India’s plans to start renewable energy projects could provide gateway for Tesla Energy

Since PM Narendra Modi’s visit to Tesla Motors Inc (NASDAQ:TSLA) Fremont factory last year, there have been speculations regarding the company opening a new assembly plant in India. While that matter still remains a mystery, the recent initiative by the Indian government shows that it is establishing a new market and opening doors for the likes of Tesla, Panasonic Corporation, and Samsung SDI Co.

Bloomberg reported that India is considering adding storage batteries as a requirement for a solar project, which will be tendered later this month. Solar Energy Corp. of India (SECI), which implements the state’s green objective, will invite bidders to add a storage device in 100 megawatts (MW) of the 750 MW of solar capacity tendered in Andhra Pradesh.

SECI is also considering constructing a pilot hybrid project of 5 KW of solar and 2 MW of solar capacity with 1 MW storage battery in Lahaul Spiti, Himachal Pradesh.

The government aims to decrease power supply fluctuation through the pilot program to possibility transfer renewable energy between provinces. Mr. Modi expects to achieve 175 GW of renewable power by 2020 and the latest project consists of 15 minutes of storage capacity in each of the two solar systems.

Warehousing energy is seen as an important component of the country’s green objectives. If adopted more broadly, the requirement has the possibility to create the storage industry, due to India’s massive plans. This would allow manufacturers to obtain economies of scales on battery storage.

Global battery producers have identified India to be a huge market. Even, Tesla stated in its 3QFY15 Shareholder Letter that “There is also an exciting market opportunity for us in India with strong government alignment that we look forward to growing in 2016.”

Tesla’s Gigafactory partner, Panasonic, is also developing products for the Indian market. Bloomberg New Energy Finance (BNEF) estimates show that energy storage capacity would reach roughly 11.3 GW by 2020, representing less than 1% of existing installed capacity.

While the Modi administration seeks to join Japan, Korea, and US in the renewable energy race, it is also cautious due to high storage cost, which would make projects unfeasible.

Tesla has already started making household batteries, the Powerwall, and the commercial batteries, Powerpack at the Gigafactory. The first cell production at the $5 billion facility is expected at the end of this year. Thus, it would not be surprising if CEO Elon Musk finds new business partners in India in 2016.

(This news story is from The Country Caller)