Based on the comprehensive insights provided by CareEdge Ratings, the Indian energy storage sector is on the cusp of a significant transformation, driven by the government’s revised Renewable Purchase Obligation (RPO) and Energy Storage Obligation (ESO) norms. These regulations are set to catalyze the expansion of energy storage systems (ESS), with a projected requirement of 12 GW capacity in FY24, escalating to an ambitious 70 GW by FY30. This growth trajectory is aligned with India’s strategic goal to bolster its renewable energy (RE) portfolio, aiming for a cumulative non-fossil fuel-based capacity installation of 500 GW by the end of the decade.
The report by CareEdge Ratings highlights the pivotal role of Pumped Storage Projects (PSP) and Battery Energy Storage Systems (BESS) in this renewable energy revolution. With an estimated Rs. 14 lakh crore in incremental debt financing needed for reaching a 425 GW installed RE capacity, alongside the development of 19 GW of PSP capacity and 42 GW of BESS capacity by 2030, the financial implications are substantial. The analysis underscores the competitive levelized cost of storage from PSP at Rs. 4.81 per unit compared to Rs. 11.64 per unit from BESS, showcasing the economic viability of PSP for long-duration energy storage.
In terms of technology, PSP is identified as a more cost-effective solution for round-the-clock RE supply, with a landed cost of approximately Rs. 4.74 per unit versus Rs. 6.59 per unit from BESS. However, the report acknowledges the necessity for significant technological advancements, economies of scale, and financial stimuli to enhance the viability of BESS, which offers advantages in terms of deployment flexibility and lower land requirements.
The government’s proactive policy measures, including the RPO and ESO targets, are instrumental in driving the adoption of renewable energy and integrating storage solutions into the energy mix. CareEdge Ratings points out that these targets, coupled with supportive policies like simplification of project approvals, viability gap funding (VGF) for BESS, and incentives for PSP development, are crucial for the sector’s growth.
Moreover, the analysis provides a forward-looking perspective on the RE and energy storage sector’s evolution. With RE’s contribution to the overall energy generation expected to exceed 35% by 2030, the strategic emphasis is on balancing the grid’s stability with the intermittent nature of renewable sources through effective storage solutions. The report also notes the increasing share of ESS tenders, indicating a rising market demand for storage capabilities.
In conclusion, CareEdge Ratings’ in-depth report offers a nuanced understanding of India’s energy storage market dynamics, highlighting the interplay between technology, policy, and finance in achieving the nation’s renewable energy objectives. The insights underscore the necessity for a multifaceted approach, encompassing technological innovation, supportive regulatory frameworks, and substantial financial investments, to realize the potential of energy storage as a linchpin in India’s green energy transition.