India is setting up a first-of-its-kind standalone renewable battery power bank envisaging investment of Rs 2,000 crore to make green energy available on tap for discoms and grid operators during peak demand, but spike in prices of lithium — a key ingredient for making batteries — and supply chain disruptions due to the Russia-Ukraine conflict may weigh on industry response.
According to the tender floated earlier this week by SECI (formerly Solar Energy Corporation of India Ltd), the government entity implementing India’s solar and wind energy plans, the project will have storage capacity to supply 500MW for two hours, or 1,000MWh (mega watt hour). Discoms can hire storage capacity, which will be charged using renewable energy, and draw power to manage peak demand.
The power bank project is to be located in the vicinity of the Fatehgarh-III substation of the interstate transmission system in Rajasthan, the renewable energy ministry said on Saturday.
It will be set up on a build-own-operate basis, with the developer being responsible for securing connectivity and necessary permissions. Land will be provided by the central transmission utility on a right-to-use basis. The developer has to make storage capacity available for two operational cycles per day, or two complete charge-discharge cycles a day.
SECI will offtake 60% capacity for third-party leasing, while 30% will be earmarked by northern and national grid operators for their ancillary services.
But industry representatives said the project’s success will depend on viability gap funding from the Centre, especially since 500% increase in lithium prices has made batteries expensive and will push up the power tariff.
The ministry statement said the project is aimed at providing support for developing a market in the energy storage domain. Currently, India is considered a low-priority market by global battery makers, who are focusing on the US and Europe that are focused on storage-based renewable energy projects.
However, industry representatives said the timing may not be ideal because of the uncertain geopolitical situation in east Europe, which has effected global trade and jacked up commodity prices. The government has set a target of 4,000MWh of battery storage capacity as part of the plan to increase penetration of renewable energy in the national grid. A report by the Central Electricity Authority on optimal generation capacity mix envisages a battery storage capacity of 27,000MW, or 108,000MWh essentially four-hour storage — by 2029-30.