PV+ Energy Storage: Drives in Indian electricity system
Battery plus energy storage is a crucial aspect of the Indian electricity system as the country moves towards a cleaner and more reliable power supply. There are several potential use cases and value streams for storage in India, which can vary depending on local market conditions for each Indian state or DISCOM service territory. Here are five drivers that may steer a state or DISCOM towards emphasizing particular value streams and use cases for behind-the-meter storage.
- Regular reliability issues and/or unmanaged peak demand
Some Indian states and cities regularly struggle to meet demand due to low reserve margins, transmission congestion issues, quickly growing peak demand, among other issues. Storage can be an attractive option for consideration under these circumstances. Retail electricity customers may be more likely to deploy behind-the-meter storage when they are otherwise faced with regular outages. Utilities may wish to enroll these demand-side storage resources to manage peak demand and build utility-scale storage facilities to help time-shift demand and provide a range of important ancillary services.
- Regular power quality issues
India currently suffers from persistent power quality issues that inhibit the functioning and competitiveness of the Indian economy as well as negatively impact consumer experience. Promoting distribution-connected or customer-sited storage could be an effective use case for addressing localized power quality issues on distribution networks caused by regular grid operation or higher localized penetrations of rooftop solar. Regulators overseeing service territories with power quality issues may consider allowing DISCOMs to rate base storage assets and/or re-designing tariffs to incentivize retail customers to deploy storage. Furthermore, specific customers may already be more likely to employ behind-the-meter storage to ensure both reliable power as well as high-quality power, especially in electronics manufacturing or in data centers where power quality issues can significantly impair end-products or services.
- Distribution network congestion
In some cases, particularly in areas experiencing demand growth, peak demand within a particular segment of the distribution system may exceed the physical limitations of the equipment needed to provide power, such as transformers or lines. During these peak demand periods, the DISCOM may be unable to fully satisfy demand or may need to dispatch generators out of merit order to fully meet demand, operating the power system in an economically sub-optimal way which leads to higher power prices. During off-peak hours, however, portions of the power system may be over-sized relative to demand, leading to lower utilization rates. In order to delay or offset the need to upgrade the distribution system, utilities might choose to invest in storage systems or incentivize the adoption of customer-sited storage systems within a congested area. These systems can charge during periods of lower demand and meet demand during peak hours locally, helping DISCOMs supply customers in all hours or ensure that generators continue to be dispatched in merit order, even during peak periods. Also, unlike traditional transmission or distribution investments, mobile storage systems could be relocated to new areas when no longer needed in the original location, increasing their overall value to the DISCOM.
- Support for DPV integration on high penetration feeders
The presence of DPV systems on distribution feeders can, under some circumstances, exacerbate distribution-level issues, such as DPV systems on the ends of long feeders leading to higher voltages ‘upstream’. Although these issues typically do not manifest until very high local DPV penetrations, and can often be resolved using improved interconnection standards and inverter requirements, storage systems can also be used to manage the exports from DPV systems to minimize their negative impact on the grid. For instance, storage systems could help reduce the presence of coincident exports on a feeder with high levels of DPV penetration, such that not all systems would export power at the same time and cause reverse power flow. Storage could also be directly interconnected to the distribution network to address periods of oversupply of DPV.
- Financially unhealthy DISCOMs:
Many DISCOMs in India are facing financial challenges and are struggling to maintain their financial and operational sustainability. According to reports, as of November 2019, the total outstanding payments of DISCOMs to generation companies were Rs. 729.4 billion (Ministry of Power 2020). This financial stress can lead to delays in payments to power generators, which could affect the reliability of the grid.
Investing in energy storage systems can help DISCOMs manage their financial stress by reducing the cost of peak power procurement and stabilizing the grid. Energy storage systems can be used to store excess power during off-peak hours and discharge it during peak hours, reducing the need for DISCOMs to purchase expensive power from the grid. This can help DISCOMs save money and improve their financial health.
Additionally, energy storage systems can help DISCOMs avoid costly grid upgrades by managing peak demand and providing ancillary services such as frequency regulation, voltage support, and reactive power control. This can help DISCOMs optimize their existing infrastructure and reduce their capital expenditure.
Moreover, the deployment of energy storage systems can help DISCOMs comply with renewable energy targets and reduce their carbon footprint. The integration of energy storage systems with renewable energy sources such as solar and wind can help smooth out the variability of these sources and make them more dispatchable and reliable.
Overall, energy storage systems can play a crucial role in helping financially stressed DISCOMs in India reduce costs, stabilize the grid, and comply with renewable energy targets.