The document discusses the opportunities for energy storage to support India's growing renewable energy sector. It notes that while renewable energy capacity is increasing, supply still lags demand. Energy storage could help address issues of predictability for renewable sources by storing excess energy for later use. This would help integrate renewable energy into the grid and lower costs. The document outlines various energy storage technologies and calls for policy support to develop this sector in India, including incentives and mandates. Key stakeholders like regulators and utilities must recognize storage and incorporate it into planning to fully leverage its benefits.

1. F O R U M
48 P OW E R L I N E ● December 2014
A
s the Indian economy gets back on
the growth path, millions of energy
consumers will reach prosperity
levels that require substantially higher
energy use. We have seen the demand
for power increasing at a compound
annual growth rate of 6.65 per cent for
the period 2003-04 to 2012-13 to reach
998,114 MUs in 2012-13. The installed
generation capacity has also grown
rapidly from 1.4 GW in 1947 to 255 GW
as of November 30, 2014. However, sup-
ply still lags behind demand, with a peak
deficit of 4.5 per cent and an energy
deficit of 4.3 per cent in October 2014.
Even with an installed capacity of 255
GW (thermal 177 GW), most of the con-
ventional energy plants have not been
running at full potential due to issues
pertaining to the shortage of coal and
gas. Large hydropower plants also have
their unique challenges in terms of
issues related to environmental impact
and resettlement and rehabilitation. In
such circumstances, renewable energy
seems to be the only sustainable future.
Recently, the Government of India articu-
lated its mission of “24x7 power for all by
2019”. It aims to generate 2 trillion units
of power a year by 2019 from the current
level of less than 1 trillion units a year.
During the past decade, we have seen
increasing awareness and support for
renewable energy technologies. Techno-
logical developments in the solar and
wind energy sectors are increasingly
making them commercially competitive
as compared to conventional power
sources. Given the challenges associated
with conventional power, investors and
the government will need to depend on
renewable energy as a sustainable sour-
ce of power. However, there are still
some fundamental issues facing the
renewable energy sector and it will
require certain enablers to further
improve its competitiveness against
conventional power sources.
Key challenges facing renewable
energy market
The Indian power market is facing
numerous challenges like the demand-
supply gap, suboptimal plant availabili-
ty factors, peak power shortages, poor
plant load factors, grid indiscipline and
related penalties, system reliability
issues, transmission congestions (due to
the concentration of generation capaci-
ties in one region while the demand is in
another region) and grid instability.
Historically, renewable energy has been
costlier than conventional power, leading
to the need for mechanisms like feed-in
tariffs and renewable purchase obliga-
tions (RPOs). In spite of this, we have
seen cases of slackness in RPO compli-
ance by distribution companies due to
multiple reasons, like enforcement being
done only in pockets and disparities in
the cost of power. While such mecha-
nisms do lend support to renewables, the
mainstreaming of renewable energy will
be more sustainable when it is based on
commercial principles, instead of only
regulatory support over a longer period.
This will require renewable energy to be
available at competitive costs and at the
time of demand. In the past decade, we
have seen a declining trend in the cost of
solar energy from around Rs 20 per unit
to around Rs 7 per unit. However, one of
the biggest challenges facing renewable
energy sources is that there is no pre-
dictability because of the level of gener-
ation being conditional upon the weath-
er, time of day, etc.
Energy storage as a potential solution
The traditional nature of electricity is
that it must be produced when it is
needed and consumed once it is pro-
duced. The energy produced and not
consumed is lost. Conventional thermal
energy has the flexibility to be generated
when needed and hence the need for an
energy storage mechanism had not been
felt so far. If renewable energy is to be
brought at par with conventional power,
it will need to grow along with energy
storage technologies.
Energy storage, as the word suggests,
Mainstreaming Renewables
Can energy storage be an enabler?
Roshan Joshi, Consulting Manager, Resources Group, Accenture
“AIM to generate 2 trillion units of power a year by 2019 from current level of
less than 1 trillion units a year.”
Government plans
to raise renewable
energy generation.
Expected
The renewable energy
sector will witness
$100 billion in investments
in the next five years.
of total electricity generation
The government plans to double the installed wind energy capacity to
40,000 MW by 2019.
It has also revised its solar energy target to add 15,000 MW of solar power capacity
by 2019 from a base of currently installed capacity of 2,971 MW.
From
6%
To
15%

2. F O R U M
49P OW E R L I N E ● December 2014
means technology that can absorb ener-
gy when excess is available and store it
for a period before it is released to sup-
ply energy when needed. The period of
storage can vary from a few seconds to a
long term, depending on the technology.
This also helps in improving the quality
of power through frequency regulation.
Energy storage technologies offer the
potential to break this linkage by allow-
ing for generators and/or users to pro-
duce and store electricity for later use,
similar to other commodities.
Benefits of energy storage
Energy storage will enable the renew-
able energy generated during off-peak
hours to be supplied during times of
peak demand. Storage promises to pro-
vide assistance to power generators,
grid operators and discoms by allowing
them to operate in a more cost-effec-
tive manner by optimally utilising the
existing generation assets. This miti-
gates the need to make capital invest-
ments in augmenting generation ca-
pacity. In essence, energy storage tech-
nologies can act as a “shock absorber”
for the power grid.
The use of energy storage solutions will
help distribution utilities reduce the cost
of RPO compliance as renewable energy
can be made available when required,
unlike the current situation. This will
also help renewable energy producers
compete more effectively with conven-
tional energy producers.
The Government of India recently anno-
unced plans to set a target of 100,000 MW
of solar power generation by 2019, and
24x7 electricity supply to every house,
including those in remote areas. For this
to become a reality, it is imperative to
leverage energy storage technologies.
Energy storage technologies: global scenario
Globally, it is estimated that nearly
140,000 MW of large-scale energy stor-
age is currently installed in grids to pro-
vide electricity during peak hours. The
vast majority (99 per cent) of this capac-
ity is comprised of pumped storage
hydropower (PSH) technologies. Some
of the other major technologies that
have been commercialised or are in the
demonstration and deployment phase
are: compressed air energy systems
(CAES); batteries comprising mainly of
sodium-sulphur batteries, lithium-
based batteries; and flywheels.
How can energy storage be leveraged
in India?
Each technology has some inherent lim-
itations or disadvantages that make it
practical or economical for only a limit-
ed range of applications. Large-scale
stationary applications of electric ener-
gy storage can be divided into three
major functional categories: power qua-
lity, bridging power and energy manage-
ment. Although some storage technolo-
gies can function in all application
ranges, most options would not be eco-
nomical for application in all three func-
tional categories.
Energy storage: Potential policy roadmap
for India
It is evident that energy storage is one of
the missing links in the electricity value
chain and can play a critical role in India’s
power infrastructure. It can deliver bene-
fits across generating companies, renew-
able energy companies, grid congestion
management, discoms, consumers, etc.
However, the current lack of an enabling
policy framework raises uncertainties
about its potential to create a regular rev-
enue stream for an energy storage plant.
In addition, some energy storage tech-
nologies are still evolving and are yet to
reach the commercial adoption stage.
Pumped storage During off-peak hours, water is pumped into an elevated 50-85 500-4,600 Bath County PSH Project, USA
hydro plants reservoir and later allowed to flow back down, generating Capacity: 3,000 MW
(PSH) electricity similar to a conventional hydro plant Operator: Dominion Virginia Power
Compressed air Uses off-peak electricity to compress air, storing it in 27-70 500-1,500 Huntorf CAES, Germany
energy storage underground caverns or storage tanks; this air is later Capacity: 321 MW
(CAES) released to a combustor in a gas turbine to generate Operator: E.ON
electricity during peak hours
Batteries Uses the chemical reactions of electrochemical cells to 75-95 300-3,500 Laurel Mountain (Lithium-ion) plant, USA
enable the flow of electrons; examples include lithium- Capacity: 98 MW
based batteries (lithium-ion, lithium polymer), and Operator: AES
sodium-sulphur and lead-acid batteries
Flywheels Mechanical devices that spin at high speeds, storing 90-95 130-500 Flywheel storage plant, Pennsylvania,
electricity as rotational energy; this is later released by USA; Capacity: 20 MW
slowing down the flywheel's rotor, releasing quick bursts Operator: Beacon Power
of energy (that is, releases of high power and short durations)
Key technology Brief description Efficiency Initial investment Key project
(%) cost ($/kW)
Energy storage tech-
nologies can act as a
“shock absorber” for
the power grid.

3. Key pointers for developing the right legal,
regulatory and policy framework for energy
storage solutions
While developing a legal, regulatory and
policy framework on energy storage
solutions, some points that need to be
kept in mind are:
• Storage must be recognised as an im-
portant element of the power supply
value chain, along with fuel, generati-
on, transmission, distribution, as well
as services.
• A minimum energy storage facility can
be mandated to be built along with
renewable power plants beyond a cer-
tain size.
• Tax breaks and other incentives like
those provided to renewable energy
generators should be extended to
energy storage facilities as well.
• Research and development must be
continued and expanded for small-
scale storage. Advanced technologies
for large-scale energy storage should
be added to the current capacity addi-
tion programmes.
• The policy framework should enable
energy storage plants to become inde-
pendently viable and generate rev-
enue based on the benefits delivered
to the grid and its participants.
• Renewable and energy storage plants
can also be promoted through shift-
ing specific applications like munici-
pal and river water pumping to such
energy sources.
Potential role of key stakeholders in evolv-
ing policy framework
The potential areas where key stake-
holders can contribute to evolving a
well-consulted and mature policy
framework for energy storage in India
are as follows:
Ministry of Power: It must recognise
storage as an important element of the
power supply industry and incorporate
it into the Electricity Act, 2003, by
amending the role of storage and defin-
ing an energy storage facility.
Central Electricity Authority: It can be
involved in the following areas:
• An estimation of the likely benefits of
energy storage technologies, a review
of energy storage technologies and
their performance across existing
plants in the world, and technology
recommendations for India.
• Feasibility studies for selected tech-
nology: These include choice of loca-
tion, technology partner and other
project development activities, and
demonstration projects through gov-
ernment funding or a public-private
partnership framework
• Creating a task force for energy storage
technologies and exploring the possi-
bility of creating demonstration pro-
jects, and enabling the replacement of
old thermal plants beyond their usable
life with renewable energy plants
• Developing standard bidding docu-
ments (SBDs) for discoms for the
purchase of energy storage services
from generators pursuant to the poli-
cy framework. The current Case 1
SBDs have a provision for peak power
procurement, but only from conven-
tional plants and not energy storage
projects. Hence, the required cost
benefits are not offered. For promot-
ing energy storage, a bid process
should be developed regarding the
concept of energy banking, wherein
discoms offer specified energy for a
specified period, which should be
returned at the specified rate in the
specified time period with the given
round-trip efficiency on energy. This
bid framework would be technology-
independent, that is, flexible enough
to cover a number of technologies for
a given purpose of procurement and
performance requirement.
Electricity regulatory commissions:
They can create rules and regulations
for energy storage technologies, cover-
ing the amendments in existing regu-
lations to accommodate energy stor-
age. For example, the redrafting of
“gaming” provisions under the avail-
ability-based tariff is necessary for
energy storage plants.
State electricity boards/discoms/gencos:
These entities can be responsible for con-
cept development, finalisation of opti-
mum requirements for states, technology
choices, pre-project development acti-
vities, selection of technology suppliers
(through a bid process or direct tie-ups),
signing of energy storage contracts with
state discoms, regulatory approvals, etc.
Power exchanges: They can develop
energy storage/banking contracts for
trade on exchanges with potential pro-
ject developers. ■
F O R U M
50 P OW E R L I N E ● December 2014