India Needs 100 GW Storage To Avoid Energy Shortages: Report

In a report that goes against the actions of the Indian government (more thermal, faster deployment of PSP), Berkeley has made a case for solar and battery storage to solve the country’s power demand issue. Solar plus storage can not only help to avoid power shortages in India but also help to prevent a solar energy shortage in the overall energy mix, says the report from Berkeley

The technical report on “Rapid Deployment Of Solar And Storage Is the Main Option for Avoiding Power Shortages in India” identified rapid electricity demand growth as the main cause of power shortages. It acknowledges India’s  main power shortage during the evening hours, for which energy storage can help to avoid. The study identified large-scale solar plus storage deployment as the main option left to avoid power shortages, as they can be deployed much faster than new thermal and hydro assets.

By 2027, Berkeley believes that in India, 100-120 GW of new solar, out of which 50-100 GW can be co-located with 16-30 GW x 4-6 hours of storage. This could help to avoid shortages. The report identified solar plus storage to be highly economical due to the recent gigawatt-scale solar plus storage auction results. These results have recorded a low price of Rs 3.4/kWh, a price at which such deployment is highly economical for discoms as well. It suggested the use of fiscal incentives combined with mandates to scale storage deployment and ensure security and reliability.

It perceived a significant renewable energy (RE) and storage expansion in the long run to meet India’s electricity demand, which is expected to quadruple by 2047. Thereby, low-cost RE and storage can help to reduce consumer bills and sustainably power the rapid economic growth. The study projected significant evening power shortages by 2027 (20-40 GW). It identified the reason for the surge in power shortage India’s electricity demand grew by 7% in 2023, compared to a global average of 2.2%. It was because, between May 2019 and May 2024, India’s peak electricity demand increased by a staggering 68 GW, from 182 GW to 250 GW, representing an annual growth rate of 6.5% and it grew dramatically, during the post-COVID period and increased even more since then. 

Berkeley projects energy storage capacity to reach 60-70GW (250 GWh) by 2030 and 500GW (2500 GWh) by 2050. Storage deployment combined with solar can avoid shortages. Simulated grid dispatch results for a range of demand and supply scenarios in 2027 for the week of May 17, 2027. 

Discussing the impact of storage during evening peak, the report identified that even if 100 GW of new RE is added, evening peak shortages will still occur by 2027. Therefore, the study indicated an increase in new solar energy use to reach 50 GW, co-located with 16 GW/62 GWh of storage (~20% of daily solar gen), to avoid shortages. It further anticipates shortages to start in 2025 in case the new firm capacity commissioning gets delayed, to reach 25-30 GW by 2027.

Moreover, the study indicates a potential shortage in demand from 2025 in case of a delay in firm addition capacity. It identified solar plus storage, especially after the battery storage auctions received an overwhelmingly positive response. Multiple major developers, including JSW Neo, NTPC Renewables, Renew Power, etc., bidding aggressively, and in each auction, there have been at least 5-6 developers that bid within 5% of the winning bid, indicating the winning bids are not outliers.

In this SECI is reported to play an important role in bringing more solar plus storage projects. So far, SECI has reportedly conducted 1200 MW solar + co-located 600 MW/1200 MWh battery storage auctions in July 2024. It identified the winning bid at Rs. 3.41/kWh, which indicates a dramatic reduction in battery storage cost.

 

Based on the assumption that solar LCOE is at Rs. 2.6/kWh, this implies an evening peak storage adder of Rs. 0.81/kWh, which means a battery storage capital cost of Rs. 150/kWh. This means that it can potentially, with 4-hr batteries, the storage adder drops further (Assumptions: storage availability = 95%, round trip efficiency = 90%, and annual).