Energy storage can help India to integrate large-scale variable renewable technologies into its electricity grid, says a report.

The analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) highlights battery storage, green hydrogen and flexible coal-fired power generation as key sources in helping the South Asian nation to overcome the significant challenges to scale up on clean energy.

As the third-highest emitter in the world, the pressure is increasing on India to reduce emissions, with the country aiming to expand its renewable energy capacity from about 93 gigawatts (GW) currently to 175GW by 2022 and 450GW by 2030 – a target that could require a further $500bn worth of investment to reach.

“The transition to low-cost, variable renewable energy generation requires a flexible grid that can respond rapidly to changes in power demand dynamics,” says Kashish Shah, IEEFA research analyst and author of the report.

“Battery storage can provide a solution to help the grid manage massive amounts of intermittent wind and solar, provide dispatchable power during peak demand periods and other essential grid services. And battery cost deflation is now making utility-scale battery storage projects possible for India.”


Battery storage to play an “important role” in India achieving its 2030 renewable energy target

The International Energy Agency (IEA) in its India Energy Outlook 2021 last month highlighted that the nation has the potential to become a “world leader” in battery storage, predicting that it could add 140GW-200GW of battery capacity by 2040 – the largest of any country and more than 100 times as much as the amount installed in the US today.

Shah says battery storage will likely play an “important role” in India achieving its renewable energy capacity target for 2030.

The nation’s Central Electricity Authority (CEA) projects that solar and wind will form 51% of India’s total installed capacity, or 420GW, by 2030, with biomass and small hydro adding another 30GW, while the IEA’s report noted that the country could add 900GW of renewable capacity by 2040.

Solar power is now the cheapest source of new Indian electricity capacity, and with record low tariffs of 1.99 Indian rupees ($0.027) per kilowatt-hour (kWh), it is now below the marginal fuel cost of coal-fired power plants.

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India’s Central Electricity Authority projects that solar and wind will form 51% of India’s total installed capacity by 2030 (Credit:

But the IEEFA’s report notes that coal is likely to remain an important source of electricity generation in the country for “some time to come” and proposes that flexing its generation to cater to the majority of grid variability requirements should be an “important focus area”.

“Flexible generation is characterised by the ability to rapidly ramp up and ramp down the generation, quickly start up and shut down and operate efficiently at lower generation levels,” says Shah.

“Flexible coal-fired plants would require retrofitting, operational and regulatory amendments. This would incur capital costs as well as additional operational expenditure depending upon the size, age and combustion technology of the plant, but this could be rewarded with a higher time-of-day price.”


India must be prepared to “ride the energy storage wave when it arrives”

The report calls for policy support for a time-of-day pricing mechanism to incentivise capital investment in key grid-firming solutions to ensure flexible, reliable peak-time power supply.

In the battery storage space, Shah says domestic and international developers as well as utilities are “eyeing the very positive battery cost deflation trend” but need to see a market signal in the form of time-of-day pricing to “attract high initial capital investment into such assets”.

The IEEFA’s analysis also looks at the experiences of leaders in integrating large-scale renewables, such as Germany and the states of South Australia and California, US, in the context of the Indian electricity market.

“While the much-bigger Indian market benefits from its strongly connected national electricity grid, it has its own set of challenges and market structure dynamics in dealing with large-scale variable renewable energy,” says Shah.

“But there are interesting lessons for India as renewable energy-rich states such as Rajasthan, Gujarat, Maharashtra, Karnataka and Tamil Nadu could see their shares of renewable generation increase to 50% by 2030 from the current levels of 10%-30%.”

Though yet to be commercially deployed in India, he believes green hydrogen, produced through water electrolysis using renewable energy, has a wide range of potential applications in transport, industrial production of ammonia, methanol, steel and electricity storage – and is an opportunity that India “cannot afford to miss”.

According to recent analysis by New-Delhi based researcher The Energy and Resources Institute (TERI), the cost of alkaline electrolysers is projected to drop 56% from about R63m ($860,000) per megawatt (MW) today to about R28m ($380,000) per MW by 2030.

“Billions of dollars of capital commitments across the globe are building a critical mass in the green hydrogen space,” says Shah. “So, India will have the benefit of leveraging these learning-by-doing pilots that are underway in developed economies.

“India’s strategy should be to plan in advance and be prepared to ride the energy storage wave when it arrives.”