take discoms, for instance. Most of them are forced to buy additional power at higher rates to meet peak-time demand. “However, if excess power from off-peak hours is stored locally in battery storage, the same can be supplied to the consumer without the discoms having to stretch its pockets,” argues Sankhe of Elara Capital. For generation players, integrating more renewable energy at less than `3 per kWh compared to thermal at ₹4.10 per kWh to ₹5 per kWh, means discoms can provide low-cost power to consumers while keeping their margins intact. Transmission companies can save on capital expenditure by locating batteries close to peak load areas and discharging them to meet peak demand, instead of building thousands of kilometres of peak load infrastructure. “What it means is that large-scale deployment of energy storage has the potential to upend industry structures, both physical and economic, which have defined power markets for so long,” says Raja.

The challenge for storage makers is to make grid-scale storage systems viable. Developers like ReNew Power, which are building solar plants and wind farms, are unwilling to add storage to their portfolio because of cost concerns. With the levelised cost of electricity—electricity delivered on the grid from the source—becoming the benchmark for all utilities, storage is still a nascent business. “Energy storage systems are expensive and require a significant upfront investment,” says Sankhe. “Adequate fiscal incentives and suitable subsidies would pave the way for early adoption and implementation of this technology.” Globally too, the business is yet to pick up. In 2018, total storage was just enough for 6,000 MWh of electricity in the grid, according to Wood Mackenzie.

Steingart says there are challenges in India as it tries to roll out battery storage. The national grid is weak compared to the U.S. or Germany, sourcing of raw materials for lithium ion-based batteries is an issue, and there is a general reluctance to pay a premium for better quality electricity. Some think pump hydro storage, in which stored water is forced up a terrain using solar or wind energy and then released on a turbine, is a better option. The Central Electricity Authority estimates 96 GW of pump storage capacity is available at 63 sites; some 2.6 GW is already operational.

Companies and governments, says Raja, have not recognised the value and benefits of such devices: “For instance, how should you value an asset that can generate 10 MW or 100 MW of power in milliseconds when all other power sources have collapsed.” No other form of storage in India, including pump storage, can accomplish such a feat. Setting up battery storage, unlike pump hydro storage, is far easier. It does not require environment clearances and can begin operations in months and costs ₹3.5 crore-₹4 crore per MWh. The Tata Power storage plant was set up in nine months flat. “We can build 1,000 MW, four-hour batteries today,” says Raja. “Hence, ambition is the only constraint, not its potential.

This was originally published in the August 2019 issue of the magazine.