India to add 6-GW renewable energy storage by FY28: CRISIL

• Published 4 months ago
• By SuperAdmin

It added that such an increase is crucial to sustainably absorb the rising share of RE in the country’s overall power generation mix

Mumbai: India’s renewable energy (RE) storage capacity is expected to surge 6 GW by FY28 from less than 1 GW operational as of March 2024, driven by a robust pipeline of projects under implementation and expected healthy pace of auctions, according to research agency CRISIL.

It added that such an increase is crucial to sustainably absorb the rising share of RE in the country’s overall power generation mix.

“Despite slow progress on project implementation, the government’s push to develop RE power and tariffs for round-the-clock renewable energy, discovered in the past two fiscals, being comparable with other sources of round the clock power — improves confidence around adoption,” it said.

According to the research agency, storage is becoming crucial with the rising share of RE — both solar and wind — in the overall power generation mix.

“This is because RE generation by nature is concentrated, happening at specific times in a day. For instance, solar generation happens largely during daytime. Such a generation profile does not match with demand that typically peaks in the morning and evening,” it said.

Hence, to manage absorption of such a profile of generation, surplus generation must be stored and discharged at the time of requirement to keep the grid balanced.

To address this issue, the government is working on developing the infrastructure needed through standalone storage systems and storage-linked projects that combine RE generation with storage.

The auctions of such projects have been ramped up. About 3 GW of standalone storage and ~10 GW of storage-linked projects with about 2 GW of storage were auctioned in the past two fiscal years, resulting in a healthy pipeline of about 6 GW of storage as of May 2024.

Development of at least this much storage capacity would be required to sustainably increase the proportion of RE power to 20 per cent to22 per cent in the overall power generation, as per government estimates.

“However, progress on implementation has been tardy. Slow adoption by state discoms has been a key deterrent to implementation — 60 per cent to 65 per cent of such projects had not got their power purchase agreements executed until May 2024,” said Manish Gupta, senior director, CRISIL Ratings.

A major reason for the low traction is higher tariff on these projects compared with other RE bids because of additional cost of storage.

Going forward, it is expected that the government push to promote RE power and comparable tariffs of storage projects with other sources of round-the-clock power will provide a fillip to adoption.

“Though tariffs of projects with storage are above the typical renewable bids, they are comparable with that of other round-the-clock sources, including tariffs discovered through medium-term power purchase agreements of coal thermal plants. This further provides confidence on increase in traction of signing of PPAs,” said Ankit Hakhu, director, CRISIL Ratings.

That said, 6 GW projection remains sensitive to project cost estimates and timely implementation. More than anticipated rise in cost or unavailability of key raw materials can impact viability since tariffs are fixed and do not provide a pass-through.