As power systems transition to sustainable energy sources, two key technologies that are expected to gain traction are electric vehicles (EVs) and energy storage. The year 2018 was a record year for energy storage, which reached 9 GW globally. EVs saw higher uptake with over a million cars sold in 2017 globally – a new record as per data from the International Energy Agency. The total number of electric cars on the road surpassed 3 million worldwide, an expansion of over 50 per cent from 2016. In India, the government has been stepping on the gas to give a significant boost to these segments. In March 2019, the cabinet approved the National Mission for Transformative Mobility and Battery Storage. Under the mission, two-phase manufacturing programmes will be rolled out across the country for the setting up of large-scale, export-competitive integrated battery and cell manufacturing giga plants as well as for localising production across the entire EV value chain. The Union Budget 2019 has also announced a range of incentives for these segments, including an income tax rebate on interest paid on loans to buy EVs, as well as customs duty exemption on lithium-ion (Li-ion) cells. Further, the recent slashing of corporate tax rates is expected to give an impetus to local EV manufacturing, given that most of the critical electrical and electronic parts for vehicles continue to be imported. A closer look at these technologies, the policy trends and the renewable energy industry’s outlook…
With India aiming to achieve a 175 GW target by 2022, utilities and grid operators have to deal with numerous issues. This is because renewable energy systems face challenges such as periods of excess and shortage in electricity generation. Solar energy systems work best in bright sunlight while hydropower systems work only when there is water, and wind energy systems when there is wind. So, the problem faced by countries today pertains to the storage of excess energy, or the reduction in demand during periods of low generation, or both. With energy storage solutions, renewable technologies can continue to power the grid even when the sun has set and the air is still, levelling out jumps in output to create a continuous, reliable stream of power throughout the day.
Technological advancements have helped reduce the cost of Li-ion batteries while increasing their life cycle, thereby positioning them as a key energy storage technology globally. As per industry estimates, the cost of energy storage technologies has declined rapidly over the past 10 years. The cost of Li-ion technology fell from over $1,000 per kWh in 2008 to $300-$400 per kWh in 2018. Other technologies have also witnessed similar trends. The cost of rechargeable vanadium redox batteries fell from $1,000 per kWh in 2008 to about $850 per kWh in 2013 and then to about $500 per kWh in 2018. Meanwhile, the prices of sodium-nickel-chloride batteries and sodium-ion batteries reduced from $1,000 per kWh and $900 per kWh in 2013, respectively, to $700 per kWh and $600 per kWh in 2018. The costs of lead-acid and sodium-sulphur (NaS) batteries have plateaued. NaS prices fell from about $700 per kWh to only $600 per kWh in the past 10 years whereas lead-acid battery cost remained constant at about $200 per kWh. Lead-acid batteries have the lowest cost among all technologies, but also a rather short life cycle.
Although efforts are on to propagate energy storage, most of the energy storage tenders issued in the renewable energy space over the past one year have been either cancelled or delayed. This includes the Solar Energy Corporation of India’s (SECI) solar-wind hybrid tender for 160 MW of capacity (including 40 MW of wind and 20 MW of storage). However, in the past couple of months, new tenders have been issued. In August 2019, a fresh tender was floated by SECI for 1.2 GW of solar-wind storage projects. In September 2019, SECI issued a tender for the development of 1.95 MW of solar projects with 2.15 MWh of battery energy storage systems (BESS). The industry has taken first steps towards energy storage. In a first, a grid-scale BESS of 10 MW capacity was set up in February 2019 by Tata Power Delhi Distribution, the AES Corporation and the Mitsubishi Corporation. It is said to be South Asia’s largest. The project will provide grid stabilisation and protect its critical facilities. Meanwhile, private transmission major Sterlite Power has forayed into grid-connected BESS. The company has submitted bids for two storage projects in Arizona, USA.
Going forward, energy storage installations around the world are expected to multiply exponentially, from a modest 9 GW/17 GWh deployed as of 2018 to 1,095 GW/2,850 GWh by 2040, as per the latest forecast by research company Bloomberg NEF. It also anticipates India to emerge as the third largest country in terms of energy storage installations by 2040. With the government considering a plan to install 40 GW of battery manufacturing capacity, almost $40 billion of investments are expected to come in the next two to three years.
At the state and central level, numerous initiatives have been put in place to fast-track the adoption of e-mobility. Key amongst these is the outlay of Rs 100 billion for the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India or the FAME II scheme. Under Phase II of the scheme, the government intends to support the development of EV charging infrastructure by extending capital grants to organisations working with city governments for the promotion of EVs. In July 2019, the Department of Heavy Industry invited proposals for deploying over 1,000 EV charging infrastructure stations under FAME II. During the same time, the GST Council reduced the GST rate on EVs from 12 per cent to 5 per cent. These charging stations will be tendered in different states and will house a minimum of 6,000 chargers.
As per a NITI Aayog report, at the state level, 27 states have devised strategies for transforming their mobility systems while others are in the process of formulating their EV policies. For instance, the Andhra Pradesh Electric Mobility Policy for 2018-23 has set targets to add 1 million EVs and install 100,000 slow and fast EV charging stations by 2024. Kerala’s EV Policy, 2018 aims to add 1 million EVs by 2022. Apart from these, Maharashtra, Karnataka, Uttarakhand, Tamil Nadu, Himachal Pradesh and Uttar Pradesh have rolled out their EV policies.
At the industry level, a number of public and private majors have announced significant plans for scaling up their EV business. The country’s largest power producer, NTPC Limited has invited bids for the setting up of 400 charging stations across cities and highways for the creation of a charging infrastructure ecosystem. It is also setting up a pilot project for 50 e-autos for battery charging and swapping. Meanwhile, public major Energy Efficiency Services Limited (EESL) is planning to set up nearly 1,000 charging stations. It has finished the procurement process of 10,000 e-cars under the National E-Mobility Programme that was launched in March 2018. The move by EESL would help in increasing the demand for EVs and also in deploying at least 5,000 EV cars in the country. In June 2019, the Bangalore Electricity Supply Company announced plans to establish 678 EV charging stations across Karnataka. Of these, 100 charging stations will be established in Bengaluru. Delhi discom BSES has entered into partnerships with several organisations to set up over 150 smart EV charging stations across its licensed area. Of these, around 50 smart EV charging stations will be set up during financial year 2019-20. In August 2019, Tata Motors and Tata Power came together to set up around 300 EV charging stations by the end of 2019-20. The two companies have launched seven charging stations in Pune, Maharashtra, and fast charging stations are planned for Mumbai, Delhi, Pune, Bengaluru and Hyderabad.
The decreasing cost of energy storage and its widespread adoption would help in reducing the overall operational costs of a solar plant and also facilitate the setting up of rural microgrids and minigrids. It will help commercial and industrial players that have already set up rooftop solar projects. Besides, it will drive the uptake of EVs, especially among price-sensitive consumers in the country. However, there are other challenges to be dealt with. For the e-mobility revolution to take off, it is imperative to put in place robust charging infrastructure and also ensure reliable electricity supply from the grid.
Overall, EVs and energy storage are expected to be the catalysts for the country’s transition to clean energy and in its efforts to build climate resilience. Continued policy support will be vital to attract domestic and international capital for scaling up these technologies.