ESS Report India

ENERGY STORAGE MARKET
LANDSCAPE REPORT
Supporting Structural Reforms in the Indian Power Sector
November 2018
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Contents
Executive Summary ....................................................................... 08
1. Introduction .......................................................................... 15
1.1 Problem statement and alternates: role of energy storage .................... 16
1.2 Role of energy storage in India’s electricity value chain ........................ 17
1.3 Current scenario of energy storage market in India .............................. 27
1.4 Existing alternatives to energy storage solutions .................................. 28
2. Technology landscape ............................................................. 32
2.1 Key players and technologies ................................................................ 33
2.2 Energy storage technologies: comparison of technical parameters of
various technologies ............................................................................. 35
2.3 Cost projections .................................................................................... 37
2.4 Cost build-up of ESS for typical large-scale solar PV project and rooftop
PV project ............................................................................................. 40
3 Challenges and possible solutions/recommendations ........................ 42
3.1 Existing regulatory barriers for energy storage ..................................... 43
3.2 Technological and commercial barriers ................................................. 43
3.3 Recommendations ................................................................................ 44
Annexure 1: Major global energy storage projects .................................. 48
Annexure 2: Energy storage initiatives in India ...................................... 54
Annexure 3: Review of existing policies and regulations for RE, energy
storage, ancillary services in India (energy storage perspective) . 55
Annexure 4: Policy recommendations for India ...................................... 58
Annexure 5: Analysis of global energy storage policy initiatives ................. 61
Annexure 6: Solar intermittency — a case study for Andaman and Nicobar
Islands ...................................................................... 63
Annexure 7: Suggested business model for Indian context ........................ 65
References ................................................................................ 68
List of Figures
Figure 1 Potential energy storage use cases in India ................................................................................ 11
Figure 2 India's Energy storage Market Potential Application-wise split in 2022 ..................................... 11
Figure 3 Potential Energy Storage Use Cases for India ............................................................................. 17
Figure 4 Anticipated southern region Load-Wind-Solar profile in 2022 (CES Analysis) ............................ 19
Figure 5 Typical Solar Generation profile in Southern Region ................................................................... 19
Figure 6 PLF of thermal generators Vis a Vis RE capacity growth India aggregate ................................... 20
Figure 7 Coal Plant vs Energy Storage ramping capability ........................................................................ 21
Figure 8 Power Evacuation Southern Region 2018 ................................................................................... 22
Figure 9 Power Evacuation Southern Region 2022 ..................................................................................... 22
Figure 10 Components of Pay for Performance mechanism under FERC order 755 ................................... 24
Figure 11 Supply Quality across major cities for April 2018 (Watch Your Power, Prayas) .......................... 25
Figure 12 Supply Quality across states for April 2018 (Electricity Supply Monitoring Initiative, Prayas) .... 25
Figure 13 Typical daily load duration curve (POSOCO report, Jan 2016) .................................................... 29
Figure 14 Peak hydro generation pattern (POSOCO) .................................................................................. 31
Figure 15 Classification of energy storage technologies (State of Charge, 2016) ....................................... 33
Figure 16 Global Energy Storage Landscape ................................................................................................ 33
Figure 17 Global Scale of Energy Storage across Chemistries on Relative Scale (CES analysis) ................ 34
Figure 18 Estimated Li-ion Manufacturing Capacity, Global, 2020 (CES Analysis) ..................................... 35
Figure 19 Li ion cell prices vs global manufacturing capacity in GWh (CES analysis) ................................ 37
Figure 20 Electric drivetrain vs ICE drivetrain parity analysis for two Indian hatchback versions (CES
analysis) ..................................................................................................................................... 38
Figure 21 Behind the Meter backup power LCOES prediction (CES analysis) ............................................. 39
Figure 22 Grid scale solar PV integration LCOES prediction (CES analysis) ............................................... 39
Figure 23 Utility Scale Solar with Battery Cost Breakdown (CES Analysis) ................................................. 40
Figure 24 Rooftop Solar PV with Battery Cost Breakdown (CES Analysis) ................................................. 41
Figure 25 Accuracy and speed of regulation FCAS response – Hornsdale Power Reserve ......................... 51
Figure 26 Deviation penalty for existing generators .................................................................................... 56
Figure 27 Solar Plant Output with and without ESS .................................................................................... 63
Figure 28 Solar Ramping for a 5 MW Plant with +/- 10% Limit .................................................................. 64
Figure 29 Business Model Option I: Gencos to Own Storage Asset ............................................................ 65
Figure 30 Business Model Option II: IPPs to Own Storage Asset with Long-term Contract ........................ 66
List of Tables
Table 1 Energy storage projects in India .................................................................................................... 10
Table 2 Summary of different energy storage technologies and suitable application .................................. 12
Table 3 Grid Level energy storage (NREL) ................................................................................................. 18
Table 4 Power Capacity Projections (NEP, 2018) ....................................................................................... 18
Table 5 Energy Storage Potential for Generation Sector (Source: CES analysis) ......................................... 21
Table 6 Summary of Technology Suitability for Ancillary Services ............................................................. 24
Table 7 Energy Storage Potential for Ancillary Services Sector (Source: CES analysis) .............................. 24
Table 8 Summary of Technology Suitability for Consumer End .................................................................. 27
Table 9 Energy storage potential across applications at the consumer end ................................................. 27
Table 10 Average gas supply and shortfall (NEP, 2018) ............................................................................... 29
Table 11 Status of pumped hydro in India (CEA) .......................................................................................... 31
Table 12 Summary of technical parameters of different technologies (CES Analysis) ................................... 35
Table 13 Summary of modelled scenarios .................................................................................................. 43
Table 14 SNS Business Models .................................................................................................................. 44
Table 15 Drivers for storage deployment .................................................................................................... 45
Table 16 Proposed large scale energy storage projects in India ................................................................... 54
Table 17 Status of F&S regulations across States ........................................................................................ 56
List of Abbreviations
AGC Automatic Generation Control
CAES Compressed Air Energy Storage
CEA Central Electricity Authority
CERC Central Electricity Regulatory Commission
CES Customized Energy Solutions
DG Diesel Generators
DISCOM Distribution Company
DIPP Department of Industrial Policy and Promotion
DoD Depth of Discharge
DSM Deviation Settlement Mechanism
EPS Electric Power Survey
ESS Energy Storage Solutions
FERC Federal Electricity Regulatory Commission
GDP Gross Domestic Product
GENCO Generation Company
GEC Green Energy Corridors
GW Giga Watt
IEA International Energy Agency
IEGC Indian Electricity Grid Code
kW kilo Watt
kWh kilo Watt hour
LCO Lithium Cobalt Oxide
LCOE Levelised Cost of Energy
LCOES Levelised Cost of Energy Storage
LFP Lithium Iron Phosphate
LMO Lithium Manganese Oxide
MHh Mega Watt hour
MHI Ministry of Heavy Industries
MMSCMD Million Metric Standard Cubic Meter per Day
MNRE Ministry of New and Renewable Energy
MoF Ministry of Finance
MoP Ministry of Power
MW Mega Watt
NaNiCl Sodium Nickel Chloride
NAS Sodium Sulphur Battery
NCA Nickel Cobalt Aluminium
NELP National Exploration and Licensing Policy
NEP National Electricity Plan
NMC Nickel Manganese Cobalt
NVVN NTPC Vidyut Vyapar Nigam Limited
PGCIL Power Grid Corporation of India
PLF Plant Load Factor
POSOCO Power System Operation Corporation Limited
PV Photo Voltaic
RE Renewable Energy
RRAS Reserves Regulation Ancillary Services
SERC State Electricity Regulatory Commission
ToD Time of Day
ToU Time of Use
VGF Viability Gap Funding
VRB Vanadium Redox Battery
ZnBr Zinc Bromine Battery
EXECUTIVE
SUMMARY
Executive Summary
Background
Energy access to clean, affordable and reliable power is central to the Government of India (GoI)’s current power sector planning
and resonates with the United Nation’s Sustainable Development Goals. As part of its power sector development agenda, India
plans to deliver 175 GW of renewable energy (RE) by 2022 and 24x7 power for all by 2019 by creating an efficient, resilient and
financially sustainable power sector. Alongside, India is committed to generating 40% power from non-fossil fuel sources as part
of the Intended Nationally Determined Contributions (INDC) to the Paris climate agreement.
India’s RE capacity grew from 8% in FY09 to 19% in FY18. Incentive mechanisms for RE generation, allied with significant cost
reductions, have already led to over 69 GW1 of new RE installation in India to date. The above trend indicates the increasing role of
RE in India’s power generation mix. Hence, transitioning towards new energy systems, decarbonisation and decentralisation are
expected to emerge as the key themes shaping the utilities of the future.
However, high RE deployment and use would require technical as well as commercial solutions and a variety of policy decisions
around minimising the impact of intermittency and enabling grid integration of RE. In a few cases, the falling costs and rising
efficiencies of the supporting technologies, such as battery storage, are already making the generation of renewable power more
viable than conventional power. Technological advancement and cost reduction in storage options will facilitate the deployment
of the abundant renewable resources.
On the basis of the above, this energy storage market landscape report has been prepared to provide a comprehensive overview of
the energy storage potential in India’s power market and to create an action plan that will enable accelerated deployment of
storage applications in the power sector, and in turn facilitate grid scale flexibility and grid integration of RE.
Overview of India’s energy storage market

As of 2018, grid scale energy storage installations in India are mostly in the form of pumped hydro projects, with 4.8 GW capacity,
consisting of nine plants. Two additional projects of 1080 MW capacity are now under construction (Tehri — 1000 MW and
Koyna — 80 MW). Furthermore, four projects with a cumulative capacity of 2600 MW (Kundah — 500 MW, Malshej Ghat —
700 MW, Humbali — 400 MW and Turga — 1000 MW) are envisaged for development.
India’s energy storage market has traditionally been driven by lead acid batteries for back-up power applications. Annually over 5
GWh of lead acid batteries are sold predominantly for residential power back-up applications. During 2015-2018, over 1 GWh of
advanced energy storage solutions have been deployed for back-up power across telecom towers.
The deployment of large-scale battery energy storage projects in India started in 2017 with Power Grid Corporation Limited
(PGCIL) installing its first pilot for frequency regulation. The projects have been designed for multiple grid service applications;
however, during the initial operation period, they have been used for frequency regulation services. Other upcoming large-scale
energy storage projects are summarised in Table1 below, most of which are likely to be commissioned by 2019.
1
Total RE installed capacity as of March 2018, as recorded by CEA
9
ENERGY STORAGE MARKET LANDSCAPE REPORT
Table 1 Energy storage projects in India
Project Capacity Location Commissioning year
PGCIL 2 x 500 kW, 250 kWh BESS Puducherry 2017

NLC 2 x 10 MW Solar PV Port Blair, Andaman and Nicobar Islands 2019*
8 MWh/16 MW BESS
NTPC 2 MWh BESS Port Blair, Andaman and Nicobar Islands 2019*
NTPC 17 MW Solar PV South Andaman, Andaman and Nicobar 2019*

6.8 MWh/6.8 MW BESS Islands
NTPC 8 MW Solar PV South Andaman, Andaman and Nicobar 2019*
3.2 MWh/3.2 MW BESS Islands
AES-Tata Power 10 MWh BESS Sub-station, Delhi 2018
SECI 10 MW/20 MWh BESS for Andhra Pradesh 2019*

160 MW Wind + Solar
Hybrid
SECI 2 MW Solar PV Project/ 1 Kaza, Himachal Pradesh 2019*

MWh BESS
SECI 2 x 1.5 MW Solar PV/ 2 x Leh District, Jammu and Kashmir 2019*
2.5 MWh BESS
AP State Electric 5 MW Solar PV Project/ 4 Makkuva, Andhra Pradesh 2019*
Utility MWh BESS
Source: Primary research, CES, 2018 *Planned
Most of the proposed energy storage projects in 2018–19 are expected to come up in the Andaman and Nicobar Islands to reduce
the dependency on diesel use. Solar Energy Corporation of India (SECI) is also evaluating energy storage projects along with the
bids of large-scale solar and wind projects in the future beginning with a proposed 160 MW hybrid project in Andhra Pradesh. In
total, there are 50 MWh of energy storage system projects at grid scale, which are either in the contracted, tendered or under
tendering process.
Energy storage market potential

Energy storage technologies can provide storage solutions at all scales, from household systems through to grid-size solutions.
The detailed role of energy storage across the electricity value chain has been illustrated in Figure1:
10
Figure 1Value Chain Potential energy storage use cases in India
Generation Transmission & Distribution Consumer
ü Ramping Support ü Transmission Deferral ü Transmission Congestion Relief ü Back-up Power

Application
ü Black Start ü Distribution Deferral ü Increase Solar Self-consumption

Ancillary Services
ü Peaking Capacity ü Diesel Use Minimization
ü Generation Support ü Voltage Support ü Frequency Regulation ü Demand Charge Reduction
ü Spinning Reserve ü Non-Spinning Reserve ü Electric Vehicles
ü Telecom Tower
Source: CERC, IESA-Shakti Foundation, CES Analysis
Based on the above, India’s market for advanced batteries and energy storage solutions could be well over 35 GWh in 2022 2.
Batteries for power back-up applications will be a major market among stationary applications. In recent years, telecom towers
have started using cleaner fuels and most of the recent installations in this space have been lithium ion (Li-ion) batteries. The
recent air pollution issues have only amplified the need to switch off diesel generators and with energy storage solutions offering
a comparable cost per unit, a sizeable capacity will be deployed in this space. Hence, behind-the-meter is expected to witness a
stiff rise, with its share in the battery market expected to be around 36% by 2022. Large-scale batteries will be installed along with
the solar and wind farms to provide a stable output to the grid. Market mechanisms are expected to incentivise the performance of
these flexible assets but it will be a slow-growing market. Electric vehicles are expected to account for about 63% of India’s
advanced battery market. In line with its ambitious vision to roll out electric vehicles, India is already creating demand for
batteries, which, if sustained, would scale up manufacturing and reduce the total system costs for energy storage.
Figure 2 India's Energy storage Market Potential Application-wise split in 2022
2%
4%
Solar Rooftop
Diesel Replacement
20%
Inverter Backup
Telecom
35GWh
(2022) Solar Integration
Wind Integration
63% 10%
Ancillary Services
Electric Vehicles
1%
Source: CEA, IESA Energy Storage Overview Report, CES Analysis
2
CES Analysis
11
Energy Storage Technologies
The suitability of each individual energy storage technology varies across potential energy storage use cases/applications based
on certain technical parameters and performance characteristics. For example, technologies such as advanced lead acid and Li-
ion could offer comparable levelised cost for behind-the-meter applications, while Li-ion and flow batteries could be
commercially viable for large-scale grid applications. A general overview of different parameters in advanced energy storage
technologies and their corresponding suitable application is presented in Table 2 below.
Table 2 Summary of different energy storage technologies and suitable application
Parameter Lead Acid Advanced Li ion NaS Na-NiCl2 VRB Zn-Br

Lead Acid
Round Trip 60-80% 80-90% 93% 70-80% 80-85% 65-70% 68-70%

Efficiency
Available C- C/10 C/5 (Charge) C/4-2C C/6-C/8 C/6-C/8 C/5-C/8 C/3-C/4
Rates - 4C-C/10
(Dch)
Depth of 60% 80% 90% 80% 80% 100% 100%
Discharge
(DOD)
Energy Density 40-60 27-30 180-196 65-70 55-60 7-8 40-45

(Wh/kg)
Energy Density 90-100 95-105 420-433 40-45 35-40 4-5 35-40
(Wh/L)
Power Density 10-20 27-30 40-60 8-12 6-10 2-3 12-15
(W/kg)
Cycle Life 200-500 1700-1800 3800-4000 4500-5000 3500-4000 10000 3650-3800
Safety (Thermal High Medium Medium Medium Medium High Medium
Stability) (210oC)
Initial Capital 100-150 300-400 150-600 750-1000 800-1000 600-800 750-800
Cost ($/kWh)
Suitable Inverter backup, Solar Electric Solar Solar Solar Solar
Applications Off grid Solar Rooftop, Vehicle, Integration, Integration, Integration, Integration,
Diesel Ancillary Peak Shifting Peak Island Telecom
Replacement Services Shifting Microgrids
Source: NREL, IESA-Shakti Foundation, CES Analysis

*Abbreviations of Battery Technology: Li ion (Lithium ion), NaS (Sodium Sulphur), Na-NiCl2 (Sodium Nickel Chloride), VRB (Vanadium Redox battery), Zn-Br (Zinc Bromine
flow battery)
12
Energy storage market opportunities
In recent years, there have been significant progress in the research and development of Li-ion batteries, leading to a rapid price
reduction as the manufacturing and installations have scaled up. A key inflexion point that tilted the benefits towards Li-ion
batteries is the increasing energy densities compared to lead acid batteries. However, the fall in cost has not been significant for
other energy storage technologies due to lack of manufacturing base. As higher storage technology costs increase the capital
outlay for a project, impairing project economics, their adoption at the grid and stationary levels has been challenged by
advancement of Li-ion chemistries.
In this regard, India offers enormous opportunities to collaborate on manufacturing, procurement and technology transfer of
battery storage, behind-the-meter storage integrated power management units and electric vehicle technology (including
vehicle-to-grid (V2G)) owing to lower cost of production of energy storage products. Globally, the electric vehicle application
has stirred investments in the battery storage manufacturing, especially in Li-ion cell technology. Similarly replicating the global
trends, India's market will also benefit from the higher penetration of electric vehicles. The National Electricity Mobility Mission
Plan estimates the deployment of about 6–7 million electric/hybrid vehicles, a cumulative outlay of about ~GBP 1.6 Billion in
India. Auto manufacturers in India could gain an early market advantage if they collaborate with battery and V2G technology
providers to explore potential for technology transfer, procurement or manufacturing.
Key challenges and recommendations

India is beginning to see the outcomes of its policy initiatives in the solar and wind sectors, providing it an opportunity to shift its
focus towards energy storage. Energy storage resources in India are fast approaching the point where they can participate in
existing national energy markets, including markets for energy, reserve capacity and other grid services. The services that can
effectively be used through energy storage such as frequency regulation, power smoothing, ramp rate control, voltage support,
and reactive power support and transmission deferral can be enabled through policy and regulatory facilitation.
Energy storage being both a source and a sink has no definite classification in the existing regulations in India. It could provide
multiple services to the grid and enhance its flexibility; however, under the current regulations, it is not incentivised for its
services, which affects the viability of energy storage solutions. Globally, the prices of energy storage solutions are declining.
India has an opportunity to accelerate this trend by capitalising its market potential and incentivising manufacturing in this space.
Some key recommendations from policy and regulatory perspectives are provided below:
Ÿ Defining energy storage: Energy storage may be defined appropriately in the Electricity Act. The definition should
acknowledge its flexible nature and applications, and its categorisation as generation, transmission and/or distribution asset.
For example, as part of the UK’s Smart Systems and Flexibility plan ‘Upgrading our energy system’, the issue of storage not
being defined in primary legislation was raised and a proposal to include it as part of generation is being mooted.
Ÿ Clarity on the licensing requirement: The need for obtaining a licence from the appropriate Commission to set up an
energy storage facility requires clarity. The generation set up as per the current provisions does not require a licence. By
extension, the setting up of grid scale storage may also be exempted from licence. This would enable the creation of
Independent Storage Service Providers (ISSPs) to deploy large-scale solutions.
Ÿ Market for ancillary services: CERC has already published a discussion paper covering framework for slow tertiary
response. The paper also acknowledges the development of a framework for secondary control and fast tertiary, going
forward. There is a need to enable various forms of ancillary services covering primary, secondary and tertiary responses. This
will provide an opportunity to evaluate the techno-commercial viability of flexible operation of a thermal generation fleet
against the investments in energy storage solutions to deliver similar services.
13
Ÿ Storage as part of the solar/wind power project: Initially, large-scale energy storage deployments can happen if there
are mandates to include a percentage of storage as part of the solar/wind power project bids to balance and provide firm
power.
Ÿ Real-time power market: India needs to set up a real-time market where dispatch is done by economic price points versus
long-term pricing, allowing fossil units to follow national dispatch pricing signals and sell into the market based on that price
would be a significant step forward. This will help in bringing transparency around the real cost of generation and allow
efficient systems and technologies to do better without any mandates.
Key challenges and recommendations

Ÿ Conducting a study on the cost evaluation and environmental impacts and compare it with the use of energy storage for
providing flexibility to the grid
Ÿ Evaluating the use of energy storage for deferring upgrade of transmission assets to reduce renewable generation curtailment
Ÿ Setting up of a fund for accelerating the deployment of grid scale energy storage projects in the early years to explore
learnings from these projects, which can help market adoption by addressing technology, policy and commercial risks
Ÿ Conducting a study on the impact of meeting rooftop solar targets on system cost for discoms to determine the possible role
of storage
Ÿ Exploring the use of behind-the-meter energy storage resources for grid services through demand response programs;
providing incentives for setting up batteries with rooftop solar PV projects
Ÿ Creating grid interconnection standards for use of storage on stand-alone basis and as part of generation, transmission
and/or distribution asset
Ÿ Formulating a regulatory framework to monetise the value of firming/smoothing of solar power, ramp rate control, peak
shifting, demand response etc.
Ÿ Following an integrated approach to define the policy around energy storage for grid services and electric vehicles. This will
be spread across ministries including, but not limited to, the Ministry of New and Renewable Energy, Ministry of Power,
Ministry of Heavy Industries and Public Enterprises, Department of Industrial Policy and Promotion and Ministry of Finance
14
1 Introduction
Introduction
The Government of India (GoI) has come up with an ambitious plan to deliver 175 GW of renewables by 2022 and 24x7 power for
1
all by 2019 by creating an efficient, resilient and financially sustainable power sector. Furthermore, India in the recent COP 21 has
committed to generating 40% power from clean energy sources by 2032. This objective, along with clean energy access, has
become the centre of all plans around economic development and environment.
High RE deployment and use will require technical as well as commercial solutions and a variety of policy decisions around
minimising the impact of intermittency and enabling grid integration of RE. In a few cases, the falling costs and rising efficiencies
of the supporting technologies, such as battery storage, are already making the generation of renewable power more viable than
conventional power. Such technological advancement and cost reduction in storage options will facilitate the exploitation of the
abundant renewable resources.
Energy storage technologies include a set of grid scale and off-grid designs that provide an array of services to power systems
such as peak load management, grid balancing and RE integration. Historically, storage systems such as pumped hydro were
deployed for peak load management; however, emerging storage technologies (particularly battery storage) are currently used in
many other areas such as grid balancing and RE integration.
Based on the above, this energy storage market landscape report has been prepared to provide a comprehensive overview of the
energy storage potential in the Indian power market and to create an action plan that will enable the accelerated deployment of
storage applications in the power sector, and in turn facilitate grid scale flexibility and grid integration of RE.
1.1 Problem statement and alternates: role of energy storage

Globally, energy storage is being increasingly seen as an alternative to building peaking power plants. Reserve energy storage
systems are also capable of providing black start operations. Energy storage integrated with RE generates a smooth and firm
output that is controllable, which subsequently reduces transmission congestion. It also has the potential to reduce the size of
transmission and distribution infrastructure for the evacuation of intermittent generation. A key application for energy storage in
transmission is to defer the investments on upgrade for new capacity projects to overcome congestion. As highlighted by the
CERC’s staff paper on energy storage3, transmission companies can deploy energy storage systems at grid-level substations and
use the assets to participate in energy markets for grid support like the ancillary services. Transmission companies can be the
owners of energy storage systems without being involved in the trading of the stored energy. The National Electricity Plan (NEP)4
highlights the role of energy storage in maintaining grid security with increasing penetration of RE in addition to addressing the
intermittency of RE to a large extent. At the consumer’s end, energy storage can be used as a back-up power while reducing the
use of diesel consumption and integrating with solar rooftop PV systems, as well as a standalone back-up for reducing demand
charges.
The grid level applications of energy storage include:5
Ÿ Optimising generation
Ÿ Controlling intermittent generation from renewable sources
Ÿ Ensuring reliable operation of power system
Ÿ Minimising the deviation from schedule dispatch or drawl
Ÿ Storing excess generation of grid
Ÿ Providing ancillary services
Ÿ Deferring transmission and distribution
3
Staff paper on introduction of Electricity Storage Systems, CERC, 2017 (Ref 5)
4
National Electricity Plan (Vol 2, Transmission, draft), CEA, 2017 (Ref 7)
5
Staff paper on Introduction of Electricity Storage Systems in India, CERC, 2017 (Ref 5)
16
Additionally, behind-the-meter applications for energy storage include:
Ÿ Back-up power
Ÿ Solar rooftop PV
Ÿ Diesel use minimisation
Ÿ Demand charge reduction
Ÿ Electric vehicles (EV)
Ÿ Telecom towers
Similarly, the potential energy storage use cases can be categorised based on the location where their services are deployed as
summarised in Figure 3. In addition to being deployed at the grid scale at generation, transmission and distribution sites, energy
storage can be deployed at the consumer end in the form of back-up power applications as highlighted in Figure 3. As EV
proliferation increases, EVs could be a crucial energy storage resource at the consumer end.
Figure 3 Potential Energy Storage Use Cases for India
Generation Transmission & Distribution Consumer
ü Ramping Support ü Transmission Deferral ü Transmission Congestion Relief ü Back-up Power

ü Black Start ü Distribution Deferral ü Increase Solar Self-consumption
Ancillary Services
ü Peaking Capacity ü Diesel Use Minimization
ü Generation Support ü Voltage Support ü Frequency Regulation ü Demand Charge Reduction
ü Spinning Reserve ü Non-Spinning Reserve ü Electric Vehicles
ü Telecom Tower
The detailed role of energy storage in India's electricity value chain has been provided in the subsequent sections.
1.2 Role of energy storage in India’s electricity value chain

1.2.1 Role of energy storage in the generation sector
The 19th Electric Power Survey (EPS)6 projects that India’s electrical energy requirement would be 1566 BU in 2021-22 with a
peak load demand of 226 GW. The reduction in demand forecast between the 18th and 19th EPS is attributed to the demand side
management (DSM), energy conservation and efficiency improvement programmes, reduction in AT&C losses, slow progress in
household-level electrification, and low GDP growth than the forecast in 2011 when the 18th EPS was published. The energy
demand and peak load demand are likely to grow by 6.18% and 6.88%, respectively, as per the 19th EPS.
As per the estimates from the 19th Electricity Power Survey7 and NEP8, India’s installed capacity is projected to grow from 335 GW
to 479 GW at over 9% from FY 2016-17 to FY 2026-27, while the peak demand would grow at over 6%. The contribution of RE to
the mix is set to double during the same period, both in terms of added capacity and as a percentage of peak demand.
6
Nineteenth Electric Power Survey of India, Jan 2017, CEA (Ref 8)
7
National Electricity Plan, Vol 1, Jan 2018, CEA (Ref 6)
17
The services rendered by energy storage systems for grid scale range from improving power quality, providing bridging power to
managing energy as highlighted in Table 3.
Table 3 Grid Level energy storage (NREL)
Services Applications and duration Storage technologies
Power Quality Transient Stability, Frequency Regulation Flywheels, Capacitors, Li-ion

(Seconds- Minutes)
Bridging Power Contingency Reserves, Ramping Lead Acid, NiCd, Li-ion etc.
(Minutes to ~1 hour)
Energy Management Load Levelling, Firm Capacity, Li-ion, Sodium-Sulphur, Flow Batteries,
Transmission & Distribution (T&D) Compressed Air Energy Storage, Thermal
Deferral (Hours) Energy Storage etc.
Projected installed capacity and generation profiles

7
The NEP projects the installed capacity (Table 4) by the end of 2021-22 to reach 479 GW in the base case scenario assuming
175 GW of RE is installed during that time.
Table 4 Power Capacity Projections (NEP, 2018)
Fuel Type Capacity in MW Capacity in MW

(Feb, 2018) (2021-22)
Hydro 44,963 51,301

Coal 193,822 217,302
Gas 24,897 25,735
Nuclear 6,780 10,080
RE 62,847 175,000
Total 334,147 479,418
18
Figure 4 Anticipated southern region Load-Wind-Solar profile in 2022 (CES Analysis)8
Yearly Load, Net Load vs Wind+Solar, 2022

60000
50000
40000
30000
=730 MW
20000
10000
0
6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l 6 12 18 l
January February March April May June July August Septmeber October November December
Load Wind + Solar Net Load
Figure 4 shows the anticipated net demand characteristics for the southern region in 2022 based on the analysis from the
anticipated load and wind-solar installations. It shows the generation characteristics for a typical day across each month in 2022.
Although the wind and solar generation profile resembles a smooth curve, the individual plant-level variability will be present.
The generation profiles of individual solar plants in the region and the aggregate generation profile will resemble the
characteristics as depicted in Figure 5.
Figure 5 Typical Solar Generation profile in Southern Region9
45 100
40 90
Individual Solar Plant (MW)
35 80
70
Total Solar (MW)
30
60
25
50
20
40
15
30
10 20
5 10
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Daily Hours
Plant 1 Plant 2 Plant 3 Total Solar
8
CES Analysis based on load forecast in Southern Region (SR), wind capacity factors in ‘Capacity Value of Wind in India’ (Shakti Foundation, 2017, Ref 9), solar
generation from actual simulation and targets from government data.
9
Solar energy generation simulation for plants in Southern Region i.e. Karnataka, AP, Telangana, TN, Kerala
19
RE (solar power and wind power) generation being intermittent is required to be scheduled on a day ahead basis. The schedules
are given for each 15-min block and the generators are permitted to have up to 16 revisions a day. The process is through a
Deviation Settlement Mechanism (DSM) route where the present state-level deviation limit from schedule is (+)/(-) 150 MW or
(+)/(-) 12% of scheduled dispatch, whichever is higher. Deviation from schedules is one of the key challenges for states with
high penetration of RE, particularly wind. In a recent analysis by the CEA Technical Committee for RE integration, the deviation
caused by intermittency by wind power plants in Tamil Nadu ranged from 304 MW to 792 MW in a single day in 2017. Tamil Nadu
was found to deviate between 54 MW and 542 MW from its permissible limit of 250 MW, which also has financial implication10.
Integrating 175 GW of RE in the grid by 2021-22 may be technically feasible as per a recent study11. The addition of RE in the grid
will increase the variability and uncertainty in power generation. The major portion of the targeted RE is to be delivered by solar
energy, which has peak generation around noon when the demand is minimum and ceases production during the night when the
power demand is the highest. Hence, there is a requirement of conventional power plants to have fast ramping capabilities in
order to accommodate the variability and generation uncertainty for RE. Considering the generation from RE will be fed into the
grid, the net demand (net demand = total demand - demand met by RE) should be met by conventional generation sources.
Under such a scenario, for a typical day in October, the average ramping requirement in an hour is in the range of 4000–9000 MW
as highlighted in Figure 5.
The Central Electricity Authority (CEA)’s technical standards for power plant construction calls for a technical design that permits
a minimum rate of loading or unloading at 3% per minute above the control load (i.e. 50% maximum continuous rating, MCR).
The technical minimum to be maintained is at 55% of the installed capacity/MCR. However, thermal plants do not prefer to back
down below 70% because of the heat rate degradation. In recent times, due to an excess installed capacity, thermal power plants
have been forced to operate below the technical minimum plant load factors (PLF). The declining PLF of thermal generators in
recent years in comparison to the increasing RE capacity is summarised in Figure 6.
Figure 6 PLF of thermal generators Vis a Vis RE capacity growth India aggregate12
85% 80000
80% 70000
PLF (%) of thermal plant s
60000
75%
RE Capacity MW
50000
70%
40000
65%
30000
60%
20000
55% 10000
50% 0
- 05 - 06 - 07 - 08 - 09 - 10 - 11 - 12 -13 - 14 - 15 - 16 - 17 - 18
04 05 06 07 08 09 10 11 12 13 14 15 16 17
20 20 20 20 20 20 20 20 20 20 20 20 20 20
PLF of the thermal generators (%) RE Installed Capacity (MW)
10
Report of the Technical Committee on Study of Optimal Location of Various Types of Balancing Energy Sources/ Energy Storage Devices to Facilitate Grid
Integration of RE Sources, CEA, 2017
11
Greening the Grid – Pathways to Integrate 175 GW of RE into India’s Electric Grid, NREL, 2107 (Ref 10)
12
CEA data, 2018
20
Thermal plants have been routinely found to deviate from the minimum ramp rate requirement of 3% per minute. NTPC plants
have a ramping range of 1.5–3%/min. The other factor in flexibility is the start-up time, which can be in the range of 3–6 hours for
sub-critical units and can even be higher for supercritical units. Similarly, start-up costs are much higher than gas-based stations
(INR 10–50 lakhs) depending on the type of unit. The O&M costs for cold start-ups can also be 50–100% higher than those of hot
start-ups13. Operating thermal power plants below their optimal limits will also increase their SOx and NOx emissions, acting
against India's objectives to reduce emissions by 2030.
Figure 7 Coal Plant vs Energy Storage ramping capability
1000
900
800
700
600
MW
500
400
300
200
100
0
Coal Power Plant Energy Storage
Technical Minimum Rated Power
Energy storage in comparison to thermal power plants have 0% minimum load requirement and can ramp at the rate of 20%/min.
A 1000 MW coal power plant can only offer 10–20 MW/min ramping capability whereas a 200 MW energy storage plant can offer
up to 40 MW/min ramping as highlighted in Figure 714. In the absence of flexibility in thermal power plants and limitations in
operating hydro and gas power plants for grid flexibility requirement, the Ministry of Power (MoP) has rightly acknowledged that
energy storage will be key to addressing the flexibility needs by providing reserve capacity15.
The energy storage potential for the generation sector considering the wind and solar installation targets up to 2022 is assessed
and summarised in Table 5.
Table 5 Energy Storage Potential for Generation Sector (Source: CES analysis)
Generation sector Market scenario, Market scenario, Cumulative market scenario,

2017 (Mwh) 2022 (Mwh) 2017–22 (Mwh)
Solar integration Nil 100 220

Wind integration Nil 450 850
The solar and wind installations is expected to reach 160GW by 2022. About 8-10% of the projects are likely to have energy storage requirement in their scope. Storage
capacity as a portion of the total system will be about 10-15% till 2019-20 with the proportion of storage capacity could go up to 20% around 2022.
13
Committee report on optimal mix in power generation on medium and long term basis, MOP, 2018 (Ref 11)
14
Desert Power India 2050, PGCIL, 2013 (Ref 12)
15
Committee report on optimal mix in power generation on medium and long term basis, MOP, 2018
21
1.2.2 Role of energy storage for transmission and distribution sector
The transmission system is planned to meet the peak load demand but during the year the peak demand varies on diurnal,
monthly and seasonal basis. As summarised in the NEP16, the variation between regions could be nearly 20% during some
months of the year and at the all-India level it could be 5–10%. The increasing RE capacity addition is unlikely to serve this peak
load demand requirement. However, the addition of energy storage systems could serve the short-duration peak demand surges
in the transmission network. The projected RE development is likely to be concentrated in eight Indian states, accounting for more
than 77% of the capacity addition by 202217. The Southern Region (SR) is expected to double its installed capacity of wind and
solar power plants from its current levels of 30 GW by 2022 as per MNRE targets. The capacity utilisation of the current power
evacuation network is shown in Figure 8.
Figure 8 Power Evacuation Southern Region 201818
2000
1800
1600
1400
1200
MW
1000
8000
6000
4000
2000
0
% of Time
Solar Generation Wind Generation Wind+Solar
Figure 9 Power Evacuation Southern Region 202219
40000
35000
30000
25000
MW
20000
15000
10000
5000
% of Time
Solar Generation Wind Generation Wind+Solar
16
National Electricity Plan, Vol 2 (Transmission) draft, CEA, 2017
17
India Green Energy Corridors, GIZ, 2015 (Ref 14) 8 States include Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Madhya Pradesh, Gujarat and
Rajasthan
18
CES Analysis based on load forecast in Southern Region (SR), wind capacity factors in ‘Capacity Value of Wind in India’ (Shakti Foundation, 2017), solar
generation from actual simulation and other targets from government data.
19
CES Analysis based on load forecast in Southern Region (SR), wind capacity factors in ‘Capacity Value of Wind in India’ (Shakti Foundation, 2017), solar
generation from actual simulation and other targets from government data.
22
The peak solar power evacuation is projected to increase from about 12000 MW in 2018 to about 31000 MW in 2022 in SR. The
transmission network will have to increase by the same measure to accommodate the capacity expansion. However, only for
about 5% of the time in a year the system is expected to evacuate power in the range of 26000–31000 MW, and the additional
5000 MW of transmission infrastructure will be idle for the remaining 95% of the time as highlighted in Figure 9. According to the
cost estimates from the first phase of Green Energy Corridors, the cost for building a 1 MW transmission system is about INR 1.2
crore20. The option of building large-scale energy storage systems to offset the investment in transmission network expansion
needs to be evaluated going forward.
Similarly, the distribution networks are sized for the peak demand of the consumer circles. As the consumer demand grows, lines
and distribution infrastructure have to be upgraded just to meet the peak demand occurring for a few hours. Building new
distribution infrastructure will be expensive and may not be feasible in certain urban spaces. An increase in the installation of
distributed solar rooftops will increase the impact on the distribution infrastructure and as seen in recent developments,
consumers are barred from adding solar rooftop projects as their local distribution transformer is capped for a certain loading.
Energy storage systems can be deployed under such circumstances to avoid or defer new distribution infrastructure. Energy
storage can also reduce high line-loss rates that occur during peak demand21 and also avoid deviation penalties.
1.2.3 Role of energy storage for ancillary services
The primary requirement in ancillary service is to provide frequency stability, reserve support and load balancing. The different
ancillary services in the market along with their alternatives are summarised in Table 6. Slow tertiary control through ancillary
services has been implemented pan India since April 2016. The un-requisitioned surplus of central thermal power plants has
been used for services so far. The impact of slow tertiary responses are felt only after 20–30 mins and the CERC’s expert
committee has recommended fast tertiary services through Reserve Regulation Ancillary Services (RRAS) using hydro in the
future. The existing regulatory framework in India permits floating of frequency within the band of 49.90–50.05 Hz. With stricter
framework including ancillary services through RRAS and governance, the frequency has come under control to a large extent.
The frequency is observed to have remained within the specified band for 70–75% of the time since the last revision to frequency
band in 201422.
Table 6 Summary of Technology Suitability for Ancillary Services23
Ancillary services Storage technologies Alternatives
Frequency regulation Li-ion, Flywheel, Pumped Hydro, CAES Hydro and gas plants
Synchronous reserves Li-ion, Lead Acid, Flow batteries, CAES etc. Hydro, coal and gas plants
Non-synchronous Li-ion, Lead Acid, Flow batteries, CAES etc. Hydro, coal and gas plants
reserves
Operating reserves Li-ion, Lead Acid, Flow batteries, CAES etc. Hydro and gas plants
Voltage support/ Li-ion, Lead Acid, Flow batteries, CAES etc. Hydro and gas plants
Reactive power
Load following/Energy Li-ion, Lead Acid, Flow batteries, CAES etc. Hydro, coal and gas plants
imbalance
20
India Green Energy Corridors, GIZ, 2015
21
The role of energy storage with renewable energy generation, NREL, 2010 (Ref 15)
22
Report of Expert Group for bringing power system operation closer to National Reference Frequency, CERC, 2017
23
Energy Storage Technologies for Ancillary Services in India, IESA-Shakti Foundation, 2014 (Ref 16)
23
Globally, energy storage has proved to be an ideal alternative for frequency regulation services. The UK’s Enhanced Frequency
Response (EFR) bid of 200 MW is completely served by energy storage projects. The US’s FERC order 755’s ‘pay for
performance’ has enabled wider participation from energy storage assets in the frequency regulation market. Its characteristics
are depicted in Figure 10. Energy storage assets are offered a capacity and performance payment for its services.
Figure 10 Components of Pay for Performance mechanism under FERC order 75524
Energy storage solutions deployed for ancillary services could also be used for multiple services in the transmission and
distribution sector in addition to being complimentary sources at the sites of generation. An indicative market estimation for
ancillary services is summarised in Table 7.
Table 7 Energy Storage Potential for Ancillary Services Sector (Source: CES analysis)
Sector Market scenario, Market scenario, Cumulative market scenario,

2017 (MWh) 2022 (MWh) 2017–22 (MWh)
Ancillary services 2 100 230
1.2.4 Role of Energy Storage at the Consumer End
Power quality is an essential criterion in the electricity value chain. In spite of the rapid progress being made in providing
affordable and reliable electricity in the country, power outages are a common phenomenon. The power quality for major Indian
cities and other states is summarised in Figure 11 and Figure 1225. States such as Uttar Pradesh and Jharkhand still witness 100
hours of outage in a month, which necessitates the use of diesel generators for back-up power.
24
Energy Storage Technologies for Ancillary Services in India, IESA-Shakti Foundation, 2014
25
Electricity Supply Monitoring Initiative (ESMI), Watch Your Power, 2018, Prayas Energy (Ref 17)
24
Figure 11 Supply Quality across major cities for April 2018 (Watch Your Power, Prayas)
27 26 Bengaluru
8 10
Hyderabad
4 9
Pune
5 3
Chennai
3 3
Delhi
Avg. Outage hours (Hrs) Avg. No of interruptions
Figure 12 Supply Quality across states for April 2018 (Electricity Supply Monitoring Initiative, Prayas)
119 129 Jharkhand
65 119 Uttar Pradesh
13 14 Karnataka
13 13 Assam
15 12 Uttarakhand
8 11 Maharashtra
7 7 Madhya Pradesh
Avg. Outage hours (Hrs) Avg. No of interruptions
1.2.4.1 Role of Energy Storage at the Consumer End
Inverter back-up is another market witnessing constant growth every year. The market for inverter back-up power grew
consistently at about 10% over the last decade; it currently accounts for the highest market share of nearly 7 GWh annually for
energy storage in the country . India can think of innovative ways of using already existing back-up inverter batteries to help with
peak demand issues in the last mile networks. The UK has several leading examples of companies that are leveraging smart home
inverter technology with batteries and helping customers in connecting their systems to the grid individually or through
aggregation, thereby providing mutual benefits to both the utility and themselves. A detailed case study of a project from the UK is
presented in Annexure 1 Major Global Energy Storage Projects.
24
Energy Storage Technologies for Ancillary Services in India, IESA-Shakti Foundation, 2014
25
Electricity Supply Monitoring Initiative (ESMI), Watch Your Power, 2018, Prayas Energy (Ref 17)
26
Primary research, CES, 2018
25
1.2.4.2 Solar rooftop
Beginning 2017, a significant number of batteries have been installed at commercial and industrial (C&I) sites, along with solar
rooftop projects. Reliability issue of power and higher grid tariffs are the key driver for such installations. In a few cases, the solar
rooftop systems were integrated to the existing battery back-up systems. As the incentives for net metering ceases, storage
systems are likely to see an increased penetration across residential rooftop systems as well.
1.2.4.3 Diesel replacement
In addition to over 300 GW of grid-connected power resources, India has over 72 GW of diesel generators, growing at over 5 GW a
27
year . In recent years, as the power supply situation has improved, the usage of diesel generators has reduced to an average of
two hours or less in the C&I sector28. This space is likely to see early adoption of energy storage systems as the levelised cost of
energy will be comparable or lower than the alternative.
1.2.4.4 Telecom towers
India has already installed capacity of 554,000 towers and the number of towers is expected to be over 750,000 by 2022. Till
2016, approximately only 10,000 towers were powered by solar PV-based hybrid system and more than 70,000 were operated
without using diesel29. The installation of hybrid energy solution at telecom tower sites can be a practical issue due to unsuitability
of the site for solar PV installation. In this case, tower companies are not willing to spend more on capital expenditure after heavy
spending at spectrum bidding. Advanced energy storage technologies are likely to make inroads in either case of PV getting
installed or not. Diesel generator optimisation or generator-less sites have been achieved by the use of Li-ion battery. These
batteries have demonstrated fast charging capabilities, superior efficiency and higher depth of discharge (DoD). Such advanced
properties have given them an edge over existing dominating VRLA technologies in terms of number of cycle use.
1.2.4.5 Electric vehicles
As far as India’s EV market is concerned, the current share of battery electric passenger vehicles is approximately 0.1%, whereas it
is approximately 0.2% for electric two wheelers and practically nil for electric buses. The country’s EV industry is mainly
dominated by electric two wheelers. More than 95% of EVs running on Indian roads today are low-speed electric two wheelers
(maximum power 250 watts and maximum speed less than 25 kmph), which does not even require a licence to drive. The EV
industry sold nearly 450,000 electric two wheelers in the last eight years (between 2009 and 2017) and as per SIAM’s
estimation30, approximately 210,000 electric two wheelers are running on Indian roads.
The electric three-wheeler market in India is mainly dominated by e-rickshaws. This market is continuously growing in an un-
organised manner. Exact sales figures are not available for this segment but as per the estimation by various agencies, 6–7 lakh e-
rickshaws are currently running on Indian roads31. As the charging infrastructure network improves, there will be an increased
proliferation of Evs.
27
Economic Survey 2016
28
29
30
Electric Vehicle White Paper, SIAM, 2017 (Ref 18)
31
26
Table 8 Summary of Technology Suitability for Consumer End
Consumer end Storage technologies
Inverter back-Up Li-ion, Lead Acid

Solar rooftop Li-ion, Lead Acid
Telecom towers Li-ion, Lead Acid
Diesel replacement Li-ion, Flow batteries
Evs Li-ion, Lead Acid
A summary of storage technologies suitable for various energy storage services at the consumer end is presented in Table 8. A
detailed breakdown of the potential for energy storage across various applications at the consumer end is presented in Table 9.
Table 9 Energy storage potential across applications at the consumer end
Consumer-end Market scenario, Market scenario, Cumulative market scenario,

application 2017 (MWh) 2022 (MWh) 2017–22 (MWh)
Solar rooftop 200 1300 4000

Diesel replacement 50 750 2000
Telecom 3200 3400 19300
Inverter backup 6500 6900 40500
EVs 3000 22000 60000
TOTAL 12950 34350 125800
Source: IESA Energy Storage Overview
The solar rooftop installation is likely to reach over 26 GW by 2022 with over 30% in the residential sector accounting for about 1% of storage deployment for 1 hour or less. The
diesel replacement potential is based on the potential for short duration storage of 2 hour or less in about 10% of the market that utilizes DG for short duration power outages. The
inverted backup market will grow by around 6-7% of current capacity. The EV estimation is based on an estimation of 5-10% penetration in the vehicle sales across categories.
1.3 Current scenario of energy storage market in India

The grid scale energy storage market in India is mostly in the form of pumped hydro projects. Potential available in India for
pumped hydro capacity, assessed by the CEA, is more than 96.5 GW32. However, at present the total installed capacity of pumped
hydro is about 4.8 GW that consists of nine plants. Two additional projects of 1080 MW capacity are now under construction
(Tehri — 1000 MW and Koyna — 80 MW). In addition, four projects with a cumulative capacity of 2600 MW (Kundah — 500
MW, Malshej Ghat — 700 MW, Humbali — 400 MW and Turga — 1000 MW) generation are envisaged for development33.
On the electro-chemical technology, India’s energy storage market has been traditional behind the meter and has been driven by
lead acid batteries for back-up power applications. Lack of reliable and quality grid supply has largely driven this market. Annually
over 10 GWh of lead acid batteries are sold predominantly for power back-up applications. In the last couple of years, over 1 GWh
of advanced energy storage solutions have been deployed for back-up power across telecom towers34. Power Grid Corporation is
successfully operating a large-scale energy storage project in India. The project installed at a sub-station is also a test bed for
three different energy storage technologies. These energy storage technologies have been designed for multiple grid service
applications but in the initial operation period they have been used for frequency regulation services.
32
Large Scale Grid Integration of RE, CEA, 2013 (Ref 19)
33
National Electricity Plan (Vol 2, Transmission, draft), CEA, 2017
34
India energy storage market overview report, IESA, 2018
27
1.4 Existing alternatives to energy storage solutions
1.4.1 Gas power plants
Gas-based power plants have significant benefits in comparison to coal-based power plants as their land and water requirements
are less and also their specific emissions are low. On the operations side, gas-based power plants offer better flexibility such as
faster ramping capability which will be required if 175 GW of RE is to be added to the grid. In spite of these benefits, gas-based
power plants contribute to meet less than 10% of India’s energy requirement as against 22% of the global average35. As of January
2018, a cumulative of 25.2 GW of gas-based power plants was installed in India. Of the total gas allotment of 94.54 MMSCMD,
only 27.75 MMSCMD was consumed in January 2018, accounting for only 29.35% of gas supplied against the total allotment36.
Hence, gas-based peaking power plants as an alternative cannot be considered.
The gas supply situation was expected to be better than actual when the discovery and production of gas began in the Krishna
Godavari Dhirubhai 6 (KGD6) field and was expected to supply 80 MMSCMD by the end of 2009 with a further potential to
increase in successive years. An allocation of 63.17 MMSCMD to the power sector was made by the Empowered Group of
Ministers (EGoM) under the National Exploration and Licensing Policy (NELP) in 2009 with a further enforcement that the gas
production exceeding 31.5 MMSCMD (allocated to the fertiliser sector) from KGD6 should be supplied to the power sector
starting 201337. However, the supply of gas from KGD6 gradually declined over the years and when in 2013 the production fell to
16 MMSCMD, the power sector got no supply of gas from KGD6. Against the total domestic natural gas allocated to power
projects of 87.05 MMSCMD, the total gas supplied to these gas-based power plants during 2016–17 was only 29.59
MMSCMD41. The declining gas availability as shown in Table 10 has been taken into consideration and the CEA in its forecast for
capacity addition does not include any new gas-based power plant addition.
Table 10 Average gas supply and shortfall (NEP, 2018)
Gas-based Gas required* Average gas Shortfall Avg. PLF of

Years capacity (MMSCMD) supplied (MMSCMD) gas plants
(MW) (MMSCMD) (%)
2007-08 13408 65.67 38.14 27.53 55.18
2008-09 13599 66.61 37.45 29.16 55.43
2009-10 15769 78.09 55.45 22.64 66.97
2010-11 16639 81.42 59.31 22.11 66.94
2011-12 16926 81.78 55.98 25.80 62.06
2012-13 18362 90.70 39.95 50.75 37.25
2013-14 20385 97.90 27.13 70.77 24.28
2014-15 21665 104.00 25.20 78.80 20.93
2015-16 23075 113.63 28.26 85.37 23.40
2016-17 24038 117.45 29.59 87.36 22.80
* Normative gas requirement at 90% PLF
35
World Bank data
36
CEA reports
37
National Electricity Plan, Vol 1, Jan 2018, CEA
28
Gas-based peaking power plants
Considering the generation from RE will be under a must-run obligation, the net demand (total demand - generation from RE)
needs to be met through conventional generation sources. The solar generation would be maximum during the day time when the
system demand is quite low and would be ‘NIL’ during evening peak hours. This would make the net demand curve very steep and
would require generation from conventional sources that can ramp up very fast. This necessitates dedicated peaking plants. In
addition, a report38 by POSOCO highlighted (as in Figure 13) that a typical day would need ramping capacity for 25% of the time
and for the remaining time the full generation capacity would be sufficient to serve the load.
Figure 13 Typical daily load duration curve (POSOCO report, Jan 2016)
Load Duration curve for typical day in July

133000
131000
Ramps indicating the necessity
129000 of peaking generation for 25 %
of the time
127000
125000
MW
123000
121000
119000 Flatness indicating a possibility

for high capacity factor
117000
115000
0
4
8
16
19
23
27
31
35
38
42
46
50
54
57
61
65
69
73
76
80
84
88
92
96
99 Duration in % of hours in a day
The fast ramping capabilities and low emissions of gas-based power plants make them an ideal resource for providing peaking
power to the grid. Open cycle gas power plants with their quick start/stop capability are considered ideal for ramping and
balancing power requirements. For peaking cycles, the operation will be determined by the time the gas turbine remains under
shut down prior to its start of operation. Depending on the type of machine and start (hot, warm or cold), the start-up time may
vary from one hour to six hours. The start-up cost will also depend on the design of machine and source (price) of gas. The
estimate of the start-up cost is roughly INR 10-12 lakh per start based on the current gas pricing39. India has only about 500 MW of
open cycle gas plants. Operating gas power plants at 85% PLF would require about 108 MMSCMD40 of gas, which is significantly
more than 27.75 MMSCMD available currently. Now consider a case where gas-based power plants would be required only for
peaking power in the evening; there will be an additional requirement of 20 MMSCMD in addition to the current supply to operate
the plants at 85% PLF for six hours. The CEA proposes to have 2000 MW of gas plants as reserve only for peaking purposes, and
running this even at 50% PLF would require 5.3 MMSCMD additional capacity. The gas-based stations are estimated to need at
least 45.27 MMSCMD of gas to meet the balancing and peaking requirement of the grid arising due to RES integration. If the
storage devices become economically viable in future, they can also be used for the balancing.
38
Flexibility requirement in Indian power system, POSOCO, Jan 2016
39
Committee report on optimal mix in power generation on medium and long term basis, MOP, Jan 2018
40
National Electricity Plan, Vol 1, Jan 2018, CEA
29
1.4.2 Hydro power plants
As of January 2018, the installed capacity of hydro power projects in India was 44.9 GW, including pumped hydro projects of
about 5 GW. As per the CEA’s assessment, India’s hydro potential when fully developed would be about 148 GW with an
additional 96 GW of pumped hydro power projects in 63 sites41. However, hydro power project installation as a percentage of the
total capacity declined from about 45% in 1970 to about 13% in 2017.
Hydro power projects provide an ideal solution for the flexibility challenges encountered in a high RE scenario between matching
of supply and demand. Hydro power projects with storage facilities can operate and provide ancillary services and are typically
used for load following and meeting peak demand. Storage facilities along with hydro power projects make hydro power more
flexible providing back-up reserve, black start, voltage support and frequency regulation.
Status of pumped hydro

Although nine projects of pumped hydro are installed in India, only five projects with an aggregate installed capacity of 2.6 GW are
being operated in pumping mode. The remaining four projects are not being operated in pumping mode because the second
reservoir is under construction or not been constructed42 as shown in Table 11. The development of hydro and pumped hydro
projects have consistently been embroiled in multiple issues such as land acquisition, environmental clearances, resettlement
and local issues.
Table 12 Status of pumped hydro in India (CEA)
S.No. Project/State Capacity (MW) Status Reason
1 Kadana, Gujarat 240 Not Working Due to vibration problem

2 Nagarjuna Sagar, AP 705.6 Not Working Tail pool dam under construction
3 Kadamparai, TN 400 Working -
4 Panchet Hill, DVC 40 Not Working Tail pool dam not constructed
5 Bhira, Maharashtra 150 Working -
6 Srisailam LBPH, AP 900 Working -
7 Sardar Sarovar, Gujarat 1200 Not Working Tail pool dam not constructed
8 Purlia PSS, WB 900 Working -
9 Ghatghar, Maharashtra 250 Working -
Total 4785.6
41
Large Scale Grid Integration of RE, CEA, 2013
42
Large Scale Grid Integration of RE, CEA, 2013
30
Figure 14 Peak hydro generation pattern (POSOCO)
Hydro Generation and Demand on a typical day
29 133
28 131
Hydro generation in Giga Watt (GW)
27 129
Demand in Giga Watt (GW)

26 127
25 125
24 123
23 121
22 119
21 117
20 115
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Time of the day
Hydro Generation All India Demand met
As can be seen from the above analysis (Figure 14), the peak hydro power capacity met is only about 28 GW in spite of the
installed capacity being in excess of 45 GW. The availability of hydro power plants is seriously affected by water constraints,
impacted by the uncertainty in monsoons, water prioritisation for irrigational requirement etc. On the other side, the lack of
development in the hydro power and pumped hydro power projects will result in an inadequate peaking and quick response
capability that will be required to integrate 175 GW of RE in the grid by 2022, considering the other alternative for flexibility
through gas power plants is unlikely to scale up considering the perennial shortage of gas for power plants in India.
31
2 Technology
landscape
Technology landscape
Energy storage could apply to different technologies including pumped hydro, flywheels, thermal energy storage and batteries as
2
shown in Figure 15. Advanced energy storage technologies can dispatching electricity within seconds and can provide power
back-up ranging from minutes to hours.
Figure 15 Classification of energy storage technologies (State of Charge, 2016)43
Chemical
Mechanical Electrochemical Thermal Electrical
(Hydrogen)
Umped Hydro Lead Acid, Lithium

Ion, Sodium Sulphur, Sensible Molten Power-to-Power
(Conventional Supercapacitors
and Sodium salt, Chilled water (Fuel Cells, etc.)
Storage) Nickel Chloride
CAES SMES
Flow batteries – Latent - Ice
(Superconducting
(Compressed Air vanadium redox, Storage, Phase Power-to-Gas
Magnetic Energy
Energy Storage) Zinc - bromine Change Materials
Storage)
Thermochemical
Flywheel
Storage
2.1 Key players and technologies

The energy storage landscape is well split among organisations with various technologies, and these technology companies are
broadly based out of Japan, China, Korea, the US and Germany. Some of the key companies across the spectrum are listed in
Figure 16.
Figure 16 Global Energy Storage Landscape
Metal Air Batteries Flow Batteries Primus Power Sumitomo Electric redT energy
NantEnergy UniEnergy Technologies GILDEMEISTER Energy Solutions
Pumped Hydro Storage Lead Acid Batteries
SIEMENS ALSTOM VOILTH NEYRPIC Trojan CSB EAST PENN
Compressed Air Sodium Flywheel Eco Ult GSYUASA EXIDE

Dresser Rand LightSail Energy FIAMM Energy Beacon Power AMBER
EnerSys Johnson Controls Ultracell
General Compression SHARP NGK Temporal Power
Lithium lon Batteries
BYD Toshiba LG Chem Panasonic Samsung Optimum Nano Farasis CATL EnerBlu C4V SK Innovation EEMB
Source: CES
43
State of Charge Report, Massachusetts Energy Storage Initiative, 2016
33
However, these technologies are at different stages of commercialisation and also at different stages of manufacturing. Li-ion
chemistries are at point of overtaking lead acid production as highlighted in Figure 17.
Figure 17 Global Scale of Energy Storage across Chemistries on Relative Scale (CES analysis)
Na-NiCl2
General Electric NGK

NaS,
FIAMM Energy
ViZn Energy Systems PU NENG

Flow
STORAGE TECHNOLOGIES
VIONX ENERGY RONGKE POWER
SK Innovation Panasonic CATL TOSHIBA

Li ION
SAMSUNG LG Chem BYD

Lead Acid
Trojan EAST PENN FB Battery EXIDE LEOCH
Johnson Controls HBL Power Systems ECOULT Energy Storage
SCALE OF MANUFACTURING
MW GW +300 GW
As shown in Figure 18, the global lithium-ion cell manufacturing capacity would cross the 450 GWh mark by 2020. This
expansion is driven around electric mobility plans of countries such as China, Japan, the US, Germany, Norway and rest of the
Western European countries. Most of these nations have pledged over 5% penetration of EV before 2025. The global Li-ion
battery manufacturing capacity already crossed 100 GWh in 2017.
34
Figure 18 Estimated Li-ion Manufacturing Capacity, Global, 2020 (CES Analysis)
Terra E
North Volt
Dalian Sum of 2017 (100 GWh+)
Li Tech
Sum of 2020 (450 GWh+)
Coslight
EVE
Saft
GS Yuasa
Boston Power
Vision
Golden Cells
CALB
SK Innovation
Valence
Farasis
ATL/TDX
BAK
Kokam
PEVE
Sony Murata
Toshiba
Lishen
BYD
Optimum Nano
Microvast
AESC
Jiangxi H&D
CATL
Panasonic
Tesla
Samsung SDI
LG Chem
0 10 20 30 40 50 60 70
GWh
2.2 Energy storage technologies: comparison of technical parameters of

various technologies
Different battery types have different cycle life due to which generally the life cycle cost is considered ($/kWh/cycle). Flow
batteries (VRB and ZnBr) have a very high cycle life and a moderately high cost. Lead acid batteries have a very low cost but
comparatively low cycle life. Advanced lead acid batteries have a higher cycle life at a higher cost. Lithium-ion battery systems
may be designed for high power or long duration applications. High power systems are designed (oversized) for a smaller DOD
and high cycle life. Similarly, high energy systems have a lower cost and a lower cycle life. NAS batteries have an intermediate
cycle life between lithium-ion batteries and flow batteries. A general overview of the cost vs. cycle life comparison and an
emerging trend are presented below.
35
Overall, there are several metrics for determining cell performance — energy density, power density, roundtrip energy efficiency,
self-discharge, temperature operation range and cycle life. Other important metrics are cost, safety and environmental impacts,
and maturity of technology. Lead acid batteries have high efficiency and extremely low cost but suffer from a very low cycle life.
Flow batteries have extremely high cycle and low self-discharge, and are relatively safe and environmentally compatible;
however, they suffer from low energy efficiency and are a relatively new technology. Lithium-ion batteries have relatively high
energy density, long cycle life and moderate costs but have higher safety concerns especially in high power applications. High
temperature batteries such as NAS and Na-NiCl2 have high cycle life and very low self-discharge but have comparatively low
energy density. These are also a relatively new technology although several grid level installations are already in operation.
The performance characteristics of different technologies vary based on the chemistry of the battery. A general overview of
different parameters in advanced energy storage technologies is presented in Table 12.
Table 12 Summary of technical parameters of different technologies (CES Analysis)
Parameter Lead Acid Advanced Li ion NaS Na-NiCl2 VRB Zn-Br

Lead Acid
Round Trip 60-80% 80-90% 93% 70-80% 80-85% 65-70% 68-70%

Efficiency
Available C- C/10 C/5 (Charge) C/4-2C C/6-C/8 C/6-C/8 C/5-C/8 C/3-C/4
Rates - 4C-C/10
(Dch)
Depth of 60% 80% 90% 80% 80% 100% 100%
Discharge
(DOD)
Energy Density 40-60 27-30 180-196 65-70 55-60 7-8 40-45

(Wh/kg)
Energy Density 90-100 95-105 420-433 40-45 35-40 4-5 35-40
(Wh/L)
Power Density 10-20 27-30 40-60 8-12 6-10 2-3 12-15
(W/kg)
Cycle Life 200-500 1700-1800 3800-4000 4500-5000 3500-4000 10000 3650-3800
Safety (Thermal High Medium Medium Medium Medium High Medium
Stability) (210oC)
Initial Capital 100-150 300-400 150-600 750-1000 800-1000 600-800 750-800
Cost ($/kWh)
Suitable Inverter backup, Solar Electric Solar Solar Solar Solar
Applications Off grid Solar Rooftop, Vehicle, Integration, Integration, Integration, Integration,
Diesel Ancillary Peak Shifting Peak Island Telecom
Replacement Services Shifting Microgrids
*Abbreviations of Battery Technology: Li-ion (Lithium ion), NaS (Sodium Sulphur), Na-NiCl2 (Sodium Nickel Chloride), VRB (Vanadium Redox battery), Zn-Br (Zinc Bromine
flow battery)
36
2.3 Cost projections
The energy storage technology costs for Li-ion technologies have been declining since 2010 due to the scaling up of
manufacturing around electric mobility and technological advancements leading to higher energy density of cells. Despite the
increasing material costs, the increase in the rate of manufacturing with similar capex has also led to achievement in lower initial
costs per GWh, as shown in Figure 19.
Figure 19 Li ion cell prices vs global manufacturing capacity in GWh (CES analysis)
900 790 120
800
650 103 100
700
600 80
460 73
$ per kWh
500
GWh
370 60
400
53
300 225 40
35 180
280
200
23 20
100 18
0 0
2011 2012 2013 2014 2015 2016 2017
Production (GWh) Li ion Price ($/kWh)
The market is already witnessing economies of scale with the manufacturing capacity of a single plant increasing from MWhs to
GWhs and multi-GWhs. This is helping in scaling up the supply chain of raw materials as well as helping OEMs achieve lower
production costs. Such a trend will help in increasing ESS penetration with a reduction in prices. Similarly, replicating the global
trends, India's market will also benefit from higher EV penetration. Due to the absence of policy frameworks and targets, India's
market highly depends on price parity of electric cars with internal combustion engine (ICE)-driven cars, for higher penetration of
electric mobility. The year when the price parity will be met can be considered as the inflexion point for the market. Around this
period, the rapid penetration of batteries in the grid scale will also occur. As seen in , this inflection point is likely to occur
between 2024 and 2028. Hence, this period can be marked as the inflexion point for the adoption of energy storage in the Indian
market.
37
Figure 20 Electric drivetrain vs ICE drivetrain parity analysis for two Indian hatchback versions (CES analysis)
Cost Comparison of Wagon R Power Train vs 15kWh EV Drive Train with Battery Pack
500,000
EV Power train crossover in 2024 with
450,000
BS-VI emission norms compliance
400,000
EV power train crossover with
350,000 BS-IV emission norms compliance
Cost (INR)
300,000
250,000
200,000
150,000
100,000 Assumption: 40% increase in price of power

train due to switch from BS IV-BS VI Assumption: Cost of battery pack would
50,000 decrease every year by 10% from $ 350/kWh
-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Battery pack price trend (INR) Cost of EV power train Cost of ICE power train with poor compliance Cost of ICE powertrain with regulatory compliance
Figure 20 demonstrates the estimated drop in EV power train of E2O (in green) and also a drop in battery price required for the car
(in dotted blue). The dotted red line is the price of an equivalent ICE car drivetrain. The price parity of electric car drive train is
likely to happen in 2028 at the current drivetrain prices. However, with the introduction of the Bharat Six (BS VI) emission norm,
there is an estimated price rise for the ICE drivetrain and that will allow the parity in 2024 as observed in the figure above.
In such a scenario, the levelised cost of energy storage (LCOES) is predicted to be advantageous for various applications and
kick-start the market in an immense way. The levelised cost of storage for solar rooftop for India has been demonstrated in Figure
21. As it can be observed, for most of the behind-the-meter applications, Li-ion technologies and advanced lead acid are cost
competitive.
38
Figure 21 Behind the Meter backup power LCOES prediction (CES analysis)
BTM LCOE Prediction (INR/kWh)

25.00
INR per kWh per Cycle
20.00
15.00
10.00
5.00
-
2017 2018 2019 2020 2021 2022
Lead Acid Advanced Lead Acid Li ion VRB NaS
The levelised cost of energy stored is estimated based on the future price trends of various technologies and also based on the
estimation of improvement in their technical parameters.
However, for grid scale applications such as solar integration, energy storage technologies with higher number of cycle life may
be preferred when replacements are perceived as a concern. Vanadium redox battery and sodium sulphur (NaS) technologies still
may compete for large-scale MWh projects. Figure 22 shows the LCOES for solar integration energy application at the grid level.
It can be observed that in this case also Li ion has emerged as the best option, followed by vanadium redox batteries.
Figure 22 Grid scale solar PV integration LCOES prediction (CES analysis)
Grid Solar Integration LCOE Prediction (INR/kWh)

25.0
20.0
INR per kWh per Cycle
15.0
10.0
5.0
-
2017 2018 2019 2020 2021 2022
Lead Acid Advanced Lead Acid Li ion VRB NaS
39
2.4 Cost build-up of ESS for typical large-scale solar PV project and rooftop
PV project
Solar prices have declined by 34%44 in the last five years between 2012 and 2017. The government push and mass production
have led to a large deployment of RE. With an aim to use maximum RE, its integration with grid is a must. Energy storage is a
solution for stable and reliable power.
The cost of the solar power plant components are falling at an average of 8–9%45 year on year. The module price has gone down
drastically and it in turn reduces the overall cost of solar plants. The battery mainly comprises three components — cell, module
with pack and power conditioning system (PCS). The cost split between different components in a solar rooftop and utility scale
power plant are as shown in Figure 23 and Figure 24.
In utility scale solar, the assumptions taken are that a 1 MW PV plant generating 4 MWh daily will require to store 10% of the daily
generation. If considered so, storage forms 30% of the total cost of setting up the plant at a Li-ion battery cost of $300/kWh. In
future, the cost is expected to go down and hit nearly half by 2022.
Figure 23 Utility Scale Solar with Battery Cost Breakdown (CES Analysis)
Utility Scale Solar PV with Battery Cost Breakdown (INR Cr)
2022
2020
2017
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2017 2020 2022

Cell 1.6 1.2 1
Pack with BMS 1.2 0.9 0.8
PCS 1.2 0.8 0.5
SI 0.2 1.15 0.1
EPC of Solar Plant (MW) 6.5 5.9 5.4
Cell Pack with BMS PCS SI EPC of Solar Plant (MW)
44
Primary Survey, CES, 2018
45
Primary Survey, CES, 2018
40
Figure 24 Rooftop Solar PV with Battery Cost Breakdown (CES Analysis)
Rooftop Solar PV with Battery Cost Breakdown (INR)
2022
2020
2017
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2017 2020 2022

Cell 5720 4420 3900
Pack with BMS 4680 3770 3120
PCS 3900 3120 2080
SI 9000 8000 7000
EPC of Solar Plant (MW) 87000 79170 72045
Cell Pack with BMS PCS SI EPC of Solar Plant (MW)
In solar rooftop, the assumptions taken are that a 1 kW PV plant generating 4 kWh daily will require to store 10% of the daily
generation. If considered so, storage forms 30% of the total cost of setting up the plant at a Li-ion battery cost of $300/kWh.
Storage will also help save energy and bring grid stability. The storage can be mainly used to store energy when not used during
generation and at slots of Time of Use (ToU) or Time of Day (ToD) to save money.
41
3 Challenges and possible
solutions/recommendations
Challenges and possible solutions/recommendations 3
3.1 Existing regulatory barriers for energy storage
In the past few years, various regulatory bodies across India have started exploring policies that can impact the integration of
energy storage technologies with RE sources. These efforts included the national taskforce on renewable integration created by
the MOP and the CEA in 2013. MNRE also released a roadmap for energy storage technologies in 2015 and is expected to launch
a national energy storage mission in 2018. A report by the CEA’s technical committee in 2017 summarised the need for
balancing services in the grid by recommending a market-based procurement of ancillary service and installing pilot battery
projects.
The CERC has come up with regulations for forecasting and scheduling of RE power for interstate entities. The regulations are a
step further to control RE generation variations. Energy storage use in the power sector is in nascent stage. Some of the services
that can be effectively used through energy storage such as frequency regulation, power smoothing, ramp rate control, voltage
support, reactive power support and transmission deferral cannot be monetised without appropriate norms and framework. The
creation of norms requires awareness about the aspects of various applicable technologies. This can be done by setting up
demonstration projects in the initial phase for various applications through different technologies. Based on the results achieved
through demonstration projects, a regulatory framework may be created in a phased manner with different market products for the
recovery of capital invested. The energy storage acts both as generation and load. This may require the creation of a separate asset
class so that existing stakeholders across the generation, as well as transmission and distribution sectors can adopt these
technologies for appropriate applications. A staff paper by the CERC on the introduction of electricity storage systems summed
up the requirement for energy storage; however, it needs to be progressed further for regulatory enablement. A detailed analysis of
the existing policies in India from an energy storage perspective is presented in Annexure 2.
3.2 Technological and commercial barriers

In addition to the lack of policy and regulations for energy storage as highlighted in the previous sections, other barriers could
slow its adoption in the immediate future.
Ÿ The high cost of advanced energy storage technologies will continue to be a barrier in the medium term.
Ÿ There is a lack of a manufacturing base for advanced batteries that are suitable for RE and EV applications. The cost of batteries
declines as the scale of manufacturing rises.
Ÿ There is a lack of incentives for manufacturing.
Ÿ An assessment of the indigenous material availability is missing. A comprehensive review of the availability of materials in
the value chain has to be undertaken to assess the potential for setting up large gigafactories in the country.
Ÿ The framework for recycling and reuse is not available for advanced energy storage technologies, thereby preventing a
secondary market for batteries.
Ÿ Lack of skilled workforce could be a barrier in the initial years but suitable training and reskilling could be provided to over 2
million people who currently work in the lead acid battery manufacturing sector.
Ÿ Currently, no business models value energy storage for the multiple services it provides. The delay in allotting projects under
various government tenders in recent times is attributed to a lack of a business model to operate the projects.
Ÿ Estimation of energy storage requirement is another key aspect that has been missed in the recent tenders for energy storage
projects. Energy storage capacity tends to be underestimated or overestimated in comparison to the requirement for
individual projects and its related services.
Ÿ There is lack of standards and testing protocols for advanced energy storage technologies relevant to India.
43
3.3 Recommendations
Important regulatory barriers that need to be addressed are as given here: (a detailed note on recommendations is presented in
Annexure 3).
Ÿ There is a need to define energy storage in the Electricity Act. Flexibility should be provided so that it can be treated as part of
generation, transmission and/or distribution assets when used for specific application. The UK proposed and concluded a
consultation on a similar note46.
UK’s approach to removing barriers to smart technologies

A call for evidence released in the end of 2016 by the UK government evaluated the options available for enhancing
flexibility in the grid including energy storage. A call for governing energy storage through planning rules has been
made. The proposal called for creating a market model to incentivise flexibility services such as demand-side
response and the use of energy storage technologies. Another key point targeted is the charging of double
consumption levies for storage facilities.
In the Smart Systems and Flexibility plan, ‘Upgrading our energy system’44, the issue of storage not being defined in
primary legislation was raised and a proposal to include it as part of generation is being mooted with a consultation
from Ofgem expected in 2018. The report proposes to remove various barriers to enable smart energy technologies
including EVs, which can provide demand response services.
Ÿ There is a need for clarification on the requirement of licence from the CERC/SERC to set up such a facility. The generation set
up as per the present provisions does not require a licence. The setting up of grid scale storage should also be exempted from
licence. This would enable the creation of independent storage service providers (ISSPs) to deploy large-scale solutions.
Case studies of major international large-scale energy storage projects are summarised in Annexure 1. Currently, the Power
Grid Corporation of India has installed a pilot project at its substation in Puducherry.
Name PGCIL Sub-station
Location Puducherry, India
Description The project at the PGCIL sub-station is the first large-
scale energy storage project in India. PGCIL wanted
to evaluate the technical feasibility of energy storage
for grid services. Three technologies were chosen —
advanced lead acid, lithium ion and flow battery
Type of System Stand-alone energy storage solution at a grid sub-station
Size Advanced Lead Acid: 500 kW/250 kWh

Lithium Ion:500 kW/250 kWh
Flow :250 kW/1000 kWh
Cost NA
Business model Trial Project
Applications Grid balancing

Stakeholders Developers: PGCIL
Battery Supplier: Narada, Exicom
Off-taker Power Grid Corporation of India (Image: PGCIL)
46
‘Upgrading our Energy System, Smart Systems and Flexibility Plan’, Ofgem, 2017 (Ref 20)
44
Ÿ The existing pumped hydro project capacity of about 4.8 GW need to be operationalised to provide operating reserves along
with thermal generators.
Ÿ A market for ancillary services will provide an opportunity to evaluate the techno-commercial viability of flexible operation of
thermal generation fleet against the investments in energy storage solutions to deliver similar services. The CEA RE Technical
Committee’s recommendation on the procurement of ancillary services through a market mechanism is a welcome step. The
US has enabled the large-scale participation of energy storage projects in the market through favourable policies as
highlighted here. A detailed summary of the key global policy initiatives is presented in Annexure 4.
Policy Markets and regulations Impact
FERC mandated that each grid operator change its

regulation tariffs to pay resources based on the actual
amount of regulation service each resource provides to
FERC Order 755 Frequency regulation the grid, i.e. ‘pay-for-performance’.
Responsible for the largest deployment for fast ramping
energy storage projects.
The FERC order 841(2018) removes all existing barriers
FERC Order 841 RTO/ISO participation for storage to participate in markets administered by
RTO/ISO.
Ÿ Initially, large-scale energy storage deployments can happen if there are mandates to include a percentage of storage as part
of the solar/wind power project bids to balance and provide firm power. This has also been recommended by the NEP (2018).
A case study for energy storage integration with solar power plants in the Andaman and Nicobar Islands is presented in
Annexure 5.
Ÿ Currently, there is no real-time power market in India but the CERC has recently released a staff paper in that regard. India
needs to set up a real-time market where dispatch is done by economic price points versus long-term pricing — allowing
fossil units to follow national dispatch pricing signals and sell into the market based on price would be a significant step
forward. This will help in bringing transparency around the real cost of generation and allow efficient systems and
technologies to do better without any mandates. A suggestion for potential business models is presented in Annexure 6.
CERC’s 5 min metering/scheduling and FRAS order

CERC in a recent order approved pilot projects for Fast Regulation Ancillary Services (FRAS) and 5 min metering and
scheduling for all central sector hydro generating stations on a pilot project basis. The pilot project will provide
insights into how energy storage, demand response and higher penetration of RE can be managed in the grid. Globally,
energy storage has proved to be a valuable proposition in providing fast response ancillary services and it is only a
matter of time before a real-time market regulation is created to procure these services in India.
Ÿ The study titled, ‘Committee report on optimal mix in power generation on medium and long term basis’ (MoP, January 2018),
has identified the key cost factors that could impact the flexible operation of conventional thermal power plants. It is highly
recommended that a study be undertaken to evaluate the cost and environmental impacts and compare them with the use of
energy storage for providing flexibility to the grid.
Ÿ The use of energy storage is to be evaluated for deferring upgrade of transmission assets to reduce renewable generation
curtailment.
45
Ÿ The government should consider setting up a fund for accelerating the deployment of grid scale energy storage projects in the
early years to explore learnings from these projects, which can help market adoption by addressing technology, policy and
commercial risks.
Ÿ A study on the impact of meeting rooftop solar targets on system cost for discoms should be undertaken to determine the
possible role of storage.
Ÿ The uses of behind-the-meter energy storage resources for grid services should be explored through demand response
programmes. Incentives for setting up batteries with rooftop solar PV projects should be envisaged.
Ÿ There is a need to create grid interconnection standards for the use of storage on a stand-alone basis and as part of generation,
transmission and/or distribution assets.
Ÿ A regulatory framework to monetise the value of firming/smoothing of solar power, ramp rate control, peak shifting, demand
response etc. should be formulated.
Ÿ It is recommended to have an integrated approach of policy making on energy storage for grid services and EVs spread across
ministries including, but not limited to, MNRE, MoP, MHI, DIPP and MoF.
In addition to the above direct interventions, certain indirect interventions such as enforcing strict grid discipline, narrowing the
frequency band and enforcing penalties on developers that deviate from the schedule will enable energy storage deployments. To
begin with, creating a market-based procurement of ancillary services will unlock a significant market for energy storage.
Assuming 1.5% of peak demand capacity would be needed for frequency regulation and say 20% of this capacity would be
storage based, one can expect a market of 2–3 GW by 2022.
46
Annexures
Annexure 1: Major global energy storage projects
Leighton Buzzard Battery Park (UK)
Name Leighton Buzzard Battery Park

Location Leighton Buzzard, Central Bedfordshire, UK
Description UK Power Networks, a distribution system operator,
undertook Europe's largest storage demonstration
project. Funded in part by the Low Carbon Networks
Fund, the aim of the Smarter Network Storage (SNS)
project is to determine how storage technology can be
used to support the cost-efficient implementation of
the British government's carbon reduction strategy.
Type of System Battery bank installed in a sub-station
Size 6 MW/10 MWh
Cost £ 18 Million
Business model Trial Project (Summary of the scenarios presented in Table 13)
Applications Peak shaving, frequency response and other system services

Stakeholders Developers: Younicos with UK Power Networks
Battery Supplier: Samsung SDI
Off-taker UK power networks (Image: Younicos)
Table 13 Summary of modelled scenarios47
Business model 1 Business model 2 Business model 3

DNO owned Third-party owned Third-party owned for EFR
Storage capacity 6 MW/10 MWh 6 MW/6 MWh
Ownership DNO Third Party
DNO peak shaving √ √ X

Firm Frequency Response √ X X
EFR X √ √
Triads √ √ √
Arbitrage X √ X
Capacity Market Payments X √ X
Terminal Value √ X X
47
Smarter Network Storage - The business case of battery energy storage in GB; UK Power Networks, 2016 (Ref 21)
48
Table 14 SNS Business Models48
Business model Key points Description
DNO merchant Full merchant risk, exposed to Ÿ DNO builds, owns and operates the asset. It has full
power price and balancing operational control.
services
Ÿ DNO monetises additional value streams directly on a
short-term basis (e.g. trading).
Ÿ Possible barriers: Costs of accessing the market, DNO
skills and capabilities, regulation and shareholder
expectations of risk.
Distribution system DNO exposed to incentive Ÿ DNO builds, owns and operates the asset. DNO has full
operator (DSO) scheme operational control.
Ÿ DNO has DSO role; coordinating portfolios of flexibility
for both distribution and wider system benefit through a
centralised control mechanism.
Ÿ DNO commercial risk is dependent on the design of the
incentive scheme.
DNO contracted DNO exposed to construction Ÿ DNO builds, owns and operates the asset. DNO has full
and operational risks operational control.
Ÿ Prior to construction, long-term contracts (e.g. 10
years) for the commercial control of the asset outside of
specified windows are agreed.
Ÿ Dependant on the feasibility of long-term contracts.
Contracted services Low commercial risk for DNO Ÿ DNO offers a long-term contract (e.g. 10 years) for
services at a specific location with commercial control
in certain periods.
Ÿ The third party is responsible for building owning, and
operating the asset, and monetising additional revenue
streams.
Charging incentives No guarantee of asset being Ÿ DNO sets Distribution Use of System (DUoS) charges to
build create signals for peak shaving that reflect the value of
reinforcement.
Ÿ Barriers: no operational control for DNO, therefore no
guarantee on security.
48
Smarter Network Storage - The business case of battery energy storage in GB; UK Power Networks, 2016 (Ref 21)
47
The DNO merchant model was excluded mainly because of the requirement for the DNO to build a trading capability and take
wholesale market risk. The DSO model, while attractive in principle, was excluded because the underlying regulation that would
define it has yet to be developed. The charging incentives model was excluded because it provides no guarantee of the storage
being built or, once built, being available to provide network security. The key drivers that influence business model viability are
considered below.
Table 15 Drivers for storage deployment49
Driver Description
Cost of storage Lower storage technology costs reduce the capital outlay for a project, improving project
economics (and vice versa). The terminal value at the end of the project’s economic lifetime
also has a bearing, with a higher terminal value improving project economics (and vice versa).
Network reinforcement Higher conventional network reinforcement costs increase the value of deploying storage as an
cost alternative, improving project economics (and vice versa) for DNOs directly and for third-party
projects if they have a contract for peak shaving with a DNO.
Commercial services Increased access to and higher value from the provision of commercial services (for example,
ancillary services markets, wholesale market, capacity market) increase the revenue stream for
a project, improving project economics (and vice versa).
Policy developments Removing barriers to storage or creating a more favourable environment for investment
enhances the realisable value of a project, improving project economics (and vice versa).
Pen y Cymoedd Battery Storage Facility (UK)

Name Pen y Cymoedd Battery Storage Facility
Location Pen y Cymoedd, Wales, UK
Description The 22 MW system will be one of the largest co-
located battery and wind farm projects in the UK. It will
provide a rapid-reaction grid reliability service to
National Grid, known as EFR. The energy storage
system will be integrated with an existing 228 MW
wind farm owned by the developer.
Type of System Battery storage integrated with an existing wind farm
Size 22 MW
Cost NA
Business model EFR service of National Grid at £7.447/MW of EFR/h
Applications Frequency response

Stakeholders Developer: Vattenfall
Battery Supplier: BMW
Off-taker National grid (Image: Vattenfall)
49
Smarter Network Storage - The business case of battery energy storage in GB; UK Power Networks, 2016
50
Hornsdale Power Reserve (Australia)
Name Hornsdale Power Reserve
Location Jamestown, South Australia
Description Southern Australia was hit by power supply issues in
2016–17. In July 2017, Tesla won a competitive bid to
build an energy storage project. The world's largest
energy storage project to date was commissioned in a
record 100 days. The project was integrated to a wind
farm operating since 2015.
Type of System Wind power plant linked to Battery
Size Wind Power: 315 MW

Energy Storage: 100 MW/129 MWh
Cost NA
Business model Capacity reserve for South Australia; Participation in the Australian Electricity Market
Applications Grid stabilisation and Ancillary Services (Frequency Controlled).

On an average 30 MW capacity for Energy Arbitrage and 70 MW capacity for Power Reserve is provided
as per the Australian Electricity Market Operator data.
Stakeholders Developers: Neoen Energy

Battery Supplier: Tesla
Off-taker South Australia (Image: Tesla/Reuters)
The report by the Australian Energy Market Operator (AEMO) summarising the performance of the battery performance of the
project found that the regulation Frequency Controlled Ancillary Services (FCAS) provided by the project is both rapid and
precise, compared to the service typically provided by a conventional synchronous generation unit (shown in Figure 25). Based
on the findings, the AEMO has decided to develop a framework that rewards the rapid and accurate response capabilities of
batteries.
Figure 25 Accuracy and speed of regulation FCAS response – Hornsdale Power Reserve50
30
20
10
-10
-20
-30 11:20 11:25 11:30 11:35 11:40 11:45 11:50 11:55 12:00 12:05 12:10 12:15 12:20
Time (hhmm)
AGC Setpoint Battery MW
50
Hornsdale Power Reserve Batter, Australian Energy Market Operator, 2018
51
San Diego Gas & Electric (SDG&E), Escondido (US)
Name San Diego Gas & Electric (SDG&E) sub-station, Escondido,
Location California
Description The SDG&E fast-tracked the procurement of energy
storage in 2016 after suffering grid issues earlier in the
year. The 30 MW/120 MWh energy storage was the
largest system when commissioned. The project when
fully operated provides energy to power 25,000 homes
for four hours.
Size 30 MW/120 MWh
Cost NA
Business model Capacity reserve for SDG&E
Applications Grid reliability

Stakeholders Developers: AES Advancion
Battery Supplier: Samsung SDI
Off-taker San Diego Gas & Electric (SDG&E) (Image: AES)
Kauai Solar PV Plant, Hawaii (US)

Name Kauai Solar PV Plant
Location Kauai, Hawaii
Description Kaua’i Island Utility Cooperative (KIUC) has signed a
power purchase agreement (PPA) with SolarCity for
electricity from the first utility-scale solar array and
battery storage system (13 MW/52 MWh) designed to
supply power to the grid in the evening, when demand
is the highest. The project next to KIUC’s Kapaia power
plant is the first utility-scale system in the US to
provide dispatchable solar energy, meaning that the
utility can count on electricity being available when it
is needed, even hours after the sun goes down.
The 52 MWh battery system will feed up to 13 MW of electricity onto the grid to ‘shave’ the amount of
conventional power generation needed to meet the evening peak, which lasts from 5 p.m. to 10 p.m. By
using the solar energy stored in the battery instead of diesel generators, KIUC will reduce its use of
imported fossil fuels and also cut its greenhouse gas emissions.
Type of System Electric Energy Time Shift, Solar Energy Time Shift, Peak Shaving
Size Solar: 13 MW
Energy Storage: 13 MW, 52 MWh
Cost NA
52
Business model $0.11/kWh
Applications Electric Energy Time Shift, Onsite Renewable Generation Shifting

Stakeholders Developers: SolarCity
Battery Supplier: Tesla
Off-taker Kauai Island Utility Cooperative (Image: Tesla)
53
Annexure 2: Energy storage initiatives in India
A large-scale energy storage project in India is successfully being operated by Power Grid Corporation. The project installed at its
sub-station is also a test bed for three different energy storage technologies. These energy storage technologies have been
designed for multiple grid service applications but in the initial operation period they have been used for frequency regulation
services.
Name PGCIL sub-station

Location Puducherry, India
Description The project at the PGCIL sub-station is the first large-
scale energy storage project in India. PGCIL wanted
to evaluate the technical feasibility of energy storage
for grid services. Three technologies were chosen —
advanced lead acid, lithium ion and flow battery.
Size Advanced Lead Acid: 500 kW/250 kWh

Lithium Ion:500 kW/250 kWh
Flow: 250 kW/1000 kWh
Applications Grid balancing

Stakeholders Developers: PGCIL
Battery Supplier: Narada, Exicom and Vizn
Off-taker Power Grid Corporation of India (Image: PGCIL)
Table 16 Proposed large scale energy storage projects in India
Project Capacity Location Commissioning
NLC 2x10 MW Solar PV Port Blair, Andaman and Nicobar Islands 2019
8 MWh/16 MW BESS
NTPC 2 MWh BESS Port Blair, Andaman and Nicobar Islands 2019
NTPC 17 MW Solar PV South Andaman, Andaman and Nicobar Islands 2019

6.8 MWh/6.8 MW BESS
NTPC 8 MW Solar PV South Andaman, Andaman and Nicobar Islands 2019

3.2 MWh/3.2 MW BESS
AES-Tata Power 10 MWh BESS Sub-station, Delhi 2018
SECI 160 MW (Solar + wind + Andhra Pradesh 2019

storage)
54
Annexure 3: Review of existing policies and regulations for RE, energy
storage, ancillary services in India (energy storage perspective)
The following are the reviews of national and state energy policies related to RE, ESS and ancillary services.
National Energy Storage Mission
The Ministry of New and Renewable Energy (MNRE) has constituted an expert committee to draft the National Energy Storage
Mission (NESM). The committee has subsequently met and drafted the document, which is expected to be released soon. The
NESM is expected to have a two-phased approach in terms of objective and targets. The first phase running up to 2022 is
expected to have a total target of 50–70 GWh, covering a range of applications including EV.
National Tariff Policy
The National Tariff Policy of 2016 mandates the creation of a roadmap to have 8% of the net energy consumed by utilities to be
procured from solar. The policy also calls for the procurement of RE through a competitive bidding route only. A significant benefit
from the policy is the waiver of interstate transmission charges and loses.
National Energy Policy (NEP)
The draft NEP of 2017 of projects the RE installed capacity would account for 50–60% of the total installed capacity by 2040. To
integrate this increased capacity, the NEP recommends expanding the balancing areas and upgrading the grid planning
practices, including Green Energy Corridors (GEC) and ancillary service regulations. Although the NEP recommends
incentivising the energy storage, EV and other emerging technologies through ToU and other related policies, it proposes to
withdraw a must-run status for RE and other support as non-levy of interstate transmission charges. The NEP is still in draft stage
and yet to be finalised.
CERC’s Forecasting and Scheduling Regulations
The CERC notified amendments in August 2015, introducing provisions related to scheduling and forecasting of interstate RE
generation. Accordingly, the regulations for DSM and Indian Electricity Grid Code (IEGC) have been amended. The salient
features of these amendments relevant to the solar industry are as under:
Ÿ Day ahead forecast is mandatory from solar energy generation with an interval of 15 minutes for the next 24 hours for the
aggregate generation capacity of 50 MW and above.
Ÿ Forecasting is to be done by solar generators, which are regional entities as well as the concerned RLDC.
Ÿ The solar generators which are regional entities have the option of accepting the forecast of the RLDC concerned for preparing
their schedule or providing the RLDC concerned with a schedule based on their own forecast.
Ÿ Any commercial impact on account of deviation from the schedule based on the forecast chosen by the wind and solar
generator would be borne by it.
55
Figure 26 Deviation penalty for existing generators
The Penalty mechanism for existing generators
Deviation within +/- 15% No penalty Full payment
Deviation from 15% to 25% Penalty of Rs. 0.50 per Unit Deviation
Deviation from 25% to 35% Penalty of Rs. 1 per Unit Deviation
Deviation greater than 35% Penalty of Rs. 1.50 per Unit Deviation
Based on the recommendations by the Forum of Regulators (FoR), state-level forecasting and scheduling (F&S) regulations have
been rolled out.
Table 17 Status of F&S regulations across States
State Status of F&S regulations Remark
Andhra Pradesh Final Commercial implementation to begin from 1 July 2018

Chhattisgarh Final Notified as part of DSM regulations, 2016
Gujarat Draft Notified in January 2017
Mizoram and Manipur Final Finalised in July 2016
Jharkhand Final Finalised in September 2016
Karnataka Final Implemented from June 2017
Maharashtra Draft Notified in February 2018
Madhya Pradesh Draft Notified in June 2017
Odisha Draft Notified in September 2015
Rajasthan Final Implemented from January 2018
Tamil Nadu Draft Notified in February 2018
Tripura Final Notified in June 2016
Uttarakhand Final Notified in February 2017
Energy Storage
The CERC's staff paper on the introduction of electricity storage systems in 2017 has been the only official policy note pertaining
to energy storage in India. The objective of the consultation paper was to evaluate the need for energy storage in India. The paper
highlights the existing gaps in the regulations and seeks to propose a market framework for energy storage that could serve the
generation, transmission and distribution assets. The CERC is expected to come up with the draft regulations building up on the
staff paper on energy storage.
56
Tariff determination for RE
The CERC has been determining tariffs for RE projects, solar, wind and other RE projects based on an annual capital cost
determination. Since 2017, the CERC has decided to determine tariffs for solar and wind only on a project-specific route.
However, there is no tariff determination for RE with energy storage. Even a project-specific RE tariff determination has not been
determined as MNRE has not approved any particular technology for energy storage. The tariff determination for energy storage
will be an enabler to provide capital recovery for solar with energy storage.
Review of existing standards for batteries reuse and recycling
The existing regulation for battery use is the 2001 notification by the Ministry of Environment and Forest, Batteries
(Management and Handling) Rules, 2001. The rules framed identify the roles and responsibilities of a manufacturer,
assembler, dealer and recycler, among others. A key responsibility proposed by the rule is for the manufacturer to
ensure more than 90% of the used batteries are collected and recycled. However, all the rules are applicable for lead
acid batteries and not for advanced batteries such as lithium ion.
Currently, there are no India-specific safety standards for electrical energy storage systems. An India-specific standard
is being drafted by a committee chaired by the Member (Planning), CEA and is expected to be finalised by the end of
2018.
57
Annexure 4: Policy recommendations for India
The introduction of energy storage with solar power may need some amendments in policies and regulations, which are
discussed herein below:
National Tariff Policy (NTP)
The revised NTP has given due weightage to the promotion of renewable generation sources. CES suggests that the CERC should
notify the depreciation rates for energy storage based on technology, application and life
Ÿ Clause 6.4 (i) In addition to specifying the minimum percentage for the purchase of solar energy, there should be a
provision for certain share of ‘firm’ solar power to provide incentive for the integration of storage with solar.
Ÿ Clause 6.4 (ii) RE procurement by distribution licensees for future requirements shall be done, as far as possible, through a
competitive bidding process under Section 63 of the Act within the various suppliers offering energy from the same type of RE
sources. In the long term, these technologies would need to compete with other sources in terms of full costs.
Reason
I. Energy storage is still in infancy stage. Procurement of power from solar-storage plants by distribution companies shall be
done at preferential tariffs determined by the appropriate commission as indicated under clause 6.4(iii).
II. The energy storage requirement for solar and wind power firming/smoothing may be different. So such projects may be
bid separately.
Ÿ Clause 6.4 (iii) Renewable sources of energy generation including co-generation
The Central Commission should lay down guidelines within three months for pricing non-firm power, especially from RE, to
be followed in cases where such procurement is not done through competitive bidding.
Reason
I. If solar power is integrated with energy storage, it will become firm power. The Central Commission may need to lay down
guidelines for the procurement of power from such plants. It may become a cap for competitive bidding as well if opted for.
Appropriate changes need to be incorporated when energy storage introduction is thought of.
Ÿ Clause 6.4 (iv) Renewable sources of energy generation including co-generation

To incentivise the distribution companies to procure power from renewable sources, the central government may notify, from
time to time, an appropriate bid-based tariff framework for RE, allowing the tariff to be increased progressively in a back
loaded manner over the life cycle of such a generating plant. Correspondingly, the procurer of such bid-based RE shall
comply with the tariff payment obligations throughout the said cycle of the generating plant.
Reason
If solar power is integrated with energy storage, the terms ‘renewable sources of energy’ need to have an extension ‘Integrated
with energy storage’.
58
CERC forecasting and scheduling regulations
Ÿ Central Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) (Second
Amendment) Regulations, 2015
Clause 6.4 (v)
The CERC has issued this amendment for controlling deviations of the wind or solar generators that are regional entities.
About 15% deviation has been allowed without any penalties to the generators. This requirement could be tightened further
based on technical grid studies as with energy storage forecasting errors could be addressed easily. The current deviation
band permitted will not incentivise renewable developers to provide firm power even if it is possible due additional capital
cost. A reasonable penalty/incentive structure will be required for enabling investments in such hybrid solutions or separate
ancillary service markets that can help monetisation of the flexibility.
Indian Electricity Grid Code
Ÿ Central Electricity Regulatory Commission (Power System Development Fund) (First Amendment)
Regulations, 2015
“3(A) Notwithstanding anything contained in these regulations, any scheme sanctioned by the central government in the
interest of development of power system which requires support from PSDF as part of the scheme shall be eligible for
assistance from PSDF.”
Reason
CES suggests that SECI/ NTPC Vidyut Vyapar Nigam Ltd (NVVN) is the designated nodal agency to conduct competitive
bidding for solar projects allocations at the central level. SECI is also considering mega/ultra-mega solar projects at
identified park sites. Energy storage may be combined with such projects on demonstration basis for the assessment of
various technologies for different applications. The initial investment required for such projects may be supported through
NCEF/PSDF.
Central Electricity Regulatory Commission (Power Market) Regulations, 2010
The scope defined for these regulations also include following types of contracts under clause 4:
(vii) Capacity contracts: These are contracts where the capacity of a generating station is booked in advance and consideration is
paid by the buyer with the right to require the generator to dispatch electricity as and when required by such buyer at any time
during the tenure of the contract. These can be transacted both on OTC markets and /or on exchanges.
(viii) Ancillary services contracts: These contracts are for ancillary services. Ancillary services in power system (or grid)
operation are support services necessary to support the power system (or grid) operation for maintaining power quality, reliability
and security of the grid; e.g. active power support for load following, reactive power support and black start.
Provision should be made so that solar-storage hybrid systems can provide capacity and ancillary services in addition to energy.
Frequency support ancillary services
Ancillary services are defined, under Regulation (2)(1)(b) of the CERC (Indian Electricity Grid Code), Regulations, 2010 (IEGC).
The regulation identifies Frequency Support Ancillary Service (FSAS) as a service offered through bids by a generating station or
any other authorised entity on behalf of the generating station to make itself available for despatch and get despatched/scheduled
59
by the nodal agency to support the system frequency. The objective of frequency response is to maintain the frequency within the
band specified in the IEGC. However, as noted earlier, currently only interstate generating stations whose capacity is un-
requisitioned, partly or fully, are eligible to participate.
Reason
At present, the real-time deviations from the schedule are linked to the frequency and the under/over generation and drawal are
paid or penalised according to the rate corresponding to the prevailing frequency and as per regulatory provisions. Gradually as
this market grows and imbalances are better handled with improved system security and reliability, the FSAS could phase out the
Unscheduled Interchange Mechanism. Energy storage can be used to inject and absorb power to maintain grid frequency in the
face of fluctuations in generation and load. Energy storage can play a better role in providing response to the grid requirement.
Currently, no framework exists for such assets to support the grid.
Response time for frequency regulation services
The current proposed procurement of ancillary services, particularly frequency regulation, does not provide incentive for faster
and accurate response.
All relevant regulations created by the CERC/SERCs relate measurement of energy based on 15 minute time block, and
accordingly all open access based interstate and intrastate transaction are settled on 15 minute basis. The new framework,
introduced for frequency regulation, also has a provision of 15 minute average measurement. Most system operators in the US
utilise a regulation control signal that varies every 4–6 seconds to regulating resources. In recent years, the US has adopted a
pay-for-performance mechanism for providing incentives for technologies that can provide faster and accurate response to this
regulation control signal. Services such as fast response for frequency support need to have a different set of time block-based
parameters, metering arrangement and payment mechanism.
60
Annexure 5: Analysis of global energy storage policy initiatives
UK
Policy Markets and regulations Description and status
Grid Services Frequency Regulation and The UK has witnessed significant participation from energy
Capacity Market (CM) storage project developers in tenders related to EFR and CM
auctions in recent years.
The increasing amounts of intermittent renewables have
resulted in increased frequency volatility. The EFR auction
was launched by the National Grid in 2016 to provide greater
control over frequency deviations. The auctions saw eight
winning projects, totalling 201 MW offer energy storage
solutions at the end of March 2018.
A smart flexible Energy Planning The proposal called for creating a market model to incentivise
energy system flexibility services such as demand-side response and the
use of energy storage technologies. Another key point
targeted is the charging of double consumption levies for
storage facilities.
Budget Evs To support its proposal, in the recent budget, the government
announced the creation of Charging Infrastructure Investment
Fund with an outlay of £400 million, including a £200 million
investment from the private sector. Regulations to support the
wider rollout of charging stations is being proposed. About
25% of the cars in government fleets are to be all electric by
2022.
US
FERC Order 755 Frequency Regulation FERC mandated that each grid operator change its regulation
tariffs to pay resources based on the actual amount of
regulation service each resource provides to the grid, i.e.
‘pay-for-performance’.
Responsible for the deployment of fast ramping energy
storage projects of over 500 MW.
FERC Order 841 RTO/ISO participation The FERC order 841(2018) removes all existing barriers for
storage to participate in markets administered by RTO/ISO.
61
Tax Credits for energy Tax Incentive The investment tax credit expands to all energy storage
storage systems, enabling more widespread deployment of energy
storage.
Self-Generation California SGIP is a ratepayer-funded rebate programme, overseen by

Incentive Program the CPUC and available to retail electric and gas customers of
(SGIP) the four California investor-owned utilities.
European Union
Market Design Definition of energy storage The proposed market design initiatives call for valuing energy
Initiative storage based on the different services they are able to
provide such as ancillary, balancing services, curtailment
avoidance and firming of RE generation. A provision to allow
trading of storage services as flexibility products is also
recommended. The staff paper calls for classifying storage in
line with services such as demand response and providing
integrated services which help in decarbonising the energy
sector as a whole.
Germany
KfW funding Solar Rooftop with energy The programme provides low-interest loans and repayment
programme storage subsidies for new solar PV installations, which incorporate a
fixed battery storage system, and for the retrofit of such
systems to solar PV installations. Finance is available for up
to 100% of the eligible net investment costs. The subsidy
amounts to a maximum of 30% of the investment cost for the
energy storage system.
62
Annexure 6: Solar intermittency — a case study for Andaman
and Nicobar Islands
A case study for Port Blair was evaluated, where diesel generators are the primary source of energy. The island has recently started
adding solar capacity to the grid in an attempt to reduce its diesel generation requirement. As part of these efforts, a 5 MW solar
plant was installed. However, due to large instantaneous ramps in solar power generation, grid operator is required to keep diesel
generators running for providing a spinning (synchronous) reserve and as a result diesel savings were much lower than expected.
A preliminary analysis conducted by the CES team suggested that adding a 3 MWh storage to the grid can eliminate one of the DG
set as well as increase the loading on the other DG set used for providing balancing service. This system sizing was done
assuming that the storage unit was charged only from the solar installation. Simulations suggested that such system could
achieve savings of INR1.7 Cr / year through diesel saving of more than 295,000 litres, while maintaining the ramp rate from solar
variation to under 10% of the installed capacity, i.e. 500 kW/min. Figure 25 shows solar output smoothing by energy storage.
Figure 27 Solar Plant Output with and without ESS
Solar Plant Output (kW) With and Without ESS

5,500 32%
5,000 30%
4,500 28%
4,000 26%
3,500 24%
3,000
22%
2,500
20%
2,000
18%
1,500
16%
1,000
14%
500
12%
0
10%
-500
-1,000 8%
-1,500 6%
-2,000 4%
-2,500 2%
-3,000 0%
5:59 AM
6:14 AM
6:29 AM
6:44 AM
6:59 AM
7:14 AM
7:29 AM
7:44 AM
7:59 AM
8:14 AM
8:29 AM
8:46 AM
9:16 AM
9:31 AM
9:46 AM
10:01 AM
10:16 AM
10:31 AM
10:46 AM
11:01 AM
11:16 AM
11:31 AM
11:46 AM
12:01 PM
12:16 PM
12:31 PM
12:46 PM
1:01 PM
1:16 PM
1:31 PM
1:46 PM
2:01 PM
2:16 PM
2:31 PM
2:46 PM
3:01 PM
3:01 PM
3:16 PM
3:31 PM
3:46 PM
4:01 PM
4:16 PM
4:31 PM
4:46 PM
Solar without ESS Solar with ESS Charge (kW) Discharge (kW) SOC%
The need for energy storage can be further optimised if the energy storage system is allowed to charge from grid. Figure 27
demonstrates the results of the simulation that assumes that the storage system can be charged partially during night time and is
used to provide balancing service to manage the island grid.
63
Figure 28 Solar Ramping for a 5 MW Plant with +/- 10% Limit
Ramping Analysis (10% Buffer)

4000 400
3000 300
2000 200
1000 100
0 0
-1000 -100
-2000 -200
-3000 -300
-4000 -400
Lost Energy (kW) Required Energy (kW) Cumulative Energy (kW)
As can be seen from the magnitude of the red curve in Figure 28, in such scenario, we need about 650 kWh ESS system (as
compared to 3 MWh) to cover all the ramps beyond +/- 10% of the solar capacity, thus improving the economic viability of the
project. For estimating this, we have simulated the amount of energy that needs to be absorbed or discharged during the day to
smooth out the solar ramps beyond the 10% limit. The maximum magnitude of net energy required during the day (assuming
energy can be stored during off-peak hours vs only using solar energy for smoothing; red curve with secondary axis) indicates the
storage capacity required.
64
Annexure 7: Suggested business model for Indian context
Utility ownership
Precedent: Previously, many energy storage installations in the US were owned by utilities. The business model works mainly in
case of vertically integrated utilities. Here utility floats an EPC tender. A few projects built on this model in the US have been
provided in Annexure 1.
Indian context: As per the Electricity Act (EA, 2003), most of the states have separately incorporated three companies —
generation, transmission and distribution having separate status and business interests. Hence, the issue of asset ownership is
important. Given the poor financial health of distribution companies (DISCOMs), they are unlikely to own assets such as energy
storage. Generating companies (Gencos), however, can own such assets and sell services to discoms or transmission
companies. In this case, Genco may own the asset and load dispatch centres will determine its dispatch based on the needs.
Gencos can issue an EPC tender to ensure competitive pricing and technologies.
The Discom may pay annual fixed charge to the Genco on notified tariff derived by the appropriate commission. The Discom may
claim it as pass through in the Aggregate Annual Revenue Requirement (AARR). Long-term energy services agreements (ESAs)
need to be in place between Genco and Discom. The asset may be operated by the load dispatcher based on system requirement.
Poor credit rating of discom still poses a challenge in terms of financing the project. In such case, another entity such as NVVN or
SECI need to be created that can be a credible counter-party for ESA. A representation is shown in Figure 29.
Figure 29 Business Model Option I: Gencos to Own Storage Asset
PFC/IREDA/
GenCo Multilateral Agencies
Equity Debt
Special Purpose
Vehicle (SPV)
“SPECIAL
GENERATION
Energy ASSET” Status
Storage CERC
Energy Services Asset
Agreement
(ESA)
Dispatch signal
Scheduling SLDC/RLDC
DISCOM/NVVN
like entity
63
Advantages:
Ÿ Gencos can co-optimise their operations with thermals and renewables with energy storage. Energy storage can be used to
meet the reserve requirements as well as provide frequency response.
Ÿ Storage asset can be utilised for multiple applications, such as regulation, synchronous reserve and peak capacity.
Ÿ Non-recourse financing is possible.
Ÿ Competitive bidding may drive down prices.
Disadvantages:
Ÿ Gencos do not have necessary know-how about storage technologies.
Private ownership with long-term contracts
Precedent: Utilities in California (SCE, PG&E) as well as system operators in Ontario, Canada (IESO) have issued RFPs with
long-term contracts. Over 500 MW in-front-of-the-meter energy capacity have been procured by utilities in the US through long-
term ESAs in recent years. ESA is structured with two-part payments — capacity in $/kw-month and variable charges in $/kWh.
The independent system operators in the respective US states determine the dispatch of the assets in most cases. VAR
compensation is also considered with the same ESA.
Indian context: This model will be very similar to the one described above except instead of government-owned gencos, IPPs
will own the asset. In practice, Special Purpose Vehicle (SPV) will be created to own the asset and IPPs will own the SPV. A
representation is shown in Figure 30.
Figure 30 Business Model Option II: IPPs to Own Storage Asset with Long-term Contract
Commercial Banks/
IPP Multilateral Agencies
Equity Debt
Special Purpose
Vehicle (SPV)
“SPECIAL
GENERATION
Energy ASSET” Status
Storage CERC
Energy Services Asset
Agreement
(ESA)
Dispatch signal
Scheduling SLDC/RLDC
DISCOM/NVVN
like entity
66
Advantages:
Ÿ India’s state or central government will not have any capital outlay.
Ÿ Storage asset can be utilised for multiple applications, such as regulation, synch reserve and peak capacity.
Ÿ Non-recourse financing is possible.
Ÿ Competitive bidding may drive down the prices.
Disadvantages:
Ÿ SLDC/RLDC needs to have sophisticated control algorithms to manage the portfolio of such assets.
Merchant plants through exchanges

Precedent: Due to the pay-for-performance regulation described earlier, the US market, especially Pennsylvania, Jersey,
Maryland Power Pool (PJM), has seen many storage installations for frequency regulation. Almost all of these plants are merchant
plants and 100% equity financed. Due to market risks, the deployment will not happen unless the market prices are high enough.
Indian context: In India, storage merchants’ assets most likely need to be utilised in ancillary services market when it comes to
existence. The CERC may notify full-scale ancillary services with consideration for various business options with energy storage.
Different products may be introduced keeping in mind various services required under ancillary services. Of course, this will
require the liberation of open access in true terms as envisaged under the Electricity Act 2003 provisions and address
transmission congestion issues. As on date, the exchange-based prices are not complimenting the market-based long-term PPA
prices and are very low. Buyers are unable to take advantage of cheaper power because of open access restrictions by various
state-based agencies as well as transmission congestion.
Such assets may be owned, operated and maintained by the generating agencies for their own use.
Advantages:
Ÿ Helps in real-time settlement.
Ÿ The asset may support the grid requirement on as and when required basis.
Ÿ Disadvantages:
Ÿ As on date, no such market or marketable ancillary services products exist in India for energy storage
Ÿ It is currently not commercially attractive since the short-term markets are not having demand and the prices in such markets
are subdued
67
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https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/633442/upgrading
our-energy-system-july-2017.pdf accessed on 06 Aug 2018
21. Smarter Network Storage - The business case of battery energy storage in GB; UK Power Networks, 2016
https://innovation.ukpowernetworks.co.uk/innovation/en/Projects/tier-2-projects/Smarter-Network-Storage
(SNS)/Project-Documents/The+business+case+of+Storage.pdf accessed on 06 Aug 2018
69
Notes
Contact Details
Nishant Bhardwaj
Energy Advisor
Department of International Development
n-bhardwaj@dfid.gov.uk
Anish De
Programme Director - Power Sector Reforms Programme
KPMG India
anishde@kpmg.com
For more information visit
https://psrindia.com/
https://twitter.com/psr_india
www.facebook.com/PSR-India-122338261759998/

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ENERGY STORAGE MARKET

Ÿ Nothing in this report constitutes a valuation or legal advice.

Ÿ This Report is for the benefit of the Client only.

Overview of India’s energy storage market

Project Capacity Location Commissioning year

PGCIL 2 x 500 kW, 250 kWh BESS Puducherry 2017

NTPC 17 MW Solar PV South Andaman, Andaman and Nicobar 2019*

SECI 10 MW/20 MWh BESS for Andhra Pradesh 2019*

SECI 2 MW Solar PV Project/ 1 Kaza, Himachal Pradesh 2019*

Energy storage market potential

Generation Transmission & Distribution Consumer

ü Ramping Support ü Transmission Deferral ü Transmission Congestion Relief ü Back-up Power

ü Black Start ü Distribution Deferral ü Increase Solar Self-consumption

Source: CERC, IESA-Shakti Foundation, CES Analysis

Figure 2 India's Energy storage Market Potential Application-wise split in 2022

Source: CEA, IESA Energy Storage Overview Report, CES Analysis

Table 2 Summary of different energy storage technologies and suitable application

Parameter Lead Acid Advanced Li ion NaS Na-NiCl2 VRB Zn-Br

Round Trip 60-80% 80-90% 93% 70-80% 80-85% 65-70% 68-70%

Energy Density 40-60 27-30 180-196 65-70 55-60 7-8 40-45

Source: NREL, IESA-Shakti Foundation, CES Analysis

Key challenges and recommendations

Key challenges and recommendations

1.1 Problem statement and alternates: role of energy storage

Figure 3 Potential Energy Storage Use Cases for India

Generation Transmission & Distribution Consumer

ü Ramping Support ü Transmission Deferral ü Transmission Congestion Relief ü Back-up Power

1.2 Role of energy storage in India’s electricity value chain

Table 3 Grid Level energy storage (NREL)

Services Applications and duration Storage technologies

Power Quality Transient Stability, Frequency Regulation Flywheels, Capacitors, Li-ion

Projected installed capacity and generation profiles

Table 4 Power Capacity Projections (NEP, 2018)

Fuel Type Capacity in MW Capacity in MW

Hydro 44,963 51,301

Yearly Load, Net Load vs Wind+Solar, 2022

Load Wind + Solar Net Load

Figure 5 Typical Solar Generation profile in Southern Region9

Plant 1 Plant 2 Plant 3 Total Solar

PLF of the thermal generators (%) RE Installed Capacity (MW)

Figure 7 Coal Plant vs Energy Storage ramping capability

Technical Minimum Rated Power

Generation sector Market scenario, Market scenario, Cumulative market scenario,

Solar integration Nil 100 220

Figure 8 Power Evacuation Southern Region 201818

Solar Generation Wind Generation Wind+Solar

Figure 9 Power Evacuation Southern Region 202219

Solar Generation Wind Generation Wind+Solar

1.2.3 Role of energy storage for ancillary services

Table 6 Summary of Technology Suitability for Ancillary Services23

Ancillary services Storage technologies Alternatives

Sector Market scenario, Market scenario, Cumulative market scenario,

Ancillary services 2 100 230

1.2.4 Role of Energy Storage at the Consumer End

Avg. Outage hours (Hrs) Avg. No of interruptions

119 129 Jharkhand

65 119 Uttar Pradesh

Avg. Outage hours (Hrs) Avg. No of interruptions

1.2.4.1 Role of Energy Storage at the Consumer End