While India’s peak demand deficit has fallen considerably in recent years, insufficient energy storage infrastructure and rising temperatures could widen the gap moving forward, especially in the summer months.
Moreover, state sector hydro capacity, which accounts for 58 per cent of total hydro capacity, generated 19 per cent less power last month compared to April, 2023, as per data.
Significant year-on-year fall was recorded for hydro plants operated by state-owned utilities of Telangana, Karnataka, Maharashtra, Jammu & Kashmir, and Himachal Pradesh.
The country’s current installed generation capacity is 441 GW (1 gigawatt is 1,000 megawatt) while peak demand is projected to peak at 235 GW in May.
The India Energy Storage Alliance, an industry alliance focused on development of energy storage, green hydrogen and e-mobility has estimated the requirement of about 160 GWh of energy storage system by 2030 in a report titled “Energy Storage Vision 2030 for India”.
The Ministry of Power said it has “optimised” hydropower generation to make available an additional 4GW capacity, weeks after it instructed fifteen imported coal-based and all gas-based thermal plants to be operational during the summer months. With peak power demand set to touch 240 GW in June, the ministry’s latest effort to avoid supply shortfall reflects growing concern over risk of outages, particularly amid poll season demand surge and a hotter-than-usual summer.
Even though India added a record renewable capacity of over 18 GW in FY24, the variability in renewable energy generation is putting pressure on base load capacity, including thermal, especially during evening hours of low sunlight and high demand. The reliance on coal and gas to meet peak demand is more pronounced given the absence of adequate energy storage infrastructure in the country, which can help store excess energy generated by solar and wind plants during non-peak hours and release it during peak hours.
While India’s peak demand deficit has fallen considerably in recent years, insufficient energy storage infrastructure and rising temperatures could widen the gap moving forward, especially in the summer months. The country is staring at a 14 GW peak shortfall in June, its largest in 14 years, due to delays in commissioning new coal-based plants, according to a Reuters report. The latest move comes in light of hydro generation missing the cumulative target of 12,487 MU (million units) by 1,770 MU in the ongoing FY25 till May 9, a shortfall of 14 per cent, data on the National Power Portal showed. Moreover, state sector hydro capacity, which accounts for 58 per cent of total hydro capacity, generated 19 per cent less power last month compared to April, 2023, as per data. Significant year-on-year fall was recorded for hydro plants operated by state-owned utilities of Telangana, Karnataka, Maharashtra, Jammu & Kashmir, and Himachal Pradesh.
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With these measures and forecasts of above-normal monsoon in the coming months, “it is expected that the power demand would be adequately met both during the day and during night hours in the summer months of May and June,” the ministry noted in a press release.
“Nowadays, all the plants are running at their peak, so there’s a possibility that there will be no margin available. Hydro is also expected to be a little less compared to last year because of lower snowfall,” said an industry source.
“In June, demand from agriculture will suddenly come up and the majority of this will come from the northern states as they’ll start to take power to run pump sets. There will be a surge in demand and historically, the impact of high wind and high hydro is more than the impact of demand increase. By the third week of May, a lot of wind generation comes into play and gradually, with the snow melting, hydro generation will also start to increase in another three-four weeks,” they added.
In India, which is the world’s third largest producer of renewable energy, around 40 per cent of installed electricity capacity comes from non-fossil fuel sources. This green push has resulted in a sharp 24 per cent reduction in emission intensity of GDP between 2005 and 2016, but it has also thrown up challenges in meeting peak demand with a grid being increasingly powered by renewables.
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Even as the share of installed capacity of renewables like solar and wind has increased to nearly 29 per cent of total capacity in FY24, compared to 20 per cent in FY20, these sources of power do not have high capacity utilisation as they are variable in nature. Energy storage is needed alongside green energy sources to primarily balance out the variability in renewable generation – electricity is generated only when the sun shines or when the wind blows. This is not always in sync with the demand cycle. Storage can help tide over this shortcoming associated with renewables.
For procurers such as state-owned discoms, renewables are not always a viable option precisely due to these vagaries in the generation trends, which means they still have to depend on thermal or nuclear generation for meeting base load demand. Renewables bundled with a viable storage option help overcome this problem.
With lithium-ion battery storage being ruled out as unviable for grid application, at least for now, an emerging policy resolve is that solar and wind-based generation cannot continue to be pushed down to struggling electricity distribution companies or discoms. The renewables challenge is compounded by the fact that SECI (Solar Energy Corporation of India Ltd) — the state-owned company conducting solar auctions — has locked-in a number of contracts involving green developers in rigid PPAs (power purchase agreements) with no scope for innovation, according to sectoral experts.
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On the specific concerns of energy storage considering the bulk of capacity addition is coming through renewables, a senior government official said one of the requirements is storage and the other is the flexibility of thermal power plants.
“We’ve already issued a regulation that the thermal power plants will be flexible up to 55 per cent. In the next phase, after three years, we have to go down to 40 per cent, which means in the daytime, they would run at 40 per cent and pick up after sunset. Now, battery storage is expensive at Rs 10 per kilowatt per hour… There is a fresh impetus to pursue pumped hydro projects,” the official said. The country’s current installed generation capacity is 441 GW (1 gigawatt is 1,000 megawatt) while peak demand is projected to peak at 235 GW in May. Of the installed capacity, the total electric power installed capacity from non-fossil fuel-based energy resources was over 190 GW as of March 2024, which is nearly 45 per cent of the total electric power installed capacity, primarily solar and wind.
To compensate for the intermittency, pumped-storage hydroelectric plants – where it stores energy in the form of the gravitational potential energy of water that is generally pumped from a lower elevation reservoir to a higher elevation reservoir when renewable power is available, which is then released to move a turbine to generate electricity when renewable generation is not available – is being seen as the most viable alternative. These projects thereby work similarly to a giant battery, because they can store power and then release it when needed.
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The Central Electricity Authority, the policy arm of the Union Power Ministry, has assessed a requirement of 41 GW/190 GWh (gigawatt hour) of energy storage system for integration of 500 GW of non-fossil fuel-based electricity into the grid by 2030.
The India Energy Storage Alliance, an industry alliance focused on development of energy storage, green hydrogen and e-mobility has estimated the requirement of about 160 GWh of energy storage system by 2030 in a report titled “Energy Storage Vision 2030 for India”.
