Energizing the Future: How Government Policies Can Drive Battery Energy Storage in India

“Battery energy storage is a game-changer for India’s energy landscape, and coordinated government policies are key to unlocking its full potential. From knowledge sharing to funding and incentives, strategic measures can accelerate the deployment of energy storage technologies, powering a cleaner and more resilient energy future.”

Battery energy storage, a critical component of the transition to a sustainable and renewable energy future, has largely been ignored in India’s energy policy framework and planning. Despite its potential to address challenges such as intermittency of renewable energy sources, grid stability, and energy access, energy storage has not been explicitly included in key programs and initiatives of the Government of India (GOI). This lack of policy guidelines and supporting programs presents a significant barrier for investments in the energy storage sector in India.

India’s energy policy is primarily guided by the 2003 Electricity Act and the 2006 Integrated Energy Policy. However, energy storage is not explicitly mentioned in these policy documents or in the National Electricity Policy and Tariff Policy, which are revised from time to time in response to changing system needs. Organizations such as the India Energy Storage Alliance (IESA) have called for future amendments to include a clear policy framework regarding energy storage. Although recent amendments to the National Electricity Policy proposed earlier this year do not mention storage, they include an amendment targeting renewable energy, which may also include storage-friendly components. Proposed amendments to the Tariff Policy also include measures to promote pumped hydro storage only through regulated tariffs. However, more comprehensive and explicit inclusion of energy storage in these policy documents is needed to provide a clear market signal and regulatory direction for the deployment of energy storage technologies.

In the 2006 Integrated Energy Policy and its proposed revision in 2017, energy storage is mentioned several times as an opportunity to supplement the rapid growth in variable renewables and smooth load curves. The policy think tank, NITI Aayog, surmises that renewables paired with energy storage, once cost-competitive, will lead to the widespread phase-out of coal across India. NITI Aayog proposes that all renewable energy installations in the future could be required to be co-located with some form of balancing capacity, either gas-burning power plants or energy storage, to maintain a steady and reliable electricity supply. This proposal seems to be reflected in India’s recent round-the-clock power auction, which requires renewable energy projects to include energy storage or other balancing capacity.

To promote energy storage, Power Minister Singh has proposed introducing a renewable purchase obligation for round-the-clock power. Under this proposed scheme, increased demand for energy storage would drive investments in storage manufacturing facilities, leading to economies of scale and cost reduction, and accelerating the transition to renewable energy. The IESA has also proposed specific policy changes, including allowing energy storage to provide ancillary services and frequency regulation, and adding a storage purchase obligation similar to the existing Renewable Purchase Obligation and proposed Hydropower Purchase Obligation. These policy changes, if implemented, could help create a favorable environment for investments in energy storage in India.

Energy storage is also gaining attention in national planning activities. The Central Electricity Authority (CEA), responsible for producing India’s long-term plan for the power sector, has historically only considered pumped hydro storage as the sole energy storage technology in its National Electricity Plan. However, in the latest Report on Optimal Generation Capacity Mix for 2029-2030, the CEA has included 4-hour battery storage, along with pumped hydro storage, as candidate technologies. The analysis considers a variety of applications for energy storage, including providing ancillary services, load smoothing from renewables, and spinning reserves, which demonstrates an expansion on the singular application mentioned by NITI Aayog.

Despite these recent developments, India’s energy policy framework lacks clear targets for energy storage deployment. Programs and targets aimed at promoting renewable energy and round-the-clock power auctions, which are expected to rely on energy storage, do not have accompanying policies or programs to stimulate the necessary level of investments in energy storage. The National Mission on Transformative Mobility and Battery Storage, which aims to coordinate research activities on advanced batteries and establish battery

Battery energy storage in the grid can add operational flexibility and help meet the variable renewable energy requirements by 2030 in several ways:

1. Curtailment reduction: Battery energy storage can help reduce renewable energy curtailment, which occurs when renewable energy generation exceeds the grid’s capacity to absorb it. By storing excess renewable energy during periods of high generation and releasing it during periods of low generation, battery energy storage can help optimize the utilization of renewable energy, reducing curtailment and ensuring that more renewable energy is fed into the grid.
2. Grid stability and frequency regulation: Renewable energy generation, especially from variable sources such as solar and wind, can cause fluctuations in grid frequency and voltage, which can impact grid stability. Battery energy storage can provide rapid response capabilities to smooth out these fluctuations and help maintain grid stability. Batteries can also provide frequency regulation services, where they can quickly respond to changes in grid frequency by charging or discharging, helping to balance the supply and demand of electricity and maintain grid stability.
3. Ancillary services and grid management: Battery energy storage can participate in ancillary service markets, such as automatic generation control (AGC), which involves changing generators’ outputs based on commands from the grid operator to maintain grid frequency. Battery energy storage can provide fast response times, comparable to or faster than traditional generators, making them well-suited for AGC and other ancillary services. This can help enhance the overall flexibility of the grid and support the integration of variable renewable energy.
4. Flexibility for ramping and peak demand management: Battery energy storage can provide flexibility for managing ramping events, which are rapid changes in generation that can occur when renewable energy sources like solar and wind experience sudden changes in weather conditions. Batteries can quickly charge or discharge to smooth out these ramping events and help manage peak demand periods, ensuring a reliable and stable electricity supply.
5. Market-based mechanisms: Battery energy storage can participate in market-based mechanisms for providing flexibility services, such as the RRAS (Reactive Reserves and Regulation Up and Down Services) tertiary response service proposed by CERC (Central Electricity Regulatory Commission) in India. This can create opportunities for battery energy storage to compete in the market and provide flexibility services based on economic and technical merits, promoting operational flexibility and enhancing grid performance.

To address battery energy storage in government policies, the following measures could be considered:

1. Establish a central agency or forum for coordination: Currently, there are multiple initiatives and agencies involved in energy storage in India, but there is a need for greater coordination. A central agency or forum could be established to streamline efforts, disseminate information, and promote knowledge sharing among stakeholders. Examples of such agencies could be the Association of Renewable Energy Agencies of States (AREAS) or a dedicated energy storage research and development authority, similar to the New York State Energy Research and Development Authority (NYSERDA) in the United States.
2. Support organized knowledge sharing and delivery: Knowledge sharing platforms, databases, and standards taskforces could be established to promote organized knowledge sharing and delivery. These platforms could facilitate discussions, training, and forums for experts from across the power sector to exchange ideas and best practices related to energy storage technologies.
3. Provide research funding: Government funding for research and development of energy storage technologies could be continued or increased. Programs such as the Clean Energy Research Initiative could be further supported to advance research and innovation in energy storage.
4. Foster international partnerships: Collaborations with international partners, such as the Indo-US Joint Clean Energy Research and Development Center (IUSSTF) and similar initiatives, could be strengthened to leverage funding, expertise, and resources for energy storage research and development.
5. Promote energy storage pilots and incentives: The Ministry of Power (MoP) could continue to promote energy storage pilots and incentive programs through initiatives such as the joint Greening the Grid initiative with USAID and the World Bank’s Accelerating Battery Storage for Development program. Incentives, funding, and technical resources could be provided to encourage the installation and operation of energy storage facilities, and to support researchers and manufacturers in developing new energy storage technologies.
6. Connect technical experts with developers and contractors: One-on-one consultations and technical support could be provided to developers and contractors to help with project siting, sizing, and economics of energy storage projects. This could be facilitated through dedicated agencies or forums to ensure that technical expertise is readily available to support the deployment of energy storage technologies.

By implementing these measures, the government policies can address the challenges and promote the deployment of battery energy storage in the grid, thereby enhancing operational flexibility and meeting the requirements of variable renewable energy by 2030.

Overall, incorporating battery energy storage in the grid can increase operational flexibility, reduce renewable energy curtailment, improve grid stability, participate in ancillary service markets, manage ramping events, and provide flexibility for peak demand management. These benefits can help meet the variable renewable energy requirements by 2030 and support India’s energy strategy to promote operational flexibility in the grid.