Solar-Storage Can Avert India’s 40 GW Power Shortage By 2027: Berkeley

India is projected to face a power shortage of 20-40 GW in the evenings by 2027 due to the rapid increase in electricity demand, according to a report by Berkeley. However, this shortfall could become more manageable, considering the significant drop in the prices of gigawatt-scale solar and storage. Recent solar-plus-storage auction results recorded a low price of ₹3.4/kWh.

This power shortage is anticipated in the foreseeable future, even if all the thermal and hydro capacity currently under construction is completed as planned.

Key Reasons for Power Shortages in India

Berkeley attributes the primary cause of India’s power shortages to the rapid growth in electricity demand. In 2023 alone, electricity demand increased by 7%, compared to the global average of 2.2%.

The decline in solar and storage prices could help India meet its growing electricity needs. However, another key challenge is the daily drop in solar generation to nearly zero by 7 PM. Wind generation only begins to increase in late May or early June. To compensate, non-VRE (non-variable renewable energy) firm capacity would need to increase by 50-80 GW to avoid potential evening shortages.

To prevent these shortages, an additional 50 GW of new solar capacity, co-located with 16 GW/62 GWh of storage (approximately 20% of daily solar generation), would be necessary. This is supported by recent auction results, which indicate a growing interest in battery storage. Recent large-scale auctions have seen strong competitive bidding from major developers such as JSW Neo, NTPC Renewables, and Renew Power. In each auction, at least 5-6 developers bid within 5% of the winning bid, indicating that the winning bids are not outliers.

Cost Reduction in Battery Storage

The Solar Energy Corporation of India (SECI) conducted a 1200 MW solar auction, co-located with 600 MW/1200 MWh of battery storage, in July 2024. The winning bid was ₹3.41/kWh, reflecting a significant reduction in the cost of battery storage. Assuming a solar levelized cost of energy (LCOE) of ₹2.6/kWh, this implies an evening peak storage adder of ₹0.81/kWh. This, in turn, suggests a battery storage capital cost of $150/kWh (with the following assumptions: storage availability = 95%, round trip efficiency = 90%, and annual cycles = 365 cycles/year). With 4-hour batteries, the storage adder drops further.

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