Merchant batteries deliver critical system-level value

The multi-faceted benefits of battery storage to support a high-renewables grid have never been in doubt. Yet, despite its benefits to the grid, prohibitively high upfront costs and the lack of a business case to invest in the deployment of battery storage have prevented its penetration in the Indian electricity system till now. 

The strengthening business for battery storage comes at an apt time. With rising price volatility and the growing need for fast-acting reserves, the case for battery storage is clear. They deliver critical system-level value in two key areas:   

• Reducing price volatility and improving liquidity in short-term markets:
  A liquid short-term market with stable prices is vital for renewable energy growth. It serves as a backstop for power purchase in case of demand-supply mismatch, thereby building greater confidence to integrate higher shares of renewables.
  
  Also, power market sales form a key revenue stream for FDRE projects, so avoiding consistently low prices during solar hours is essential to keep these projects viable and tariffs affordable.
• Enabling fast response for real-time grid balancing
  Systemic grid fluctuations are expected to intensify due to the inflexibility of coal and the growing share of renewables in the energy mix. Sufficient fast-acting reserves will be essential to maintain grid stability. While batteries are eligible to participate in India’s Secondary Reserve Ancillary Services (SRAS) market, incentive mechanisms need to be improved further to encourage batteries to play a greater role in grid balancing services.

Recently, India hit a milestone of 50% non-fossil fuel power generation capacity. The ability of its electricity grid to keep accommodating more variable renewable energy will depend on whether developers, investors and stakeholders are able to accelerate the dawn of the age of battery storage.