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In a bid to accelerate the goal of achieving energy transition from fossil fuel sources to non-fossil fuel based sources and ensuring energy security, the Ministry of Power (MoP) in August 2023, as notified in September, 2023, unveiled a comprehensive National Framework for Promoting Energy Storage Systems (Framework) in India. The variability associated with renewable energy (RE) sources creates a need for flexibility solution such as Energy Storage Systems (ESS). Key details of the framework have been set out below:
Objectives of the Framework:
Estimation of Storage Requirements:
The Framework provides the estimate of storage requirements for the years 2026-2027, 2029-2030, and 2031-2032. The CEA predicts that the energy storage requirement would reach 320 GW (90 GW Pumped Storage Projects (PSPs) and 230 GW Battery Energy Storage Systems (BESS)) with a capacity of 2,380 GWh (540 GWh from PSPs and 1,840 GWh from BESS) by 2047.
In order to develop the storage capacity during 2022-27, approximately Rs. 54,203 crores would be required for PSPs and Rs. 56,647 crores for BESS. Additionally, for the period 2027-2032, approximately Rs. 75,240 crores would be required for PSPs and Rs. 2,92,637 crores for BESS.
Applications and Use Cases of ESS in Power Sector:
ESS can be integrated at various levels of power sector, (i.e., generation, transmission, distribution) and therefore find use in applications such as storage with generation, transmission, distribution, standalone ESS, lease and sale of ESS and storage for ancillary services.
Existing Policy Framework for ESS Promotion:
The MoP has already notified the following policies and regulations to promote the development of ESS in the country:
The policies enumerated above collectively aim to promote the development and utilization of ESS in India’s energy landscape. However, more steps are required to taken at the policy and regulatory level to develop an enabling ecosystem for ESS. The Framework provides that the following measures are under consideration:
Power purchase guidelines would be framed to encourage the use of ESS to meet demand and reliability requirements. ESS may also be considered as an alternative by the appropriate commission when approving CAPEX requirements for any new transmission and/or distribution system.
Appropriate commission would specify Time of Day Tariffs for commercial and industrial consumer category and other categories in accordance with the Electricity (Rights of Consumers) Amendment Rules, 2023.
Other measures to incentivize consumers and utilities to use ESS includes:
Promoting Indigenous Manufacturing
The government may introduce Product Linked Incentive scheme for BESS to be used in the power sector, to promote indigenous manufacturing.
Quality and Standards
To ensure quality, the government may issue an approved list of models and manufactures (ALMM) for BESS. Further, specifications, standards, and test methods including fire safety would be prepared by appropriate agency to manage safety when ESS is in use. Test labs for safety and performance testing may be set up to demonstrate commercial readiness of ESS. Further, CEA safety standards and CEA (Technical Standards for Connectivity to the Grid) Regulations may be suitably updated to cover ESS and other technologies like electrolysis for green hydrogen.
Research and Development (R&D)
The government plans to encourage investment in R&D of ESS technologies such as liquid metal, Ni-Fe, green hydrogen storage etc. Such investments would lead to enhancement in efficiency and longevity of these technologies and make them cost effective and viable for commercial use.
The government may establish a nodal agency which would coordinate the R&D efforts in the field and provide funding for the same. A national portal may also be created to facilitate knowledge sharing and avoid duplication of R&D efforts.
The government plans to undertake technology demonstration projects/ Pilots for emerging storage technologies like novel Advanced Chemistry Cells, Compressed Air Energy Storage, Flywheel etc. The central government may also provide financial assistance from power system development fund or any other fund to utmost two Pilot ESS Projects with a maximum capacity of 20MW, for both LDES and SDES applications, to a maximum cumulative capacity of 80MW.
Recycling and Sustainability
In order to ensure that all ESS projects comply with the principles of 3Rs (i.e., Reduce, Reuse and Recycle), the end-of-life management plans may be included in the bidding documents of all ESS projects. Manufactures may design systems with end-of-life management approach and promote reuse and recycling of ESS components. The framework proposes to use exhausted and exploited mines as repurposed hydro storage facilities, that serve as natural facilitators for PSP developments. A standard operating procedure may also be developed to encourage recycling efforts. Further, all environmental concerns may be addressed and monitored to ensure compliance.
Monitoring and Evaluation
The framework for ESS may be revised periodically based on feedback from the stakeholders, technological advancement, or based on maturity in the operating system. The concessions and incentives may be provided for a limited period of time and may be reviewed regularly as the ESS supply chain matures. In the long term, the goal is to make ESS deployment self-incentivized.
This framework aims to accelerate the development and adoption of ESS in India, while ensuring sustainability, quality, and regulatory support. Investment would be promoted by offering stakeholder-friendly schemes, exemptions, or incentives as considered suitable.
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