Study on the feasibility of the(Solar + Storage) based project in India

MBA- POWER MANAGEMENT

Under the supervision of

Dr. Anil Kumar (HOD)

Department of Power Management
School of Business, Kandoli,
Dehradun

BY
SAURABH BARANGE (500074689)

Batch: 2019-2021
Semester: IV

University of Petroleum & Energy Studies

Kandoli Campus Knowledge Acres, PO Kandoli
Dehradun (248007)
 ACKNOWLEDGEMENT

It gives us a great sense of pleasure to present the dissertation on the Study on the

feasibility of the (Solar PV + Storage) based project in India, Undertaken during the Fourth

semester. We owe a special debt of gratitude and like to thank Dr. Anil Kumar, Professor and

HOD, Department of Power Management, School of Business, UPES, Kandoli Campus,

Dehradun, for his constant guidance and great support with all the help he has to provide us

with theory and practical implication on our projects. His sincerity, thoroughness, and

perseverance has been a constant source of inspiration for us.

We would like to thank Dr. Mohammed Yaqoot, Dr. Anil Kumar and Mr. Avishek Ghosal

for being the backbone for the successful completion of the project and for always providing

guidance whenever required.

Our sincere thanks to all the friends, teaching and non-teaching staff members of Power

Management Department for their cooperation and guidance.

 DECLARATION

This is to certify that the Project report entitled “Study on the feasibility of the(Solar

PV + Storage) based project in India” by Mr. SAURABH BARANGE, submitted for the

partial purpose of Dissertation in the fourth semester of MBA in Power Management in the

University of Petroleum and Energy Studies, Dehradun, during the academic year 2019-21, is

a bonafide record of work carried out under my guidance and supervision.

Date:

Dr. ANIL KUMAR,

(Professor AND HOD)
Department of Power Management
School of Business, Kandoli Campus, Knowledge Acres,
Dehradun- 248 007
.
 Table of Contents
Introduction ................................................................................................................................ 7
Business Problem ..................................................................................................................... 10
Literature review ...................................................................................................................... 12
Research Gap ........................................................................................................................... 20
Research Problem .................................................................................................................... 21
Research Question ................................................................................................................... 22
Research Objective .................................................................................................................. 23
Research Methodology ............................................................................................................ 24
Findings.................................................................................................................................... 29
Bibliography ............................................................................................................................ 37
 List of Tables
Table 1: Characteristics of selected energy storage systems ................................................... 17
Table 2: Capital Cost of Solar + PV Storage System (estimates) ............................................ 29
Table 3: Tariff addition after installation of the system .......................................................... 29
Table 4: Estimates of reduction in battery prices..................................................................... 29
Table 5: Cost comparison of Solar and Solar+Storage ............................................................ 30
Table 6: Scaling factor considered to compare price of USA and India ................................. 30
Table 7: Scaling factor for different items ............................................................................... 31
Table 8: BoS for BESS and Solar PV ...................................................................................... 31
Table 9: Assumptions for calculating Levelised Cost of Supply ............................................. 32
Table 10: Bottom-up Cost Estimates of U.S. Utility-Scale Li-ion Battery Systems with
Durations of 1 and 4 Hours ...................................................................................................... 33
Table 11: Cost Scaling Ratios Between 1- and 4-Hour Battery Systems ................................ 33
Table 12: Scaling of U.S. to India Battery Cost Components ................................................. 33
Table 13: Capital Expenditure Estimates for 1 MW/4MWh BESS in India ........................... 34
 List of Figures
Figure 1: Advantage and Disadvantage of (Solar PV+Storage) system .................................. 12
Figure 2: Market maturity of grid technology ......................................................................... 19
Figure 3: Levelized Cost of Storage estimated for 1MW/4MWh in India .............................. 35
 Introduction

India has prioritised increasing the share of renewable energy (RE) based power generation
capacity for several years. A supporting policy and regulatory framework have ensured an
exponential growth in RE capacity, reaching an all-time high of 42.6 GW, or 14.1% of the total
generation capacity by March 2016. This share is set to increase even more rapidly in the
coming six years, given the national RE target of 175 GW (100 GW solar and 60 GW wind) of
RE by 2022 (Mint, 2015). It could reach as high as 32.2% by 2022, considering the 175 GW
in place.1 In terms of electricity generation, while the present share of RE is ~ 6%, the Ministry
of New and Renewable Energy (MNRE) is hoping to push it to 17% by 2022, of which 8% is
targeted to come from solar alone. Renewable energy deployment is mainly concentrated in
the Southern and Western Indian states (80% of total). Several states such as Tamil Nadu
(37%), Maharashtra (17%) and Gujarat (18%) have a much higher share of RE in their
generation capacity mix compared to the national share (CEA, 2016).
Renewable energy generation, especially from wind and solar power, is variable in nature,
given its dependency on the weather. In addition, due to the diurnal and seasonal variations
(more pronounced in the case of wind power given the Indian monsoon) in generation, its
shorter time scale (minutes to hours) impacts on the grid are much higher than perceived
impacts considering only the lower annual average values. For example, penetration of wind
power in energy terms in Tamil Nadu in 30-35 % from June to September and 5-10% during
other months (CEA, 2013). Grid operators do not have visibility with respect to wind and solar
power generators3, because until recently they were exempt from any scheduling
responsibilities which were applicable to conventional generators. Maintaining constant
frequency is important for the reliable and secure operation of the grid. Deviation in frequency
can occur due to instantaneous differences between generation and demand, which grid
operators apprehend would exacerbate due to higher penetration of renewables.
This coupled with problems of the relatively weak Indian grid such as high line losses, load
shedding, low voltages at the distribution tail end, high variation in frequency, lack of adequate
reserves, flexible generation and effective demand forecasting makes reliable and effective grid
integration of renewables even more challenging. Hence, policy-regulatory officials and grid
operators fear that such a steep and rapid increase in ‘infirm’ or ‘non-dispatchable’ renewables
will affect the electricity grid and make grid operation far more complex and difficult to deal
with.
Various European countries and some regions in the United States have reliably integrated high
levels of variable renewables in their generation mix, and it is important to learn from their
experiences. However, several learnings may not be fully or immediately relevant in the Indian
context because of differences in the grid infrastructure, and more importantly, in the
regulations and policies governing grid planning and operation. Hence, it is important to
understand the concerns of grid operators when it comes to integrating high levels of variable
renewables.
This report is an attempt in that direction. We begin with an explanation of the structure of the
Indian power grid, its institutional setup as well as its daily operations. With increasing
renewables, we examine the potential rise in challenges to grid operation at the transmission
level, and ways to mitigate such challenges through effective grid integration of renewables.
This report does not look at the operational issues at the transmission planning or distribution
system levels.
The focus of the report is on forecasting and scheduling of renewable power, one of the key
starting points to minimise grid imbalance and aid effective integration. The report analyses
the various steps at the Central and State levels towards initialising forecasting and scheduling
of renewables in the country. It also examines the various supporting initiatives adopted by
ERCs and policy makers towards easing grid integration. This analysis is also informed by
focused discussions with a key sector stakeholder, notably grid operators. We conclude by
outlining some potential suggestions and ideas for easing the challenges of grid integration.
This report is being released as a working paper given the various changes which are underway
in the regulations and policies related to grid operation.
Globally, the sharp decline in prices of lithium-ion (Li-ion) batteries is expected to transform
how electricity from renewable sources, such as solar and wind, is integrated into the grid.
Estimates of declines in Li-ion battery pack prices vary from 50% during 2012–2017 as per
McKinsey & Co. (Frankel et al. 2018) to 73% during 2013–2018 as per Bloomberg New
Energy Finance (BNEF). Based on BNEF 2010–2018 data, the learning rate (reduction in price
for each doubling of cumulative volume) is 18%. BNEF uses this rate to project a price of
$62/kWh by 2030.
India is on the cusp of making major energy investment decisions. In its19th Electric Power
Survey, the Central Electricity Authority (CEA) projects that peak electricity demand in India
will grow at about 6.32% per year, from 162 GW in 2016/2017 to about 300 GW in 2026/2027
(CEA 2017). Total energy consumption would exceed 1,500 TWh by fiscal year FY 2022 and
2,000 TWh by FY 2027.
India’s National Electricity Plan states that about 123 GW of additional conventional capacity
would be required to meet this additional peak demand, because contributions of renewable
sources to meeting the peak demand are assumed to be minimal (CEA 2018). This is primarily
because India’s peak demand occurs during the evening. Although, wind resources are
available in the evening, their output is highly seasonal. Hence, even GW by 2030, India is
projected to require significant coal capacity for meeting evening load.
According to CEA, meeting India’s 340-GW peak load and 2,400-TWh energy requirement in
2030 would require adding about 50 GW of coal between 2022 and 2027, in addition to 48 GW
expected to come online by 2022 (CEA 2019). However, the last 130 GW of coal that provides
power during non-solar hours, including morning and evening peak, would run at an effective
plant load factor of only 24%.
Running coal plants at such a low-capacity factor would be operationally difficult and would
result in total costs per unit of Rs. 6–8/kWh, without accounting for additional operations and
maintenance (O&M) costs. This would be antithetical to the objective of cheap, reliable power
for all.
As an alternative, battery energy storage systems (BESS) based on low-cost Li-ion batteries
may enable India to use stored solar energy to meet peak morning and evening demands. India’s
Ministry of New and Renewable Energy (MNRE) is tasked with the National Energy Storage
Mission, with the objective of “creating an enabling policy and regulatory framework that
encourages manufacturing, deployment, innovation and further cost reduction” in the energy
storage sector (MNRE 2018).
In this study, we estimate costs for utility-scale Li-ion battery systems through 2030 in India.
We base our analysis on recent U.S. power-purchase agreement (PPA) prices and bottom-up
cost analyses of storage and solar photovoltaic (PV)-plus-storage systems, adapted to the Indian
context. The recent rapid growth of utility-scale photovoltaic (PV) deployment and the
declining costs of energy storage technologies have stimulated interest in combining PV with
energy storage to provide dispatchable energy and reliable capacity—particularly as the U.S.
utility storage market has begun moving away from short-term power regulation and toward
longer-term temporal shifting of renewable generation. The integration of renewable
generation and energy storage offers a way to cost-effectively diversify and strengthen the
nation’s energy portfolio.
 Business Problem

Energy is the most important issue that is being discussed throughout the world. The key
differentiating factor in the use of energy sources is environment friendliness. Growth of
renewable energy (RE) in developed nations is mainly driven by environmental concerns of
fossil fuel-based projects. In developing nations, RE projects are adopted to decrease the
demand supply-gap and to boost rural electrification and off-grid electrification. But for
countries like India, an optimal energy mix of both kinds of energy sources is essential to have
a sustainable energy system.
Challenges: One of the biggest challenges in RE development is the high initial cost of
installation. While development of a coal-based power, plant requires around Rs 4 crore per
MW, the investment required for wind and solar power-based plants is significantly higher. A
wind-based plant, with capacity utilisation of 25%, requires an investment of Rs 6 crore per
MW. The actual investment, at more efficient capacity utilisation of 80%, works out to Rs 18
crore per MW. Similarly, the investment in a solar based plant, with a capacity utilisation of
15%, is Rs 18 crore. The actual investment, at 80% capacity utilisation, is around Rs 98 crore.
High cost associated with RE projects necessitates further research and technological
developments in this area. A comprehensive policy framework is necessary for accelerated
growth of renewable energy in India.
Proper system planning and integration is another important aspect. Knowing the decentralised
nature of RE projects, the capacity and type of project is to be decided where availability of the
energy source can be ensured. Most RE systems are weather dependent; thus, factors like
number of sunny days, wind condition, monsoon, tide level, supply of biomass, etc play an
important role in feasibility of the system. Plant availability is not predictable as in case of
conventional plants.
Social acceptance of renewable-based energy system is still not very encouraging in urban
India. Despite heavy subsidy being provided by the government for installation of solar water-
heaters and lighting systems, its penetration is still very low. Manpower training is another
grey area. Currently, the Indian power sector is facing severe trained manpower shortage. Skill
upgradation of the existing manpower and training of new professionals are essential to achieve
the goal of “power to all” by 2012.
Opportunities: Despite having an installed capacity of over 167 GW, India is facing an energy
deficit of 8% and peak deficit of 12%. So far, only 4.5% of renewable energy potential has
been explored in India. To reduce the demand-supply gap, the renewable energy development
is the need of the hour.
Renewable energy certificate (REC NSE 1.76 %) is also being increasingly used and traded at
various power exchanges around the world. RECs are considered as important tool for
renewable energy promotion. Indian power exchanges are also going to introduce trading of
these certificates very soon.
Electrification of remote areas and inaccessible terrains where grid connectivity is not feasible
is only possible through renewable energy sources. Renewable energy sources are abundant
and inexhaustible and are also import independent. Thus, renewables help address energy
security concerns better than conventional energy sources.
Today, climate change is the most serious concern being discussed around the world.
Development of renewables is arguably one of the most effective options to mitigate climate
changes. Renewable development contributes to overall development of the nation. With
access to electricity, the productivity of household industries increases. India’s annual per
capital electricity consumption as per CEA report is 704 kWh and to achieve set target of 1000
kWh, full-fledged exploration of renewables is necessary.
An interesting research by Political Economy Research Institutes shows that investment in
renewable power generation provides much more employment opportunities than investment
made in conventional sources-based power projects. Besides, renewable project development
involves local people and operation and maintenance is carried out with the help of locally
available manpower. With renewed focus on renewable and clean energy development, it is a
high time for seeking business and entrepreneurship opportunity in this field.
Conclusion: Based on the present global economic growth rates, fossil fuel energy resources
may last a generation or two, at the most, before they are exhausted. Therefore, the future of
our energy needs lies in renewable energy resources. The use of these resources, rather than an
increase in fossil fuel supplies, should be encouraged through new diplomacy that takes into
account the needs and resources of all concerned. Given the vast potential of renewables in
India, all it needs is comprehensive policies and an investor friendly regime to be global leader
in clean and green energy.
 Literature review

May 16, 2015 Martin Newkirk

Hybrid solar system generates power in the same way as a common grid tie solar system but
use special hybrid inverters and batteries to store energy for later use. This ability to store
energy enables most hybrid system to also operate as a backup power supply during a blackout
similar to UPS system.
The battery ready system uses of hybrid inverter rather than a typical string solar inverter. Most
run most model hybrid inverter have the battery charger and connection building which makes
adding a battery more suitable in the future. However, hybrid inverter is more expensive add if
you don’t add batteries during installation finding compatible battery is after a few years could
become difficult.
Where solar energy in a battery? Meaning of light and network operators have reduced the
solar feed in tariff for feeding solar energy to the grid. This means can you sing great create
solar systems have become less attractive as most people are working during the day and not
hold to use solar energy as regenerated does the energy stored in to the great for very little
return. A solar hybrid system stores your solar energy and can provide backup power during
day blackout and this is perfect for homeowners although for maturity of businesses which
operates during the daylight, common grade feed solar system is this still the most economical
choice.
Hybrid solar system enables you to store solar energy and use it when you are home during the
evening when the cost of electricity is typically at the peak rate.
The ability to store adduce your solar energy when desired is referred to as self-use for self-
consumption it works in the same way in off grid power system but the battery capacity
required is far less, usually just enough to cover peak consumption as opposed to 3-5 days with
a typical off grid system.

Advantage Dis-advantage

Figure 1: Advantage and Disadvantage of (Solar PV+Storage) system

Policies for energy storage and renewables in India 5 May 2018
India has an installed generation capacity of 344,002 MW in a constrained grid (as on 31 March
2018) and a target of 175,000 MW installed renewable capacity by 2022, which is projected to
be around 40% of the total installed capacity (around 437,500 MW). In this context, as
commercially viable energy storage inches closer to reality, we are entering a disruptive phase
which can redefine how evacuation and supply of power is undertaken in India over decades.
The Ministry of Power has recently classified battery storage as a service, which is timely and
will boost investment in this area. The total energy storage market in India is expected to grow
from 4.4 GW in 2015 to 70 GW (valued roughly at US$3.32 billion) by 2022. Reports suggest
that 300,000 jobs in the clean energy and storage sector will be created over the next five years.
It is estimated that energy storage devices manufacturing could attract investments of US$3
billion-6 billion by 2022. It is projected that solar power systems with energy storage could
replace existing diesel generators and save up to ₹5 per unit (US$0.076) for industrial and
commercial consumers.
The idea of commercially viable battery storage has long been seen as utopian by law makers,
planners, courts and utilities. Growth in this market will depend on how quickly technology
improves to become commercially feasible; how utilities gear up for and integrate this
opportunity in their value-chain; and how investors and lenders evaluate and participate in the
opportunity. The legal, economic, policy and regulatory framework governing energy storage
and its integration with the current industry can have a meaningful impact. Some key areas for
a framework that strikes a balance between innovation and investments, while securing
integration of storage in real-time grid operation and load/demand planning criteria, are:
• Variable tariffs: Nuanced tariff structures which factor in variables such as norms for
differential technological realities instead of a uniform tariff, with an incentive linked
to efficiency gains.
• Preserving and phasing out capital investment: Energy storage systems are
expensive and require significant upfront investment. Adequate fiscal incentives and
suitable subsidies would pave the way for early adoption and implementation of this
technology. In fast evolving technologies it is important is to ensure continued viability
of existing investments while encouraging innovation through suitable financial
instruments, cost recognition and servicing.
• Data and new technologies: Market participants need access to detailed data that could
allow them to identify and prioritize customers for whom storage is profitable. Given
the complexity of energy storage, deployment is more likely to follow a push rather
than a pull model, favoring entrepreneurial companies that find creative ways to access
and use these data. A nodal agency should be designated and tasked with the
responsibility of preparing and disseminating data at periodic intervals to stakeholders
and consumers in a transparent manner.
• Indigenous manufacturing of batteries: Policy should encourage domestic
manufacturing as per prescribed standards, with the objective of India becoming a
major global battery supplier on competitive terms.
• Energy efficiency market deepening: Policy measures should recognize the energy
savings from battery storage and develop a market for trading of such savings in an
economically viable manner.
• Research and development: To encourage domestic manufacturing by tapping the full
market potential, it is important to establish well-funded and equipped R&D centers for
 new and advanced battery technologies. Government, investors and other stakeholders
could pool R&D resources to focus on basic research to keep the Indian battery industry
at the cutting edge of innovation.
• Energy efficiency and renewable purchase obligations: Besides boosting the energy
efficiency and renewable energy markets, strictly enforcing such obligations would
ultimately tie in with India’s international environmental commitments.

The decision to implement battery storage is not straightforward. It is important to develop a

framework which builds on the synergies between renewables and battery deployment. This
can be done only if the policy directive is uniform, clear and unambiguous. Regulators and
policy makers must protect existing investments in the renewables sector while developing a
framework conducive to synergies between renewables and energy storage. The government
can set the tone for such policy announcements.
Progress in electrical energy storage system: A critical review ( Haisheng Chen, Thang
Ngoc Cong, Wei Yang, Chunqing Tan, Yongliang Li, Yulong Ding)
Electrical Energy Storage (EES) refers to a process of converting electrical energy from a
power network into a form that can be stored for converting back to electrical energy when
needed. Such a process enables electricity to be produced at times of either low demand, low
generation cost or from intermittent energy sources and to be used at times of high demand,
high generation cost or when no other generation means is available.
EES allows energy production to be de-coupled from its supply, self-generated or purchased.
By having large-scale electricity storage capacity available over any time, system planners
would need to build only sufficient generating capacity to meet average electrical demand
rather than peak demands. EES can increase the net efficiency of thermal power sources while
reducing harmful emissions. EES is regarded as an imperative technology for the distributed
energy resource (DER) systems.
Deferred from the conventional power system which has large, centralized units
• Commodity storage: Storing bulk energy generated at night for use during peak demand
periods during the day allows for arbitraging the production price of the two periods
and a more uniform load factor for the generation, transmission, and distribution
systems.
• Contingency service: Contingency reserve refers to the power capacity capable of
providing power to serve customer demand should a power facility fall off-line.
Spinning reserves are ready instantaneously, with non-spinning and long-term reserves
ready in 10 min or longer.
• Area control: This is to prevent unplanned transfer of power between one utility and
another.
• Frequency regulation: This would enable maintaining a state of frequency equilibrium
during regular and irregular grid conditions. Large and rapid changes in the electrical
load of a system can damage the generator and customers’ electrical equipment.
• Black-Start: This refers to units with a capability to start-upon their own in order to
energize the transmission system and to assist other facilities to start-up and
synchronize to the grid.
Industry demands clear policy on energy storage in new electricity law: The IESA
represents energy storage manufacturers, research institutes, renewable energy, power
electronics, and electric vehicle manufacturing companies June 10, 2020
A clear policy framework regarding energy storage is needed in the new electricity law for the
adoption of storage technologies in suitable areas, an industry body has suggested. The Draft
Electricity (Amendment) Bill, 2020, floated by the power ministry, seeks amendments to
the Electricity Act, 2003, to address a series of challenges faced by the sector and provide
measures to improve regulatory discipline, private sector participation and give a thrust
on renewable energy sector, among others.
"While we welcome the proposed amendments, we are seeking a clear policy framework
regarding energy storage in the act. India has emerged as one of the fastest-growing markets
for renewable energy and energy storage technologies could be the key enabler for renewable
energy integration and grid stability,"
The IESA has also recommended defining energy storage in the Electricity Act as it could be
helpful to start ancillary services and frequency regulation through energy storage as a flexible
asset.
"It will also help to enable electric vehicles charging infrastructure, vehicle-to-grid concepts
and Microgrids integration with expanded grid connectivity in the long run. We hope the
ministry will consider IESA's recommendations to make the Indian electricity grid more
resilient and reliable," Dash added.
The other recommendations include advocating storage purchase obligation - instead of a hydro
purchase obligation which include significant environment and operational limitation.
"Storage purchase obligation can comprise various existing and emerging cost-effective
solutions that provide appropriate flexibility. Discoms should be free to choose specific forms
of procurement, either hybrid renewable energy + storage or renewable energy and storage
independently," the IESA said.
Fact Sheet: Energy Storage (2019)
Due to growing concerns about the environmental impacts of fossil fuels and the capacity and
resilience of energy grids around the world, engineers and policymakers are increasingly
turning their attention to energy storage solutions. Indeed, energy storage can help address the
intermittency of solar and wind power; it can also, in many cases, respond rapidly to large
fluctuations in demand, making the grid more responsive and reducing the need to build backup
power plants. The effectiveness of an energy storage facility is determined by how quickly it
can react to changes in demand, the rate of energy lost in the storage process, its overall energy
storage capacity, and how quickly it can be recharged.
Energy storage is not new. Batteries have been used since the early 1800s, and pumped-storage
hydropower has been operating in the United States since the 1920s. But the demand for a more
dynamic and cleaner grid has led to a significant increase in the construction of new energy
storage projects, and to the development of new or better energy storage solutions.
Fossil fuels are the most used form of energy, partly due to their transportability and the
practicality of their stored form, which allows generators considerable control over the rate of
energy supplied. In contrast, the energy generated by solar and wind is intermittent and reliant
on the weather and season. As renewables have become increasingly prominent on the
electrical grid, there has been a growing interest in systems that store clean energy
Energy storage can also contribute to meeting electricity demand during peak times, such as
on hot summer days when air conditioners are blasting or at nightfall when households turn on
their lights and electronics. Electricity becomes more expensive during peak times as power
plants have to ramp up production in order to accommodate the increased energy usage. Energy
storage allows greater grid flexibility as distributors can buy electricity during off-peak times
when energy is cheap and sell it to the grid when it is in greater demand.
As extreme weather exacerbated by climate change continues to devastate U.S. infrastructure,
government officials have become increasingly mindful of the importance of grid resilience.
Energy storage helps provide resilience since it can serve as a backup energy supply when
power plant generation is interrupted. In the case of Puerto Rico, where there is minimal energy
storage and grid flexibility, it took approximately a year for electricity to be restored to all
residents.
The International Energy Association (IEA) estimates that, in order to keep global warming
below 2 degrees Celsius, the world needs 266 GW of energy storage by 2030, up from 176.5
GW in 2017. Under current trends, Bloomberg New Energy Finance predicts that the global
energy storage market will hit that target, and grow quickly to a cumulative 942 GW by 2040
(representing $620 billion in investment over the next two decades).
Energy Storage Today
In 2017, the United States generated 4 billion megawatt-hours (MWh) of electricity, but only
had 431 MWh of electricity storage available. Pumped-storage hydropower (PSH) is by far the
most popular form of energy storage in the United States, where it accounts for 95 percent of
utility-scale energy storage. According to the U.S. Department of Energy (DOE), pumped-
storage hydropower has increased by 2 gigawatts (GW) in the past 10 years. In 2015, the United
States had 22 GW of PSH storage incorporated into the grid. Yet, despite the widespread use
of PSH, in the past decade the focus of technological advancement has been on battery storage.
By December 2017, there was approximately 708 MW of large-scale battery storage
operational in the U.S. energy grid. Most of this storage is operated by organizations charged
with balancing the power grid, such as Independent System Operators (ISOs) and Regional
Transmission Organizations (RTOs). ISOs and RTOs are “independent, federally-regulated
non-profit organizations” that control regional electricity pricing and distribution.
PJM, a regional transmission organization located in 13 eastern states (including Pennsylvania,
West Virginia, Ohio and Illinois), has the largest amount of large-scale battery installations,
with a storage capacity of 278 MW at the end of 2017. The second biggest owner of large-scale
battery capacity is California’s ISO (CAISO). By the end of 2017, CAISO operated batteries
with a total storage capacity of 130MW.
Most of the battery storage projects that ISOs/RTOs develop are for short-term energy storage
and are not built to replace the traditional grid. Most of these facilities use lithium-ion batteries,
which provide enough energy to shore up the local grid for approximately four hours or less.
These facilities are used for grid reliability, to integrate renewables into the grid, and to provide
relief to the energy grid during peak hours.
There is also a limited market for small-scale energy storage. While a minor portion of the
small-scale storage capacity in the United States is for residential use, most of it is for use in
the commercial sector—and most of these commercial projects are located in California.
In the past decade, the cost of energy storage, solar and wind energy have all dramatically
decreased, making solutions that pair storage with renewable energy more competitive. In a
bidding war for a project by Xcel Energy in Colorado, the median price for energy storage and
wind was $21/MWh, and it was $36/MWh for solar and storage (versus $45/MWh for a similar
solar and storage project in 2017). This compares to $18.10/MWh and $29.50/MWh,
respectively, for wind and solar solutions without storage, but is still a long way from the
$4.80/MWh median price for natural gas. Much of the price decrease is due to the falling costs
of lithium-ion batteries; from 2010 to 2016 battery costs for electric vehicles (similar to the
technology used for storage) fell 73 percent. A recent GTM Research report estimates that the
price of energy storage systems will fall 8 percent annually through 2022.
Selected Energy Storage Technologies
There are many different ways of storing energy, each with their strengths and weaknesses.
The list below focuses on technologies that can currently provide large storage capacities (of
at least 20 MW). It therefore excludes superconducting magnetic energy storage and
supercapacitors (with power ratings of less than 1 MW).
Table 1: Characteristics of selected energy storage systems
Max
Energy
Power Discharge Max cycles or lifetime
Particular density Efficiency
Rating time (years)
(Wh/Liter)
(MW)
Pumped hydro 3,000 4h – 16h 30 – 60 0.2 – 2 70 – 85%
Compressed air 1,000 2h – 30h 20 – 40 2–6 40 – 70%
Molten salt
150 hours 30 70 – 210 80 – 90%
(thermal)
Li-ion battery 100 1 min – 8h 1,000 – 10,000 200 – 400 85 – 95%
Lead-acid
100 1 min – 8h 6 – 40 50 – 80 80 – 90%
battery
Flow battery 100 hours 12,000 – 14,000 20 – 70 60 – 85%
600 (at
Hydrogen 100 mins – week 5 – 30 25 – 45%
200bar)
Flywheel 20 secs - mins 20,000 – 100,000 20 – 80 70 – 95%

Lithium-ion Batteries
First commercially produced by Sony in the early 1990s, lithium-ion batteries were originally
used primarily for small-scale consumer items such as cell phones. Recently, they have been
used for larger-scale battery storage and electric vehicles. At the end of 2017, the cost of a
lithium-ion battery pack for electric vehicles fell to $209/kWh, assuming a cycle life of 10-15
years. Bloomberg New Energy Finance predicts that lithium-ion batteries will cost less than
$100 kWh by 2025.
Lithium-ion batteries are by far the most popular battery storage option today and control more
than 90 percent of the global grid battery storage market. Compared to other battery options,
lithium-ion batteries have high energy density and are lightweight. New innovations, such as
replacing graphite with silicon to increase the battery’s power capacity, are seeking to make
lithium-ion batteries even more competitive for longer-term storage.
Additionally, lithium-ion batteries are now frequently used in developing countries for rural
electrification. In rural communities, lithium-ion batteries are paired with solar panels to allow
households and businesses to use limited amounts of electricity to charge cell phones, run
appliances, and light buildings. Previously, such communities had to rely on dirty and
expensive diesel generators, or did not have access to electricity.
When the Aliso Canyon natural gas facility leaked in 2015, California rushed to use lithium-
ion technology to offset the loss of energy from the facility during peak hours. The battery
storage facilities, built by Tesla, AES Energy Storage and Greensmith Energy, provide 70 MW
of power, enough to power 20,000 houses for four hours.
Hornsdale Power Reserve in Southern Australia is the world’s largest lithium-ion battery and
is used to stabilize the electrical grid with energy it receives from a nearby wind farm. This 100
MW battery was built by Tesla and provides electricity to more than 30,000 households.
General Electric has designed 1 MW lithium-ion battery containers that will be available for
purchase in 2019. They will be easily transportable and will allow renewable energy facilities
to have smaller, more flexible energy storage options.
Deployment of Grid-Scale Batteries in the United States David Hart and Alfred
Sarkissian
Grid-scale batteries hold the promise of making the difficult task of balancing electricity supply
and demand much easier and supplying ancillary services needed to stabilize the grid as well.
If batteries can perform these functions at a reasonable cost, the U.S. and other nations will
more easily be able to integrate renewables into their power systems on a large scale, which in
turn will accelerate the energy transition needed to meet the challenge of climate change.
The challenge of intermittency is deepened by the decentralization of the power system that is
accompanying the transition in the fuel mix. Many renewable systems are small-scale and
installed on customer premises, yet interconnected to the grid through net metering
arrangements which allow these small generators export power. Electricity customers (and
third-party energy managers working for them) are also increasingly able to vary demand, and
this flexibility will grow as “smart” end use technology improves and diffuses. In short,
balancing electricity systems is a hard task that is likely to keep getting harder.
There are three major strategies for addressing this challenge.4 One is to expand and diversify
interconnections among grid resources. A big, diverse grid is more likely than a small,
homogeneous one to have supply and demand effects that counteract one another. Bad weather
in Boston may be balanced by a balmy day in Detroit. The second strategy is to make the grid
smarter. Sensors and analytics can predict and pinpoint real-time balancing concerns and
opportunities, while new equipment allows for more flexible responses.
“Super” grids and smart grids complement one another, and both are complementary with the
third strategy, grid-scale storage. If adopted on a widespread basis, grid-scale storage would
create new options for managing the electricity system in an era of decentralized and
intermittent supply and demand – low-carbon alternatives to the gas peaking plants that provide
most of these options today. Grid-scale storage would be able to balance changes in customer
behaviour and respond to weather events that affect renewable generation and other supply
disruptions. It would also supply ancillary services that enhance grid functioning, such as
frequency regulation and provision of spinning reserves, and allow existing resources to be
used more effectively, deferring capital investment.

Figure 2: Market maturity of grid technology

 Research Gap

Some major questions that affect policymakers, practitioners and researchers alike when it
comes to the integration of renewables at the order envisaged. Some issues are theoretical, i.e.,
there is not universal agreement on optimal pricing signals or market design. Other issues are
more practical or case-specific, such as the contracting norms. There is also an issue in terms
of data availability and access–certainly scholars do not have open access to sufficient data,
even if such data are available with the government, utilities, or grid operators. Instrumentation
of grid-scale RE is relatively easy–rooftop or behind-the-meter PV is especially hard to
measure and disseminate. A few additional unknowns include:
1. Technical unknowns of RE performance and supply/demand, including spatial
and temporal heterogeneity
a. Where will the added capacity be located?
b. How much will be grid-scale versus end-user (behind-the-meter) RE?
c. What will be the expected performance (output)?
d. How much and where does transmission need to be augmented to mitigate
balancing risks and curtailment risks?
e. What will be the utilization factor for the new capacity?
f. How will the load (demand) curve evolve? Will the peak demand shift? Will
the peak grow faster? than the average? How will mid-day demand grow vis-à-
vis overall and peak growth?
g. What are the reductions in emissions from thermal units due to higher RE?
Would we witness higher emissions due to partial load operations and frequent
ramping of thermal units?
2. Grid Balancing and management unknowns
a. What are the non-internalized (system-level) costs of higher RE? How do the
costs of RE integration vary as RE’s share increases?
b. What are grid integration costs for all forms of generation, with a breakdown by
type of generation and some measure of location? A better framing might be
how will the balancing and management costs of higher RE evolve? How will
these change over time?
c. What is the role of energy storage and of demand response to meet flexing and
peak management?
d. What additional planning and system changes are required to better handle
higher RE in a manner that doesn’t increase the risk.
e. If RE curtailment is either cost-effective and/or unavoidable, what are the
quantum and cost implications?
 Research Problem

The new operating strategies for environmental compliance, when combined with our aging
transmission and distribution infrastructure, challenge the security, reliability, and quality of
the electric power supply. Hence the designing and proper integration of renewable sources
(Solar + Storage hybrid system) without a stress on existing grid infrastructure is an important
point for the utility as well as consumers. We need better grid reliability while dealing with an
aging infrastructure. And we need improved operational efficiencies and customer service. The
power distribution grid must respond quickly to shifting demand and continuously generate
and route electricity to where it's needed the most.
 Research Question

Question: How the Solar PV and Solar PV + Storage based project in India will help to increase
Renewable penetration in the system?
Question: What are the obstacles and limitations in the implementation and integration of Solar
PV and Solar PV + Storage based project in India with the grid.
a) Grid availability and grid code norms
b) POSOCO role in managing new systems with adequate metering infrastructure;
c) Base of financial and technical loss allocation.

Question: What is the level and degree of readiness Solar PV and Solar + Storage availability
and the adequacy of its infrastructure.
 Research Objective

RO1: To study the feasibility of Solar PV and Solar PV + Storage based project in India to
increase Renewable penetration in the system?
RO2: To study the obstacles and limitations in the implementation and integration of Solar PV
and Solar PV + Storage based project in India with the grid.
a) Grid availability and grid code norms
b) POSOCO role in managing new systems with adequate metering infrastructure;
c) Base of financial and technical loss allocation.

RO3: To study the level and degree of readiness Solar PV and Solar + Storage availability and
the adequacy of its infrastructure.
 Research Methodology

In recent times, the use of qualitative research methodology has been increased to pursue
applied research particularly in the context of social policy. The methodology of qualitative
research understands and explores the diversity of public and social policy concerns. To
understand complex cultures, systems, needs, and behaviours, it provides a systematic
approach.
Research is a scientific process that conducts systematic investigation in order to discover a
new knowledge. The research motivation is to discover a truth which has not yet been
discovered. Every research done has its own goal, goals, challenges and implications. Research
value does not depend on the subject of the study but it depends on how well the research is
being planned and designed.
Research design brings together different scientific concepts to gather and analyse data in a
phased way. Research design combines the importance of the purpose of the research with an
economic theory. A research design provides the conceptual and structural framework for the
data collection , measurement and analysis. It is thus always recommended that a suitable
research design be developed to follow.
Research Methodology is the way to conduct scientific research. Research methodology that is
used in research systematically solves the research problem. Research methodology contains
various research steps which are applied along with a defined logic in the research study. It is
necessary for the researcher to know not only about the research methods or techniques used
in an analysis but also the research methodology i.e., the researcher must know which research
method or technique is the best fit for his study and what is the reason for the best fit.
Methodology of study used in various research studies may differ by the nature of the issue.
The term “Research Methodology” has wider scope than the term “Research Methods”.
Quantitative research
Quantitative research methods use tools of numerical, mathematical, or statistical analysis to
solve a problem. The data are collected in quantitative methods through surveys ,
questionnaires and polls. Qualitative research also consists of various methods to use statistical
techniques to manipulate pre-existing data.
Qualitative research
Qualitative research is a research that is primarily exploratory and consists of a set of material
and interpretive practices to make this world visible. The world's observer lies in the qualitative
research. Qualitative research approaches transform any component of behaviour into a
sequence of representations. Memos, recordings, photographs, conversations, interviews or
field notes can make these representations. The qualitative research is involved in a naturalistic,
interpretive approach for the world. That concludes that the researchers who conduct the
qualitative research; study the specifics in the natural setting and interpret the particulars
through the meaningful inputs given by different people.
Data analysis is a systematic process of record review or evaluation — both printed and
electronic (computer-based and internet-based) content. Like other qualitative research
analytical methods, document analysis requires that data be examined and interpreted to gain
meaning, understanding and empirical knowledge development (Corbin & Strauss, 2008; see
also Rapley, 2007). Documents include text (words) and images which were recorded without
the intervention of a researcher.
Organizational and administrative records have for many years been a standard of qualitative
analysis. In recent years , the number of research reports and journal articles which mention
document analysis as part of the methodology has increased.
Document analysis is a systematic method for analysing or assessing both printed and
electronic content (computer-based and internet-transmitted). Like other analytical approaches
of qualitative research, document analysis involves the evaluation and interpretation of data in
order to obtain significance, understanding and scientific expertise.
Documents contain text (words) and photographs which were collected without the
involvement of a researcher. Other silent or trace evidence, such as cultural artefacts, is not
included for the purposes of this discussion.
Documents which can be used as part of an analysis for systematic evaluation take a number
of forms. These include advertisements; agendas, membership lists, and meeting minutes;
manuals; history papers; books and brochures; diaries and journals; event programs (i.e.,
written outlines); letters and memoranda; maps and charts; journals (clippings / articles); press
releases; policy plans, application forms and summaries; radio and television policy scripts;
organizational or instituting scripts.
As part of their studies, researchers typically review prior literature and incorporate that
information in their reports. However, when a list of examined documents is given, previous
studies are often not included. Needless to say, previous studies are a source of data, requiring
the researcher to rely on data description and interpretation instead of having the raw data as
the basis for analysis. The analytical method involves identifying, sorting, analysing (making
sense of) and synthesizing data in papers. Document analysis yields data fragments, quotes, or
whole passages that are then explicitly grouped into main themes, groups, and case examples
by content analysis.
Document analysis is particularly applicable as a research method to qualitative case studies
intensive studies that produce rich descriptions of a single phenomenon, event, organisation,
or program. For case studies non-technical literature, such as reports and internal
correspondence, is a potential source of empirical data.
It is important to note here that robust data collection techniques and research procedure
documentation are required in qualitative research. The research report will include detailed
details on how the thesis was conceived and performed. While document analysis has mostly
served as a complement to other methods of research, it has also been used as a stand-alone
method. Indeed, there are certain specialized forms of qualitative research which rely solely on
document analysis. As part of a study undertaking documentation may serve a number of
purposes.
Documents provide additional data for the research. Details and observations obtained from
records may be useful additions to a base of information. Therefore, researchers will browse
library catalogues and archives to evaluate the records as part of the study process. A
university-based scholar used newspaper reports, university policy papers, and department self-
evaluation data to supplement the data gained through interviews in her study of the closure of
technology teacher education programmes.
Documents offer a way to chart transition and evolution. Where different draft versions of a
specific document are available, the researcher can compare them to identify the changes. For
example, even subtle modifications in a draft may represent significant changes in a project
(Yin, 1994). The researcher can also review periodic and final reports (where available) to
obtain a clear picture of how an institution or program has performed over time.
Documents can be analysed as a way of verifying findings or corroborating other sources of
evidence. Specifically, sociologists use document analysis to verify their findings.
Analysing the Documents
Analysis of the text involves skimming (superficial examination), reading (thorough
examination), and interpretation. This iterative method incorporates elements of an analysis of
content and thematic analysis. Text analysis is the method of grouping knowledge into
categories corresponding to the research 's core questions. Some qualitative research experts
may object to the analysis of content, arguing, that it obscures the interpretive processes which
turn speech into text.
The thematic analysis is a form of pattern recognition within the data, with emerging themes
becoming analytical categories. The method includes re-reading and analysing the data
carefully, with a more emphasis. The reviewer takes a closer look at the data selected and
conducts coding and category creation, based on the characteristics of the data, to expose
themes important to a phenomenon.
Although documents can be a rich source of data, researchers should look with a critical eye at
documents and be cautious about using documents in their studies. Documents should not be
viewed as strictly reliable , accurate or complete records of the occurring events. Researchers
do not just 'grab' terms and passages to be thrown into their research report from the available
documents. Rather, the meaning of the document and its contribution to the issues being
explored should be established.
The importance of the document is decided by being researcher as analyst. It is also developed
that the content of the papers fits into the study's conceptual context. The authenticity,
credibility, accuracy and representativeness of the documents selected also need to be
determined.
It is important that the documents be assessed for completeness, in the sense that they are
comprehensive (to cover the topic entirely or broadly) or selective (to cover only certain aspects
of the topic). Whether the documents are even (balanced) or uneven (containing great detail on
some aspects of the topic and little or nothing on other aspects) is also determined.
When reading and reviewing the text, it is also decided if a text has been 'written as a result of
first-hand experience or from secondary sources, if it has been requested or not, edited or
unedited, anonymous or signed, and so on'. Furthermore, because the documents are context-
specific, they should be evaluated against other information sources.
Advantages and Disadvantages of Document Analysis
In relation to other qualitative research methods, document analysis has both advantages and
limitations. Let us look first at the advantages.
• Effective method: Paper analysis is less time consuming and thus more reliable than
other forms of study. Instead of data collection it requires data selection.
• Availability: Many documents are in the public domain, particularly since the advent
of the Internet, and can be obtained without permission of the authors. Which makes
analyzing documents an attractive choice for qualitative researchers. Locating public
records, as Merriam (1988) argued, is limited only by one's imagination and
industriousness. An, significant rule to keep in mind is that if a public incident happens,
there will most likely be some official record of that.
• Cost-effectiveness: Record analysis is less expensive than other study methods and is
therefore the method of choice when it is not feasible to collect new data. The data
(included in the documents) have already been collected; what remains to be evaluated
is the content and accuracy of the documents.
• Lack of obtrusiveness and reactivity: Records are 'unobtrusive' and 'non-reactive' – that
is, they are not influenced by the phase of testing. (Previous studies found in documents
are not considered here.) Accordingly, document analysis counters concerns relating to
(or lack of) reflexivity inherent in other qualitative research methods. For example, in
respect of observation, an event may proceed differently because it is being observed.
• Reflexivity — which involves knowledge of the researcher 's contribution to the
creation of meanings attached to social experiences and consideration of the likelihood
of the researcher 's effect on study — is not usually a problem in the use of research
papers.
• Stability: Records are stable as a corollary of not being reactive. The involvement of
the investigator does not change what they are researching (Merriam, 1988).
Documents, though, match regular comments.
• Accuracy: The inclusion of accurate names, references and event details makes
documents beneficial to the research process (Yin, 1994).
• Coverage: documentation provides broad coverage; it covers a long-time span, many
events and many settings (Yin, 1994).

Document analysis is not always advantageous. A number of limitations inherent in documents

are described below.
• Insufficient detail: Documents are produced for a purpose other than research; they are
created separately from the research agenda. (Former experiments found in records are
not considered here again.) Therefore, they usually do not include adequate information
to address a research query.
• Poor retrievability: Often paperwork is not retrievable, or it is difficult to retrieve. As
Yin (1994) pointed out, access to records could be blocked on purpose.
• Biased selectivity: Incomplete document collection suggests 'biased selectivity' (Yin,
1994, p. 80). The available (selected) documents are likely to be aligned in an
organizational context with corporate policies and procedures and with the organization
's principal agenda. They may also reflect the emphasis of the specific organizational
unit that handles record-keeping.
These are really potential flaws rather than major disadvantages. Given its efficiency and cost-
effectiveness in particular, document analysis offers advantages that clearly outweigh the
limitations.
Increased understanding of document review is essential to make successful use of this research
process. Data analysis is a low-cost way of obtaining scientific data as part of an unobtrusive
and non-reactive process. Documentary evidence is often combined with interview and
observational data to minimize bias and establish credibility. Although the strengths of
document analysis are significant, the researcher should not use it as a stand-in for other forms
of evidence that may be more relevant to the research question and the conceptual context of
the study.
The researcher / analyst must assess not only the presence and accessibility but also the quality
and usefulness of specific documents, taking into account the original intent of each document,
the context in which it was created and the intended audience. The researcher should make the
analysis process as rigorous and as transparent as possible, as the subjective interpreter of the
data contained in the documents
 Findings

India has announced ambitious RE targets (mainly for solar and wind sources):
• 175 GW by 2022,
• 275 GW by 2027, and
• 450 GW by 2030.

The capacity value of these RE is limited without grid-scale energy storage.

In order to meet this, instead of HPO, SPO should be look upon. Prices of electricity storage is
already decreasing and it also has multiple use i.e., shifting from off peak to peak, avoiding
curtailment etc. It also provides new business opportunity to DISCOMS in terms of power
purchasing. They can either procure power Hybrid RE + Storage or Standalone Storage
independently.
This can be done in 2 ways
• Increase renewables through RPO and RGO
• Equivalent amount of grid scale energy storage (SPO)

Hypothesis based on US PPA prices

If we try to scale unsubsidized US PV + Storage, its financing cost in India will be very high
i.e., 3 Rs/KWh to 3.5 Rs/KWh for 13% PV energy stored in the battery.
• This is 34% higher than what is there in US (excluding Tax and Import Duties)
• Total capital cost of 1MWh to 4MWh system.

Table 2: Capital Cost of Solar + PV Storage System (estimates)

Year Storage ($/KWh.) PV + Storage
2020 203 187
2025 134 122
2030 103 90
• Tariff addition after installation of the system
Table 3: Tariff addition after installation of the system
Year Addition in tariff (Rs. / KWh.) Final tariff (Rs. / KWh)
2020 1.44 3.94
2025 1 9.32
2030 0.83 2.83
• Estimates shows that decline in battery prices is such that it has reduced to about 50%
- 73%.
Table 4: Estimates of reduction in battery prices
Year Price of Battery ($/KWh) % reduction
2010 1200 85.3
2018 176 47
2024 94 34
2030 62
• As per CEA peak electricity demand in India will grow at about 6.32% / year.
 • Total energy consumption would exceed 1,500 TWh by FY2022 and 2,000 TWh by
FY2027
• India’s NEP states that about 123 GW of additional conventional capacity would be
required to meet this additional peak demand, because contributions of renewable
sources to meeting the peak demand are assumed to be minimal.
• According to CEA, to meet 340-GW peak load and 2,400-TWh energy requirement in
2030 additional 50 GW of coal between 2022 and 2027 is required, in addition to 48
GW expected to come online by 2022.
• Running coal plants at low-capacity factor would be operationally difficult and would
result in total costs per unit of Rs. 6–8/kWh, without accounting for additional
operations and maintenance (O&M) costs. This would be antithetical to the objective of
cheap, reliable power for all.
• As an alternative, battery energy storage systems based on low-cost Li-ion batteries
may enable India to use stored solar energy to meet demand.
• MNRE along with the National Energy Storage Mission, with the objective of “creating
an enabling policy and regulatory framework that encourages manufacturing,
deployment, innovation and further cost reduction” in the energy storage sector.
• MSEDCL filed a petition with the MERC seeking approval of procurement of power
from RE + storage
• As per the estimate India might account for 800 GWh of battery demand per year by
2030
Table 5: Cost comparison of Solar and Solar+Storage
Storage($/KWh.) PV + Storage($/KWh.)
2018 0.41 0.19
2030 0.17 0.09
• This analysis is on recent U.S. PPA prices and bottom-up cost analyses of storage and
solar PV + storage systems, adapted to the Indian context.

Case of U.S.
• Several grid-scale PV + storage and standalone storage projects are being developed in
the US.
• At the end of 2017, 708 MW of capacity was in operation in the US.

Method
• First Method
o Scale U.S. PPA prices to indicate bid prices Indian utilities could expect,
notwithstanding some benefits of economies of scale in the US.
o The U.S. data points are first scaled up by 30% to remove the effect of the
federal Investment Tax Credit (ITC), and then these unsubsidized prices are
scaled to account for India’s higher financing costs.
o For scaling the storage prices to India, we use the ratio of capital recovery factors
assuming
Table 6: Scaling factor considered to compare price of USA and India
US India
Interest rates 5.5% 11%
• An implicit assumption here is that, at scale, the capital cost of battery packs and core
control system components would be very similar in the United States and India
(globalized supply chain of batteries.)
• As per industry sources,
 o basic custom duty (BCD) for the battery pack = 5.5% (sourced from China and
deployed in non-EV applications);
o CESS=10% (computed on BCD),
o IGST = 18%
• If sold as part of a solar solution, IGST = 5%.
• Thus, consider duties + taxes = 11%–24%

Bottom-up cost analysis

• Hypothesize that a battery storage system is structurally similar to a PV system
• Panels replaced with battery packs, and
• Bidirectional inverter is deployed, along with the balance of system (BoS).
• Battery and PV BoS elements are similar.
• Assuming that the cost of PV mounting structures is equivalent to the cost of battery
thermal management systems.
• Therefore, with the exception of inverter cost will be higher for standalone storage and
absent in a PV + storage system (due to inverter sharing).
• Determine the scaling factor between India and U.S. capital costs of a PV system.
• The resulting ratios for scaling from U.S. costs to Indian costs are as follows:
Table 7: Scaling factor for different items
Scaling factor
BoS -49 %
EPC -78 %
Soft Cost -60 %
• Apply the same scaling factors to a bottom-up cost estimate available for U.S. to arrive
at a BESS cost estimate for India.
• BoS Comparison Between Storage and PV projects

Table 8: BoS for BESS and Solar PV

BoS for BESS BoS for PV
Power conditioning system/bidirectional Power conditioning units/inverters
inverters
Weatherproofing, thermal design for
components, heat-removal system, air- String combiner box with mounting structures
handling systems, filters to prevent dust
intrusion
Step-up transformers Step-up transformers
Low-tension (LT) and high-tension (HT) LT and HT switchgear and panels/ring main
switchgear and panels unit (RMU)
Performance monitoring and data acquisition/ SCADA
supervisory control and data acquisition
(SCADA)
Protection and control Protection and control
Auxiliary power system Auxiliary supply system, uninterruptible
power
supply (UPS)
Wiring/cables - HT/LT/communication Wiring/cables - HT/LT/communication
Controls and communication Controls and communication
Auxiliaries and other design requirements: Auxiliaries and other design requirements:
closed- CCTV, WMS, illumination, fire alarm
 circuit television (CCTV), weather monitoring
station (WMS), illumination, fire alarm

Levelized cost of storage (LCOS) = discounted cost/ unit of discharged electrical energy
𝐿𝐶𝑂𝑆
𝑁
1
= 𝐶𝑎𝑝𝑒𝑥 + 𝑂&𝑀 ∗ ∑ ( ) + 𝑉(𝑟𝑒𝑠𝑖𝑑𝑢𝑎𝑙)
(1 + 𝑟)𝑛
𝑛=1
𝑁 𝑁
1 1 − 𝑛 ∗ 𝐷𝐸𝐺
∗∑( ) [ 1/𝐷𝑢𝑡𝑦 𝐶𝑦𝑐𝑙𝑒 ∗ 𝐷𝑜𝐷 ∗ 𝑅𝑎𝑡𝑒𝑑 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 ∗ ∑ ( )]
(1 + 𝑟)𝑁+1 (1 + 𝑟)𝑛
𝑛=1 𝑛=1

Assumptions for Calculating LCOS

Table 9: Assumptions for calculating Levelized Cost of Supply

Variable Value
Exchange rate 70 Rs. /$
Total charging/discharging cycles available 3,650 cycles
Full charging/discharging cycles per year 365 cycles
Project lifetime (N) 10 years*
Depth of discharge (DOD) 90%
Rated capacity (Crated) 1 kWh
Annual degradation rate of capacity (DEG) 1.0% per year
Interest rate (r) 11%
O&M cost, assumed to be constant (O&M) 1% of CAPEX
Residual project value after lifetime (Residual) 10% of CAPEX

Results
Present results in 3 subsections:
• Indian PV + storage and standalone storage costs from bottom-up analysis
• LCOS
• Sensitivity analysis

Indian PV + Storage and Standalone Storage Costs Using Bottom-up Analysis

• The detailed breakdown of standalone storage capital costs from US is shown which
enables to map and group the cost components to the corresponding cost categories in
a PV system.
• US develop a detailed bottom-up model for cost structure of a traditional Li-ion battery,
broken into EPC costs (hardware and other costs) and developer costs.

Bottom-up Cost Estimates of U.S. Utility-Scale Li-ion Battery Systems with Durations of
1 and 4 Hours
 Table 10: Bottom-up Cost Estimates of U.S. Utility-Scale Li-ion Battery Systems with Durations of 1 and 4 Hours
1-hour (1 MW/1 4-hour (1 MW/4
Category Component MWh) System MWh) System
($/kWh) ($/kWh)
Battery
Li-ion battery 209 209
pack
BOS
Battery central inverter 70 18
hardware
Structural BOS 19 13
Electrical BOS 81 36
EPC Installation labor and equipment 62 23
EPC overhead 26 12
Soft cost Sales tax 33 22
Developer cost (including EPC and
developer net profit) 100 49
Total 600 382

Except for battery pack costs that stay the same per kWh, other BoS, EPC, and soft costs are
spread over a larger battery capacity—and hence are lower per kWh—for a battery with the
same MW rating but higher MWh capacity
Cost Scaling Ratios Between 1- and 4-Hour Battery Systems
Table 11: Cost Scaling Ratios Between 1- and 4-Hour Battery Systems
1-hour (1 4-hour (1
Scaling Ratio
MW/1 MW/4
Component Between 1- and
MWh) System MWh) System
4- Hour System
($/kWh) ($/kWh)
BoS 100 49 -51%
Inverter 70 18 -74%
EPC 88 35 -60%
Soft cost (excluding taxes, land,
permitting and interconnection fees) 61 39 -36%
• Current India standalone and co-located system costs are hence estimated to be 31%
lower than costs in the United States.

Complete Scaling of U.S. to India Battery Cost Components

Table 12: Scaling of U.S. to India Battery Cost Components

U.S. India
India 1
India 1 Scaling India 1
U.S. 1 MW/ MW/
Scaling MW/ Ratio MW/
1 MWh 4 MWh
Component Ratio 1 MWh (1- 4 MWh
System System
(U.S. to System hour to System
(standalone) (with
India) (standalone) 4-hour (standalone)
($/kWh) PV)
($/kWh) system) ($/kWh)
($/kWh)
Battery
176 0% 176 0% 176 176
pack
BoS 100 -49% 51 -51% 25 15
 U.S. India
India 1
India 1 Scaling India 1
U.S. 1 MW/ MW/
Scaling MW/ Ratio MW/
1 MWh 4 MWh
Component Ratio 1 MWh (1- 4 MWh
System System
(U.S. to System hour to System
(standalone) (with
India) (standalone) 4-hour (standalone)
($/kWh) PV)
($/kWh) system) ($/kWh)
($/kWh)
Inverter 70 0% 70 -74% 18 11
EPC 88 -78% 20 -60% 8 8
Soft cost 61 -60% 25 -36% 16 16
Total 495 341 242 225

• Grid-scale batteries are expected to play a crucial role as penetration of variable RE

increases on the Indian grid over time, attempt to project future capital costs of storage
in India.
• Non-pack costs decline at a nominal rate of 5%.
• This is a plausible scenario for India, with an assumed average inflation rate of 5%, i.e.,
the price per component is declining in real terms but fixed in nominal terms. In this
scenario, the projected capital cost of a 1-MW/4- MWh PV co-located storage in India
drops to $122/kWh by 2025 and $92/kWh by 2030, which are 46% and 59% lower than
the current estimated capital cost. Below table gives the component-level capital cost
estimates for both a standalone and a PV co-located BESS for the second scenario.
Further details can be found in the appendix.

Capex Estimates for BESS in India with a 5% Annual Reduction in Non-Pack Prices
Table 13: Capital Expenditure Estimates for 1 MW/4MWh BESS in India
Capital Expenditure
Estimates Standalone Year/Cost PV Co-located Year/Cost
for 1 MW/4 MWh BESS in ($/kWh) ($/kWh)
India
Components 2020 2025 2030 2020 2025 2030
Battery pack 143 88 62 143 88 62
BoS hardware 22 17 15 13 10 9
BoS inverter 16 13 11 10 8 7
Soft costs 7 5 5 7 5 5
EPC 14 11 10 14 11 10
Total Capital Expenditure 203 134 103 187 122 92
($/kWh)

Levelized Cost of Storage (LCOS)

• We use our capital cost estimates and the assumptions in Table 4 to estimate the LCOS
for 4-hour battery storage (at rated capacity) in India. We assume a 20-year PPA
contract for standalone battery storage systems as well as for PV-plus-storage co-
located systems. For such a contract, we assume the battery is replaced at the end of
year 10; the net present value (NPV) of the battery pack replacement cost in that year
is added to the upfront capital cost. For projects deployed in 2025 and 2030, we use the
 2030 battery pack cost as the replacement cost.
• Figure 5 plots our LCOS estimates. We estimate that, by 2022, the LCOS would be
about Rs. 6.13/kWh for a standalone BESS and Rs. 5.72/kWh for a BESS co-located
with PV. By 2025, the LCOS of a co-located BESS would drop to Rs. 4.70/kWh, and
by 2030 it would be less than Rs. 4/kWh. It is important to note that LCOS refers to the
per-kWh cost of the electricity that is stored in and discharged by the battery.
• For batteries co-located with PV (or any other generator), only a fraction of the total
energy generated by the powerplant likely will be stored in the battery. Therefore, to
estimate the total per-kWh cost of the co-located system, LCOS may not be directly
added to the solar tariff. The battery cost needs to be spread over the entire amount of
solar generation to determine the aggregate per-kWh cost of the system. Hence, for
BESS co-located with solar (or other projects), a more appropriate metric for assessing
the additional cost of storage would be a tariff adder, i.e., the additional battery cost
when added to the solar (or other) PPA price.

Figure 3: Levelized Cost of Storage estimated for 1MW/4MWh in India

Estimated LCOS for standalone and co-located BESS in India

To quantify the tariff adder, we determine the annualized cost of storage and spread it over the
units generated by PV. Figure 6 plots the tariff adder (in orange) on top of the solar tariff, based
on the percentage of PV energy that is stored in the battery, for 2020. The adder increases
proportionately as battery capacity vis-à-vis solar output is increased. For 25% PV energy used
to charge the battery and thereafter supplied by the battery, the tariff adder is estimated at Rs.
1.44/kWh in 2020, declining to Rs. 1.0/kWh by 2025. Assuming a solar PPA priced at Rs. 2.5–
3.0/kWh (Bridge to India 2019), a combined PV-plus-storage PPA for FY 2020 could be
estimated at Rs. 3.94–4.44/kWh.
For example, such a PPA price might be obtained for a 100-MW PV system generating an
average of 480 MWh/day with a 30-MW battery system using 120 MWh for charging.
Reducing the amount of PV energy consumed by the storage system would reduce the PPA
price. For example, reducing the battery capacity to be equivalent to 12.5% of PV generation
would halve the tariff adder as well, to Rs. 0.72/kWh by 2020, and to Rs. 0.67/kWh by 2021.
The PV-plus-storage PPA estimate for 2021 would then be Rs. 3.17/kWh (assuming a solar
tariff of Rs. 2.5/kWh), which is within the range of tariff estimates obtained from U.S. market
data. Similarly, for 33% of PV energy stored in the battery, the total tariff is estimated at Rs.
4.02/kWh in 2023, which is also comparable to the estimate based on U.S. market data. The
marginal cost of coal units dispatched in several parts of India is Rs. 4–4.5/kWh today. As the
PLF of coal plants declines, the per-unit total cost (due to fixed cost recovery) increases.
The tariff adder will continue to decline as battery costs fall. By 2025, the tariff adder for 25%
PV energy stored in the battery is projected to fall to Rs. 1.02/kWh, and to Rs. 0.83/kWh by
2030. Therefore, the estimated price for a PV-plus-storage PPA would be Rs. 3.32/kWh by
2025, falling to Rs. 2.83/kWh by 2030.
Thus, our bottom-up estimates align well with the scaled market prices, which validates the
market bids (showing they are not outliers) and suggests such prices could be achieved in
India as well. This analysis assumes the industry operates at scale—and hence can obtain
international battery pack prices—and it does not include land costs, taxes, and fees.
However, it is imperative to note the following additional factors in this analysis. First, the
method of scaling PPA prices does not account for differences in CUF between India and the
United States. Second, the bottom-up BESS cost estimates exclude certain costs such as
transportation, contingencies, and the impact of exchange rate fluctuations. Third, our
assumption that non- battery-pack system costs remain fairly steady over the next several years
is conservative. Frankel et al. (2018) project rapidly decreasing battery BoS and soft costs over
the next decade. Because the U.S. industry has a head start over India’s industry (with 40% of
the world’s grid-scale battery storage installations to date), it might take longer for India to
realize similar cost reductions as its industry matures. We also assume daily cycling of the
battery, which is important to keep LCOS low.
In contrast, our capital cost estimates for standalone BESS are significantly (~33%) lower than
the battery investment assumptions in CEA (2019). In the absence of details on CEA’s
assumptions, we speculate that CEA may not account for synergies between the EV and grid-
scale battery industries and resulting global economies of scale.
Policy and regulatory interventions have played a major role in development of the battery
industry and large-scale battery deployment in the United States. In addition to rulings by the
Federal Energy Regulatory Commission that created a level playing field for battery storage
projects to participate in wholesale electricity markets, several state-level policies (such as a
storage procurement mandate in California) have created early demand for battery storage. The
evolution of business models for grid-scale batteries in India will also depend heavily on the
policy and regulatory frameworks put in place over the next few years. India has announced
plans to establish battery manufacturing plants with a total capacity of 50 GW (Singh 2019).
With large-scale local manufacturing, India may further transform the economics of grid-scale
battery systems.
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