Instruments to Accelerate the Advent of Energy Storage in India

With all the buzz going around energy storage these days, very often than not it is claimed to be the holy grail of renewable energy. Owing to the intermittency and unpredictability in solar and wind generation, high degree of flexibility in Loads and Sources is needed by the electricity grid for absorbing renewable energy beyond a critical proportion in the energy mix.

Battery Energy Storage System (BESS) serves both the purposes – flexible load as well as flexible source.

This dual flexibility not only can be used at grid generation level applications like in transmission & distribution network operations, but also in multiple end-user level applications like for Commercial & Industrial (C&I) clients.

This dual nature of both load & source enables BESS to provide multiple services to C&I users like Peak Load management to reduce the Contract Demand charges, Energy time shift to utilize the benefit of time-of-day tariff structure or to install higher capacity of Solar PV, Diesel abatement for higher reliability at reduced expenses etc.

However, mass uptake of any technological solution beyond the demonstration level happens when it brings in commercial advantage either versus an incumbent technology or versus an opportunity lost.

This can be seen in the case of advanced energy storage systems, where the uptake has been growing steadily year-on-year with a major chunk limited to geographies like USA, Australia & Europe driven by suitable grid tariff levels & structures, relatively clearer regulatory policies and fiscal incentives by government which enhances the commercial value proposition of BESS.

In the Indian landscape, although BESS has strong commercial value proposition under certain scenarios, lack of suitable regulatory policies or fiscal incentives for BESS added with significantly high upfront capital costs diminishes the adoption by prospective users.

It is at this point where Opex / BOOT (Build, Own, Operate & Transfer) model will play a significant role in the early adoption of this technology.

However, BOOT model of BESS comes in with its own set of challenges. Unlike solar PV projects where the evaluation metrics are straight forward with commercial metric being solar PV tariff pegged against grid tariff, and performance metric being electricity units generated which off-set the grid units; BESS project metrics are complex owing to its innovative and versatile features/ use cases.

In addition, due the multitude of applications served with the same BESS asset, structuring the legal contract for BOOT model requires due amount of consideration to bring it to a saleable and scalable point.

Hence, building the right Opex/ BOOT Model for BESS with due weightage given to technical, financial & legal structuring will be the foundation for mass scale deployments of BESS solutions in India & abroad. At this stage and time, Amplus having done early Opex/BOOT projects in BESS, is a step ahead in understanding and framing the Model to place the bits in place and scale up the Opex/ BOOT offering as the infliction point in BESS cost is reached in near future.