DNV, as we understand, feels that energy storage projects in the APAC region have become increasingly viable. What are the primary reasons to support this belief?
The APAC region is witnessing a significant increase in renewable energy project development due to the various technologies’ cost competitiveness, and government actions to clean up the power generation mix across countries. In the Energy Transition Outlook 2021, DNV forecasted that renewable energy generation in APAC is expected to triple between 2021 and 2030. Energy storage will be crucial in net-zero energy systems, especially in systems with shares of VRE (variable renewable energy). Another push for these recent growth rates is perceived to be rapidly integrating wind and solar into electricity grids and retiring fossil power plants.
The APAC region is already a key player in the global supply chain for batteries. Driven by steeply falling prices since a decade ago and technological progress that allows batteries to store ever-larger amounts of energy, grid-scale systems are seeing record growth. Countries like Australia, Mainland China (China), Japan, and South Korea have installed nearly half of the global energy storage capacity.
We have also seen various governments set up energy storage mandates for renewable energy projects in APAC region and beyond. However, there are still numerous regulatory, technology, and market design barriers to overcome in order to further scale-up deployment.
“Advanced technologies and robust grids are necessary to ensure reliable power system operation.”
In general, how do you assess viability of energy storage in India?
Given India’s clean energy ambitions and uptake in the roll-out of RTC (round-the-clock) tenders, Energy storage solutions are viewed as solutions to manage these requirements not only for project reliability but also for grid infrastructure utilisation during peak and off-peak hours alike.
However, the global supply crunch in the battery raw material supply chain has been shooting up lithium battery costs, making BESS largely unviable in the shorter term. However, with the incentives given to various battery technologies manufacturing in India, in the long run, BESS would be the best viable solution when compared to other prevalent energy storage technologies.
Besides this, transformative technologies – such as seasonal power storage – to manage a large‐scale surplus or deficit of VRE supply. By 2030, with RE providing around 25 per cent of India’s total power generation (and with some states even further along the curve), advanced technologies and robust grids are necessary to ensure reliable power system operation.
“The transition from conventional electricity generation can create significant operating challenges.”
What are the technical complexities in renewable energy-based battery energy storage systems? (as opposed to those where batteries are charged using conventional grid power)
Renewable energy’s rising share in the power mix has its challenges – the inherent intermittency nature of wind and solar, including potential imbalances in supply and demand, changes in transmission flow patterns, and the potential for greater system instability. This puts a lot of strain on existing power generation, transmission, and distribution infrastructure due to the non-dispatchable nature of RE. This also raised concerns for regulators and utilities about the impact of intermittency on grid operation and stability, and ESS deployment is being evaluated as a potential solution by optimizing the level of energy storage required for stable and reliable grid operation.
Applying mainly synchronous machines to inverter-dominated renewable generation, the transition from conventional electricity generation creates significant operating challenges.
These challenges are primarily associated with reduced synchronous inertia, system stability, and black start capability. Grid-forming converters will be a cornerstone for controlling future electricity systems dominated by VRE generation. These converters will address critical stability challenges, including the lack of system inertia, frequency and voltage regulation, and black-start services, while reducing or eliminating the need to operate conventional generation.
“Long-duration energy storage can significantly enhance the utilization of renewable energy sources.”
India has planned to have 27 GW of energy storage capacity translating to 108 GWh of electricity, assuming four-hour storage, by March 2030. What are the main challenges that you see in this endeavour?
Long-duration energy storage can significantly enhance the utilization of renewable energy sources and reduce the need for firm low-carbon generation. Energy storage enables electricity from variable renewables to be matched against evolving demands across both time and space, using short, medium and long-term storage of excess energy for delivery later or in different locations.
In open competitive markets like India, the concerned policy must provide subsidies or payment for capacity in BESS. Here, electricity markets are not competitive and implicit subsidies can be built into system costs. The BESS projects deployed in Indiaare invariably funded by low-cost capital from international development agencies that are aggressively promoting decarbonisation in India. It is unclear how this model will play out in the long run when BESS systems must be scaled up dramatically.
India has started its tendering process of setting up standalone RE-based energy storage systems. The idea is to set up these systems under a concession agreement? Do you have any views on this modality?
Developers in India have expressed various challenges in having concession agreements as the economic use and business case need to be scrutinized before bidding for standalone RE based ESS.
Is DNV associated with pure RE-based storage systems? Which countries are taking the lead as of now?
Yes, DNV has advised many developers and investors for pure RE based storage systems in the Philippines, Japan, Thailand, Netherlands, South Korea, Australia, US, UK, Canada, Hawaiian Islands etc. Currently, the United States and China are leading in energy storage installations globally.
Coming back to India’s tender for energy storage, given that the storage facility will be charged using (intermittent) renewable energy, what challenges do you foresee for the developer?
The project developers need to understand how to combine and compare multiple potential revenue opportunities, including energy markets, capacity markets, PPAs and off-taker obligations that include capacity degradation and commissioning considerations.
“The PLI Scheme has given enough push for self-reliance within India.”
How do you assess India’s self-reliance with respect to battery technology?
India announced in November 2020 a production‐linked incentive (PLI) scheme for the domestic production of high‐efficiency solar PV modules and advanced chemistry cell storage batteries. This has given enough push for self-reliance within India, without depending on imports like in previous years. Currently, the government also should look into skilling programs within the battery industry value chain to bridge the gaps within India.
Please summarize DNV’s role in helping India attain its energy-storage aspirations. What are DNV’s current engagements in India (with respect to energy storage projects)?
DNV’s purpose, ‘To safeguard life, property and the environment,’ is our reason for being as an organization. It is as relevant today as it has ever been. It directs our efforts to serve our customers and society, especially for energy storage and clean energy ambitions for various corporates in India.
In India, DNV has been engaged by RE developers for RTC techno-commercial assessments that includes sizing, due diligences (e.g. technology bankability reviews) on battery manufacturers.
