BTM Storage is Closer Than You Think In India, Says Report

Integrating large amounts of behind-the-meter (BtM) battery storage and consuming their own energy will be possible for non-residential consumers by 2025, enabling a distributed energy future, says a new report Auroville Consulting.

The report findings are based on the levelized cost analysis of solar-plus-energy storage systems for consumers in Tamil Nadu.

The status report titled “2021 Levelised Cost Of Behind-the-Meter Storage in India” aims to present a snapshot of the current and projected costs of energy storage in India for BtM applications. The levelised cost of storage is an important financial parameter indicating the feasibility of energy storage systems.

The report shows that energy storage will become a financially lucrative option for most residential and commercial consumer categories in the country, resulting from expected dip in battery prices in the upcoming years. While commercial consumers can consider solar-plus-energy storage as early as 2023 for electricity bill reduction, for high-tariff paying residential consumers, the system will reach grid parity post-2027. These dates effectively bring forward the affordable storage scenario by 2-3 years, since viable storage at scale was earlier considered possible only by 2025 or beyond, and at residential level, even later by 2030.

The study focuses on two applications of stationary energy storage: electricity bill management and power backup. Electricity bill management involves the application of solar PV and battery energy storage system (BESS); power backup involves a standalone BESS. These two applications mainly utilise three energy storage technologies: lithium-ion (Li-ion), lead-acid and advanced lead-acid BESS.

Power backup with standalone Li-ion and advanced lead-acid BESS is currently very expensive. However, consumers are willing to pay the premium in some states for a reliable power supply. Standalone BESS is expected to become cost competitive compared to diesel generators around the middle of this decade.

As of today, the levelised cost of solar plus energy storage hasn’t reached grid parity in any of the user cases, considering the battery is sized so that at least 30% of solar energy flows through it. Hence, it is not a financially attractive option yet for electricity bill reduction.

However, the report argues, though energy storage is currently not viable in a lot of cases for BtM application, this is expected to change very fast. Integrating large amounts of BtM battery storage will be possible for non-residential consumers by the middle of this decade, i.e., 2025.

For residential consumers, energy storage will become feasible towards the end of this decade. For high paying residential consumers, sizing battery to store 30% of the generated solar energy reaches grid parity post 2027.

With solar plus energy storage becoming an increasingly attractive investment option for the high tariff paying consumer categories, the ‘death spiral’ threat to utility (where its highest paying consumers move to solar energy) will worsen further as these consumers are expected to increasingly adopt solar plus energy storage to meet their energy demand. The utilities need to transition from their traditional roles to that of distribution system operators.

The report notes that throughout the analysis period up to 2030, advanced lead-acid continues to compete with Li-ion technology and is comparable in cost. Notwithstanding lesser space requirement and weight of Li-ion BESS, both technologies will remain in play in future for BtM application for electricity bill management, the Auroville study concludes.

All this, before even considering the impact of smart meters and the time of day metering they will enable. As smart meter penetration grows, ad time of day metering spreads out to balance grid  demand and supply, we are already seeing scenarios of using electric vehicles, especially cars and above, as storage devices that could ‘sell’ power back to the grid during peak hours, after charging up in off peak hours at lower costs. That might be a distant scenario in India for now, but never doubt the ingenuity of Indian consumers , as the market evolves to variable pricing.