India’s energy sources are shifting away from fossil fuels towards renewable energy (RE). However, integrating large amounts of fluctuating RE into power grids creates difficulties in ensuring consistent and reliable electricity. Traditional energy sources like coal, hydro (with storage), and nuclear provide a steady and controllable power supply because their energy generation can be adjusted based on demand. These sources can regulate output by increasing or decreasing fuel input or water release. In contrast, renewable sources like solar and wind produce electricity based on natural conditions, making their output variable and unpredictable. Since they generate power only when sunlight or wind is available, their energy must be used immediately unless it is stored or banked. Otherwise, any unused energy is wasted.
RE sources present this challenge because their output changes depending on the time of day, weather, season, and where they’re located. This inconsistency creates problems for maintaining a stable power grid and requires flexible solutions to fix this intermittency challenges of renewable sources.
This is where Battery Energy Storage Systems (BESS) come in. They can help smooth out the fluctuating nature of renewable sources. Consumers (both industrial and residential) also benefit through lower peak energy costs, reduced carbon footprints, and consistent power supply.
Introduction to Battery Energy Storage Systems
A Battery Energy Storage System (BESS) allows us to store generated energy for future use. This is important because energy supplies can get hampered due to weather changes, power outages, or geopolitical issues.
Battery systems are essential for homes, businesses, and utility companies to ensure a steady flow of electricity significantly boosting the energy security of the system. They are now a key part of energy plans, especially those using solar and wind energy.
According to the National Electricity Plan (NEP) 2023, unveiled by the Central Electricity Authority (CEA), India’s storage requirement from BESS will rise to 34.72 GWh in 2026-27. Due to increased renewable energy production, this requirement is expected to reach 1840 GWh by 2047.
BESS Solutions for Commercial & Industrial Sectors
Role of Battery Energy Storage Systems in India's Corporate Energy Shift
Battery storage systems can be integrated across the energy value chain. They can be coupled with all three parts of any energy system: generation, transmission, and distribution. Here’s how BESS systems can be integrated:
Combining energy storage with renewable energy (RE) sources creates a reliable, on-demand power supply for buyers and minimizes the waste of renewable energy from intermitted sources like solar and wind. RE Developers can use BESS technologies to make true Round-The-Clock (RE RTC) solutions. Similarly, pairing storage with traditional power plants makes those plants more adaptable and responsive to changes in demand.
- Storage with Transmission:
Using BESS in transmission infrastructure allows for better utilization of existing transmission networks by preventing damage due to overloading. It keeps them in service for longer periods and makes the power grid more resilient and reliable.
- Storage with Distribution:
Power distribution companies can use these systems to better manage their peak load distribution, improve grid reliability, efficiency and renewable energy integration.
BESS is accessible to a wide range of users. It includes license holders, owners, developers, lessors, lessees, buyers, and brokers. Those who develop or own these systems can choose to rent out or sell storage space.
Benefits of Energy Storage
Here are some of the advantages of battery energy storage systems:
- Enabling Round-The-Clock (RTC) Renewable Power
Renewable energy sources like solar and wind are intermittent, making it challenging to ensure a 24/7 power supply. BESS allows surplus energy generated during high-production periods to be stored and dispatched when needed, ensuring a continuous and predictable power supply. This makes RTC renewable power a viable and scalable alternative to conventional energy sources like coal.
The cost of grid electricity is continuously increasing over time. For businesses and households, BESS helps store cheap electricity generated by their solar rooftop systems during off-peak hours and use it during peak tariff periods, reducing electricity costs. It also enables greater self-reliance for solar-powered homes and businesses, minimizing grid dependency.
- Grid Stability & Frequency Regulation
Grid frequency fluctuations can destabilize the power network, especially with the increasing penetration of renewables. BESS provides instantaneous response to frequency variations, ensuring grid stability and smooth integration of renewable energy. Unlike traditional power plants that take longer to ramp up, battery storage can inject or absorb power within milliseconds, making it essential for grid operators.
- Enhancing Energy Resilience & Backup Power
For industries and commercial consumers, power outages can result in operational losses and downtime. BESS systems on the demand side provides instant backup power, ensuring business continuity even during grid failures. In renewable-rich microgrids, BESS enables complete energy independence, reducing dependence on DISCOMs.
Renewable energy is a clean energy source as it does not release harmful emissions into the environment. However, offsetting 100% consumption with renewable energy can be a constraint for industrial consumers. BESS can help businesses go 100% green in their power consumption, helping them reduce their carbon footprint significantly.
Government Policies and Initiatives in India
In August 2023, the government released the National Framework which aims to promote Energy Storage Systems. It is a significant measure for the development of battery storage systems in India.
National Framework for Promoting Energy Storage Systems
Here are the features of the National Framework for Promoting Energy Storage Systems:
1. Viability Gap Funding for BESS
In September 2023, the Indian government approved a Viability Gap Funding (VGF) scheme. The aim is to establish 4,000 MWh of battery energy storage projects by 2030-31. Here are its key features:
- It has a budget allocation of Rs. 3,760 crore and an initial outlay of Rs. 9,400 crore.
- The scheme will give financial assistance of up to 40% of the capital investment needed. It will be a non-recurring expenditure.
- Projects will be approved over a 3-year duration, spanning 2023-24 to 2025-26. Funding will be allocated in 5 installments. The disbursements will continue until the fiscal year 2030-31.
In the table below, you can find the pattern of fund distribution across the 5 tranches:
Milestone |
VGF disbursed (%) |
Financial closure and obtaining control of 90% of the total land necessary for the project. Financial closure is contingent upon the developer securing a bank guarantee. |
10% |
On Commercial Operation Date (COD) |
45% |
Completion of 1st year from COD |
15% |
Completion of 2nd year from COD |
15% |
Completion of 3rd year from COD |
15% |
- The cost for the Battery Energy Storage Systems (BESS) is estimated to fall between Rs. 2.20 and Rs. 2.40 crore per megawatt-hour (MWh) during the 2023-26 period.
- It aims to achieve a Levelized Cost of Storage (LCoS) of Rs. 5.50 to Rs. 6.60 per kilowatt-hour (kWh).
- To maximize consumer benefits, at least 85% of the BESS project capacity will be allocated to Distribution Companies (DISCOMs).
- 4,000 MWh BESS capacity is projected to lead to an annual decrease of around 1.3 million metric tons (MMT) in carbon emissions. This calculation assumes that the BESS is charged using RE sources.
- A transparent and competitive bidding system will be used to select BESS developers for VGF grants. This method will give a fair chance to both public and private sector participants.
2. Legal Status for Energy Storage Systems (ESS)
As per Electricity (Amendment) Rules, 2022, Energy Storage Systems are recognized as integral components of the power system to enable their inclusion in regulatory frameworks. ESS can work autonomously or alongside existing generation, transmission, and distribution networks. Accordingly, they will be classified as generation, transmission, or distribution element.
3. Energy Storage Obligation
In July 2022, the Ministry of Power notified Energy Storage Obligations (ESO) for solar and wind energy. The ESO will increase from 1% in FY 2023-24 to 4% by FY 2029-30, with an annual rise of 0.5%.
To fulfil this obligation, 85% of the energy stored in the ESS must come from renewable energy. ESO fulfilled from renewable energy will be considered for Renewable Purchase Obligation (RPO) as well.
4. Waiver of Inter-State Transmission System (ISTS) Charges
In November 2021, the Ministry of Power waived ISTS charges for BESS projects commissioned before 30 June 2025. The waiver will be valid for up to 12 years or for a period which the central government specifies.
5. Replacement of Diesel Generator (DG) sets with RE/Storage
As per the Electricity (Rights of Consumers) Amendment Rules, 2022, consumers who are using Diesel Generator (DG) sets as backup power must shift to cleaner technology. This can include sources like renewable energy with battery storage within 5 years or the duration specified by the State Commission.
6. Inclusion of BESS as Eligible Generator in HP-DAM
Battery Energy Storage Systems (BESS) can now participate as generators in the High Price Day Ahead Market (HP-DAM) segment of the Energy Exchange. This inclusion allows battery energy storage system developers to effectively capitalize on the price variations between peak and off-peak electricity tariffs.
Conclusion
The use of batteries for storing renewable energy is a relatively new but promising field. Its wider adoption depends on demonstrating long-term reliability, lowering initial costs, and building new facilities. As the market matures, energy storage for businesses is expected to gain significant traction.
Innovative business models like “Battery as a Service” (BaaS) and “Storage as a Service” (SaaS) are emerging. BaaS allows companies to use battery storage without the large upfront investment of buying them. They pay for usage as needed, and the service provider handles maintenance and management.
SaaS offers similar flexibility that lets businesses pay only for the storage capacity they use. This allows them to adjust their storage based on demand and makes it a flexible and cost-effective option. These models encourage wider use of battery storage by lowering entry barriers and providing scalable, sustainable solutions for commercial and industrial users.
Why Sunsure Energy?
Sunsure is one of India’s top renewable energy solutions providers. We provide round-the-clock, dependable renewable energy for large scale industrial consumers. Our systems are built to help industries such as steel, cement, pharmaceuticals, and automotive meet their carbon reduction goals by creating true RE RTC (Round-The-Clock) power solutions for our customers.
Our cutting-edge battery storage technology guarantees a constant flow of clean energy for businesses and industrial operations, even when energy demand is highest. We focus on supplying consistent renewable power to keep your operations running smoothly, even in the low generations hours of renewable sources.