28th July, 2022

Today, we are in the midst of a fundamental transition in the power sector from fossil-fuel based energy generation to renewable energy generation. However, since renewable energy (RE) is intermittent and not always dispatchable on-demand, it presents some unique challenges. Fundamentally, as the proportion of RE in the energy mix increases, it needs to be augmented with some form of energy storage to match supply with demand in real time and ensure stability and reliability of the electricity grid.

With rapidly reducing cost projections for both RE as well as various energy storage technologies, a greener grid with a higher proportion of RE and reduced fossil-fuel based thermal generation can be envisaged.

The Central Electricity Authority (CEA)’s report on the optimal (least cost) generation capacity mix for India in 2030, highlights this trend as well.

India’s installed power capacity (28% RE, 59% thermal, 13% other) and energy (12% RE, 75% thermal, 13% other) mix today are firmly tilted towards thermal power with a smaller, but growing percentage coming from RE.

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The CEA estimates that by 2030, considering several factors such as cost of technologies, availability of fuel sources and projection of demand, the least cost energy mix for India would look something like this-

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For India’s projected demand in 2030, this represents over 280GW of solar installation and 140GW of wind installation. To enable this increase in RE, India requires over 108GWh of energy storage, predominantly in the form of battery energy storage.

Sensitivity analysis on electricity demand forecasting as well as battery technology cost forecasting suggests an optimal energy storage installed base in the range of 60-110GWh by 2030.

As these numbers suggest, with over INR 100,000 Cr expected to be invested in energy storage, the coming decade signals the transition of energy storage technology from a promise to a necessity to help reduce our carbon emissions.  

Even beyond 2030, with newer and more cost-effective storage and RE technologies coming through, we expect the march towards a fully decarbonized grid to continue at breakneck speed.