The year 2018 made the way for 2019 packed with many positives and high expectations. 2019 was therefore expected to be a year of opportunities for energy storage, especially in terms of manufacturing, deployments, and R&D.
India alone had projections of 50 percent more RE installation during the year w.r.t. 2018, this meant that the percentage of renewables in the grid will increase and thus with an increase of grid variability the next big question would be energy security. Taking stock of this the Government of India initiated working on the Energy Storage Mission document which was expected to be released in 2019.
The government acknowledged the fact that for a sustainable transition and to actually realize the true potential of 300 GWh by 2025 (IESA estimate) there needs to be a focused approach to promote domestic manufacturing. Additionally, it would be crucial to create a conducive atmosphere through policy initiatives and strategic decisions. Measures like lowering of GST rates for batteries and components were welcome initial steps. The government also set the target of 25 percent vehicles as EVs by 2030, and several state governments have released draft policies for EVs detailing EV charging tariffs and other provisions. All in all the stage was set in 2018 for 2019 to be a year of action -- where projects were finally realized from the whiteboard to ground.
The highs and highs of 2019:
The year started off on a good note, beginning with Tata Power commissioning India’s first grid-scale energy storage project of 10 MW in Delhi. This generated a lot of interest among policymakers and private players alike.
On the e-mobility front, the Ministry of Heavy Industries announced the FAME II policy with a budget of 10,000 crores. The government also approved setting up of the National Mission of Transformative Mobility and Battery Storage and Phased Manufacturing Program.
To draw focus on manufacturing, Niti Aayog started working on the ambitious proposal for gigafactories with a projection that India will need around 50 GWh of domestic manufacturing capability by 2025. The final cabinet approval on battery manufacturing is expected very soon.
The annual budget brought another relief in terms of tax incentives on the purchase of EVs and reduction of GST rates on vehicles and chargers. Tax deductions were also announced on loans taken for the purchase of EVs. The Ministry of Power proposed a plan to develop EV infrastructure across 70 cities and 20 highways in the next five years. Moreover, MoP set standards for setting up of EV charging stations and proposed a to have EV charging stations every 9km radius in urban areas and one every 25kms on highways. Energy Efficiency Services Ltd as well as National Thermal Power Corporation Ltd are getting involved in setting up of charging infrastructure. Other entities getting involved include IESA member companies like Exicom and Fortum. Another big push biggest has come from the government in the form of e-buses. The GoI has approved 5000 e-buses under the FAME II program and almost 500 e-buses are already deployed in the country. This number is expected to increase significantly by 2020-21.
While Ministry of Heavy Vehicles itself approved 5,000 e-buses under FAME II and EESL tendered for 10,000 buses. The NEMMP also set a target for the deployment of 7 million hybrid and EVs in India by 2020. There were more than 26 storage tenders and 15 EV and charging infrastructure tenders which were announced by various bodies during the year. Apart from just batteries, MNRE also came up with a project proposal inviting companies to set up gravity storage plants in India. India has signed an MoU with Bolivia for the development and industrial use of Lithium. In November last year, Ather Energy signed an MoU with the Tamil Nadu state government to set up a lithium-ion battery manufacturing facility at Hosur. Last year, also saw several announcements made by industry leaders to set-up Li-ion battery manufacturing facilities in the country. Indian majors like the Mahindra Group, Tata Group, Adani and Exide has announced a partnership with global companies like LG Chem, Leclanché, Suzuki Motor Corp, Toshiba, and Denso in order to get the indigenous manufacturing of battery cells up and running in India.
2019 - A year of several hits and a few misses:
A lot has happened over a year but the question that begs our attention is, is it enough? While 2019 saw several positives there were a few misses. 2019 witnessed a decline in renewable installation. Several tenders were extended only to be canceled later due to under subscription. India has been missing its RE yearly targets. For 2016-17, the target was of 16,569 MW against which the only 11,319.75MW was achieved. While for 2017-18, against the grid-connected renewable energy was 14,445 MW, the ministry could achieve and 11,876.82 MW. Apart from AES, there were no other ESS projects commissioned during the year. Several storage tenders were later canceled like the SECI 2 * 1.5 MW solar plus storage tender in Leh and Siachen. DISCOMs are in a very bad shape with RE developers expecting payments of around INR 9,700 crores from DISCOMs. This has amounted to a loss of confidence in the RE sector. There have been inhibitions of PPA renegotiations by state governments, land acquisition issues, policy uncertainties which have resulted in RE bid prices to go up from 2.44 to 2.85/ kWh in the year. There have been multiple declarations about EV targets from the government which also have added to investors’ dilemma. Overall, we believe that a great opportunity that 2019 had to offer has not been fully capitalized. While countries like China, Japan, Norway steadily went ahead in the market race with steady and sustainable policies and India was faced with substantial roadblocks.
However, a major takeaway is that there is enough hope and the market holds enough potential. Even with business, as usual, IESA predicts that by 2025 there will be a market of 250 GWh in India; a major part of it comes from EV penetration but avenues like DG optimization, telecom, RE integration are also gaining ground. The stationary storage market is expected to grow at a CAGR of 6 percent till 2026, while the EV market is expected to grow at a rate of 36 percent. India is expected to attract investment in two-to-four Giga factories for advanced Li-ion batteries, attracting over $ 3 billion in investments in the next 3 years. Overall, even though there was more that could’ve been in 2019, there is a lot to celebrate about stepping ahead in 2020. Taking a leaf from the success and failings falling, the GoI is now taking an active interest in making energy greener and more sustainable. Let’s say, India’s energy storage journey has just begun!