India's energy storage sector has experienced robust growth, with an annual increase of 6% to 8%. Projections suggest that by 2025, it could attain a 70 GW-hr installed capacity, mainly due to government initiatives such as the National Energy Storage Mission. While lithium-ion batteries have dominated with a 95% market share, there's growing interest in advanced technologies. These systems serve grid stability (50%), renewable integration (30%), and industrial/commercial sectors (20%), particularly focusing on rural electrification. Challenges like initial costs and regulations are being addressed through ongoing research and global collaborations. India boasted over 5 GW of installed energy storage capacity as of 2021, primed for substantial expansion given the increasing integration of renewable energy and the need for grid stability.
Benefits of BESS
Battery Energy Storage Systems (BESS) in India provide a multitude of advantages. They bolster grid stability and dependability by promptly addressing fluctuations, facilitate the integration of renewable energy sources, optimize energy expenses through intelligent charge and discharge processes, offer vital backup power during outages, align with environmental objectives by curbing emissions, and enhance grid infrastructure while generating revenue by participating in grid services markets. BESS stands out for its rapid response, extended lifespan, scalability, and efficiency, making it a versatile solution for India's ever-changing energy environment.
Market Insight
The Indian battery energy storage system (BESS) market presently stands at approximately USD 3.10 billion and is poised for substantial growth, with an anticipated value of about USD 5.27 billion over the next five years, driven by an impressive Compound Annual Growth Rate (CAGR) exceeding 11.20%. Key drivers of this expansion include the declining cost of lithium-ion batteries, government initiatives promoting energy storage, and advancements in battery technology. While regulatory uncertainties present challenges, India's ambitious target of achieving 500 GW of renewable energy capacity by 2030 will significantly boost the demand for energy storage solutions, with government policies expected to facilitate market expansion. Despite the remarkable growth in renewable energy, India's installed battery storage capacity remains relatively low, prompting initiatives to integrate energy storage into renewable projects. Notably, in October 2022, the US Department of Energy and India's Ministry of Power collaborated to establish an Energy Storage Task Force, aimed at accelerating the adoption of energy storage technologies in the shift towards clean energy sources.
Uses and Applications of BESS
Battery Energy Storage Systems (BESS) exhibit a wide range of versatile applications, encompassing grid stabilization, the seamless integration of renewable energy sources, peak load reduction, maintaining consistent power levels, providing backup electricity during outages, and enhancing overall energy efficiency. BESS solutions also facilitate microgrid operation, support electric vehicle (EV) charging infrastructure, mitigate transmission limitations, deliver rapid response capabilities, and play a vital role in extending electricity access to rural areas.
Major Customer Segments
Battery Energy Storage Systems (BESS) in India cater to a wide array of sectors, spanning grid stability, renewable energy, commercial enterprises, industrial facilities, residential applications, electric vehicle (EV) charging infrastructure, data centers, governmental initiatives, agricultural needs, energy management strategies, real estate ventures, and ancillary services, presenting adaptable solutions to meet a diverse range of energy demands.
Deciding the Technology and Type of BESS
Choosing the appropriate Battery Energy Storage System (BESS) technology requires a systematic approach, commencing with the definition of project goals and requirements. It entails an examination of diverse technologies and battery compositions, cost analysis, assessment of scalability, adherence to regulatory standards, evaluation of environmental effects, and a comprehensive risk appraisal. Crucial steps include vendor assessment, conducting pilot tests, and accounting for future-proofing aspects. A comparative evaluation aids in making an educated decision that aligns with project objectives, with contingency planning and meticulous documentation finalizing the process.
Technology Available in India
Battery Energy Storage Systems (BESS) deployed in India employ a range of technologies. This includes the well-established lithium-ion batteries known for their high energy density and reliability, advanced lead-acid batteries suitable for smaller-scale uses, and emerging alternatives such as flow batteries, sodium-ion batteries, supercapacitors, and flywheels. Furthermore, there are hydrogen-based solutions, compressed air storage systems, advanced energy management systems, and hybrid setups, all of which collectively address a broad spectrum of energy storage requirements across various sectors. This versatility underscores BESS as a dynamic solution within India's evolving energy framework.
Setting up a BESS Plant in India
To set up a Battery Energy Storage System (BESS) plant in India, a systematic approach is essential. Begin with conducting a feasibility study, ensuring compliance with regulatory prerequisites, selecting an appropriate location, devising the system's design, addressing environmental concerns, securing grid connectivity, procuring necessary equipment, overseeing construction and rigorous testing, implementing stringent safety measures, establishing monitoring and control systems, and formulating plans for ongoing maintenance and potential expansions—all while adhering to reporting and integration requirements.
National Framework for Promoting Energy Storage Systems
India is actively advancing its energy transition objectives, with ambitious aims to boost non-fossil fuel-based energy sources, curtail emissions, and promote renewable energy adoption. To expedite this transition, the government is providing substantial financial incentives, such as viability gap funding (VGF) for Battery Energy Storage Systems (BESS) projects, and additional support for the infrastructure of Pumped Storage Projects. These measures are designed to accelerate the expansion of BESS and strengthen energy storage infrastructure. Furthermore, the government is contemplating tax incentives, the creation of an Approved List of Models and Manufacturers to ensure quality standards, and the establishment of waste management facilities for BESS components. Collectively, India's comprehensive framework underscores a resolute commitment to a sustainable and secure energy future.
Financing the Project
Within the Battery Energy Storage System (BESS) industry, there are various financing avenues to explore. These include External Commercial Borrowing, which permits obtaining up to 80% of the Project Cost from foreign financial institutions. This comes with an interest rate ranging from 4% to 5%, plus LIBOR, and a repayment period spanning 7 to 10 years. Collateral in the form of project assets and guarantees is typically required. Alternatively, Domestic Commercial Loans are accessible, offering up to 80% of the Project Cost from domestic commercial banks, often at an interest rate of 9% to 11%. These loans come with a similar tenure and collateral requirements. Promoters also have the option to contribute equity funding to establish a 100MWh lithium-ion battery manufacturing facility within the BESS industry.
Government Support and Policies
India's commitment to advancing Battery Energy Storage Systems (BESS) is evident through a range of significant policy initiatives and regulatory advancements. These encompass the introduction of procurement bidding guidelines for BESS, the ambitious integration of BESS into the Draft National Electricity Plan, the establishment of fresh regulations pertaining to ancillary services, the waiving of interstate transmission charges for BESS, the inclusion of energy storage within renewable purchase obligations, and the implementation of a substantial Production Linked Incentive (PLI) Scheme designed to promote the development of the battery industry.
Required Approvals
The establishment of a Battery Energy Storage System (BESS) industry in India necessitates the adept maneuvering through a intricate labyrinth of regulatory and approval procedures. These encompass activities such as business registration, securing environmental clearance, land acquisition, obtaining electricity licensing, entering grid connection agreements, attaining customs approvals, ensuring compliance with safety regulations, adhering to taxation requirements, and obtaining various permits related to construction, operations, and environmental impact. Moreover, it is imperative to actively engage with local communities and stakeholders, all while ensuring strict adherence to both national and local regulations.
Regulatory Framework in India
Crucial regulatory frameworks and entities in India pertinent to Battery Energy Storage Systems (BESS) encompass the National Energy Storage Mission (NESM), which is dedicated to the advancement of energy storage technologies. Additionally, the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) play pivotal roles in formulating BESS-related regulations. The legal framework is provided by the Electricity Act of 2003. Further incentives come from net metering and Renewable Purchase Obligation (RPO) policies, which promote BESS and renewable energy integration. The FAME scheme indirectly benefits BESS, particularly in the context of electric vehicle (EV) charging infrastructure. Customs and import duties significantly impact BESS costs, while environmental regulations are essential to ensure compliance. Stringent grid codes and interconnection standards are in place, along with BIS certification requirements to meet specific quality and safety standards in the BESS industry.
Key BESS Projects in India
- AES-Mitsubishi Rohini – Battery Energy Storage System
- Modhera Sun Temple Town Solar PV Park – Battery Energy Storage System
- Phyang Solar PV-Battery Energy Storage System
- BESS Project by IndiGrid
Conclusion
The potential for establishing a thriving Battery Energy Storage System (BESS) industry in India is promising, aligning with the nation's pursuit of renewable energy objectives. Favourable conditions, such as diminishing battery costs and robust government backing, are conducive to industry growth. However, challenges encompass intricate regulations and cost-related considerations. Partnering with industry pioneers can facilitate market entry. Opportunities abound, encompassing utility-scale ventures, microgrid implementations, electric vehicle (EV) charging infrastructure, among others. A meticulous and strategic approach is imperative for success, ultimately contributing to India's sustainable energy transformation.
To know more about the Battery Energy Storage System Industry in India, request a Free Detailed Report by submitting a query below.
Thank you for getting in touch! 
