IESA released report on “Energy Storage Technologies for Ancillary Services in India” at ESI 2014

Mr. Tarun Kapoor, Joint Secretary Ministry of New and Renewable Energy, Mr. Sushil Kumar Soonee, CEO, POSOCO, Dr. Pramod Deo, Ex-Chairman, CERC and Mr. Ruud Kempener from International Renewable Energy Agency (IRENA) released a report prepared by IESA and Shakti Foundation titled ‘Role of Energy Storage Technologies in Providing Ancillary Services, Improving Power Quality and Reliability of the Indian Grid’. Dr. Walawalkar optimistically stated that the next decade can be the decade of transformation of the power sector in India, and energy storage will play a key role in this journey of revolution.

Executive Summary

Managing variability of electricity load has been a nightmare for the grid operators in India, especially as over 59% of power generation capacity is met by coal thermal plants which do not have the capability to respond quickly to fluctuations in the power demand and supply. Apart from this, to make things worse for system operators in the country, rise in the wind power and other renewable energy supply, which consist of over 12% of the generation mix in India, has led to uncontrolled variability on the generation side. Such a scenario has led to questions on India’s preparedness to maintain grid stability, especially after the grid failure in 2012.

In the structured power markets, like those in the US, ancillary services include the amenities that support the provision of energy to support power system reliability and security. The ancillary services markets are tied with the design of the energy market which needs careful consideration of the power system economics. This report reviews the ancillary service markets in the US, the various technologies and the pricing mechanisms which these markets are following. As understood from the US market, energy storage technologies have better capabilities to cater to ancillary services like frequency regulation, load following, voltage support, reactive power supply, black start and others than the thermal, gas and renewable energy power plants. ESS (Energy Storage System) can provide ancillary services with much better response time.

Although most of these technologies are technically viable for utility-scale systems, some are believed to have more potential than others for providing ancillary services as demonstrated by examples of various operational projects in this report. Last 3-4 years have witnessed rapid reduction in prices in energy storage technologies due to the increasing commercialization and manufacturing scale up. India could accelerate this trend by providing a huge market for such technologies. Currently most of the international technology developers are exploring local manufacturing or localization of these technologies. Introduction of ancillary service requirements in a technology neutral manner will accelerate such localization efforts and will help in bringing down the costs further. However, working of levelized cost of ancillary services may indicate that some of the technologies may require additional financial support during initial deployment phase for 2-3 years.

Indian grid regulations have tried to address some of the technical characteristics of ancillary services through existing mechanisms such as Unscheduled Interchange (UI) mechanism and power factor incentives. These mechanisms have served their purpose by improving the grid conditions as compared to prevalent issues but need to get augmented / replaced by systematic introduction of ancillary services in the coming years.
CERC (Central Electricity Regulatory Commission) and NLDC (National Load Dispatch Centre) are considering on introducing ancillary services. Regulatory body should consider clear technology neutral specification for identification of various ancillary services and quantify the magnitude at regional / national level. Some of the ancillary services will need to be procured on state / regional basis considering the transmission infrastructure availability as well as nature of ancillary services.

Regulations should have a clear roadmap for deployment of ancillary services under various scenarios, which can provide clear investment signals for potential project developers and technology developers. There is a need for proper enforcement for procurement of ancillary services. Failure of enforcing ancillary service procurement and payment mechanism could create significant hurdles in meeting the goals.

Initially, some demonstration projects may be set up under the ownership of transmission companies and operated by State/Regional Load Dispatch Centers as these agencies may operate such assets in an unbiased way and may keep grid security as only priority. Simultaneously, market rules may be created for introduction of such services through exchanges. Powergrid Corporation of India ltd. (PGCIL) has already announced a tender for 3 demonstration projects at Puducherry for demonstration of LI-Ion, Advanced Lead Acid as well as other advanced batteries for frequency regulation. Indian regulators and policy makers could utilize learning from such demonstration projects for framing the ancillary service requirements.

Rapid advances in both conventional and emerging technologies will make it possible for India to significantly improve the power quality and reliability. Such transformation could be achieved by 2020 as most of the technologies required are already commercially available and sufficient insights are available for introduction of ancillary services based on experiences of developed countries from around the world. As estimated by Customized Energy Solutions and Indian Energy Storage Alliance, the ancillary service market in India has a potential of almost 5 GW through 2020 and ESS technologies can supply over 1 GW of this market.

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