Battery storage PLI, hydropower policy coming in budget

NEW DELHI : Finance minister Nirmala Sitharaman’s upcoming budget speech is expected to include a range of announcements aimed at boosting green energy adoption, including the highly anticipated production linked incentive (PLI) scheme for battery storage and pumped storage plant policy for hydropower.

Sitharaman is expected to unveil a plan to build a 1 gigawatt (GW) battery storage system over the next two years, the people said, seeking anonymity. This would be the largest such battery storage system in the world.

The PLI for battery storage is part of the energy storage policy prepared by the government. “Even if the energy storage policy comes before the budget, the PLI is likely to be mentioned in the next budget,” one of the two officials said.

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As part of New Delhi’s plan to achieve 500GW of installed green energy capacity by 2030 and net-zero carbon emissions by 2070, the coming Union budget in February is expected to include announcements for round-the-clock renewable energy supply, with a focus on storage solutions.

Queries sent to spokespeople for the ministries of new and renewable energy, power and finance remained unanswered till press time.

In September, Union minister for new and renewable energy R.K. Singh said the government is working on a PLI scheme for grid-level renewable energy storage, which refers to large-scale energy storage solutions. Singh also said the government would invite bids for one of the world’s largest grid-scale battery energy storage system projects.

He said the only way to cut the cost of energy storage is to start local manufacturing and grow volume. “That’s what I am going to do. The PLI, which I will come up with, will be only for grid-level storage,” Singh said.

He also emphasized that lithium-ion batteries would not be the preferred technology for grid-level storage and that other chemistries would be explored.

The demand for energy storage has surged in the past two years as the need for round-the-clock renewable energy has grown. In July, the Centre added an energy storage obligation to its existing renewable purchase obligation for the first time.

The government’s energy storage obligation (ESO) targets a certain percentage of total energy consumed to be sourced from energy storage. The initial target for FY24 is 1%, rising to 4% by FY30. To fulfil ESO, at least 85% of the energy procured and stored annually must come from renewable energy sources.

According to experts, energy storage can play a crucial role in grid integration and balancing of variable generation sources. Increasing the system’s overall flexibility can improve power quality, reduce peak demand, enhance the capacity of distribution and transmission grids, and avoid or reduce deviation penalties.

By using energy storage systems and renewable energy, residential and commercial consumers can improve their power quality and reliability.

Similarly, pumped storage plants serve as a storage mechanism for hydropower. They are made up of two water reservoirs at different elevations, which generate power as water flows from one to the other through a turbine. The system also requires power as it pumps water back into the upper reservoir.

Along with battery storage, the government has been making efforts to boost pumped storage plants, and the much-anticipated policy for pumped hydro is likely to come up in the coming budget. The pumped hydro plants’ policy has been in the works for over a year now. Last year, Singh said the government has identified around 63 projects with a total capacity of 96GW.

The government has also come up with bids for energy storage systems.

Recently, Greenko Group announced that it had placed the lowest bid for the world’s first and largest technology-agnostic energy storage tender floated by state-run power producer NTPC Ltd. The tender is for 3000MWh for a 25-year period, and Greenko won the tender through its pumped hydro-backed bid.

The government also solicited bids for energy storage systems.

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