New guidelines issued on procurement and utilization of BESS as part of generation, transmission and distribution assets

In India, the growth of renewable energy (RE) installation over the last decade is one of the most commendable success stories of the nation. Electricity generated from RE (VRE) such as solar and wind energy is increasingly becoming a part of the nation’s energy mix. The cost of procurement of power from such VRE sources have become at par or even lower than the cost of power procurement via conventional energy sources such as coal.

In the backdrop of the ambitious target of installing 500 GW of non-fossil fuel-based generation capacity by 2030, India has so far crossed the milestone of 150 GW of RE capacity. However, power generation through VRE sources such as solar and wind mainly occurs during periods with low power demand. Furthermore, the energy generated is infirm or inconsistent in nature.

With the initial VRE capacities tied-up with the power grid, it can be foreseen that further penetration of VRE power into the grid would lead to aggravation of the supply-demand mismatch issue. Therefore, there is a dire need for provision of flexible (or balancing) power to complement the VRE power, in order to maintain the load-generation balance.

Now, it is well-established that integration of flexible energy resources such as Energy Storage System. (ESS) with the existing and upcoming VRE resources is one of the most viable solutions to the pertinent issue. In order to accomplish the 2030 target, set for non-fossil fuel-based energy by 2030, the right selection of energy resource mix is indispensable.

In April, 2021, for augmenting energy storage capacity in the in the energy mix, the Ministry of Power (MoP) had requested the Central Electricity Authority (CEA) to submit a report on identification of usage of storage as business case and for ancillary services.

The basic operations of voltage and frequency control are embedded in the electricity supply system. In order to facilitate provision of these basic operations, specific support services are required for reliable and efficient grid operation. These support services which act as ‘Value added Services’ are known as ‘Ancillary Services’.

To match the generation capacity with the growing demand, the ongoing ancillary system is being transformed. The new ancillary system will need to amalgamate ESS with the upcoming VRE capacity to optimize transmission and generation mix.

The report prepared by CEA, in response to the request by MoP, suggests the use of Pumped Hydro Storage System (PSP) and Battery Energy Storage Systems (BESS) for commercial deployment. Further, the study by CEA, under its planning model selected the BESS from the year 2027-28 onwards and a BESS capacity of 27,000 MW/108,000 MWh (4-hour storage) is projected to be part of the installed capacity in 2029-30. This is in addition to 10,151 MW of PSP anticipated to be a component of the installed capacity in 2029-30.

Later, on March 11, 2022, the MoP notified new guidelines on procurement and utilization of BESS as part of generation, transmission and distribution assets, along with ancillary services.

Objectives of the Guidelines:

  1. To facilitate procurement of BESS, as part of individual RE power projects or separately, for addressing the variability/ firming power supply/ increasing energy output/ extending the time of supply from an individual RE project or a portfolio of RE projects, augmentation of existing RE Projects and/or to provide ancillary, grid support and flexibility services for the grid
  2. To facilitate procurement of BESS for optimum utilization of transmission and distribution network
  3. To ensure transparency and fairness in procurement processes/ and to provide for a framework for an Intermediary Procurer as an Aggregator/ Trading licensees/ Implementing Agency for the inter-state/intra-state sale-purchase of power
  4. To provide standardization and uniformity in processes and a risk-sharing framework between various stakeholders, involved in the energy storage and storage capacity procurement, thereby encouraging competition and enhanced bankability of the projects

Key Suggestions Provided in the Guidelines:

Parameter

Description

Project Scope

Build-Own-Operate or Build-Own-Operate-Transfer

Project Size

1 MW or above ­              –            For Intra-state

50 MW or above             –            For Inter-state

Scheduled Commissioning Date (SCD)

18 months                        –            For project size < 250 MW

24 months                        –            For Project size > 250 MW

Bid Capacity Format

INR per kW (or per MW) per year (or per month)

Project Tenure

More than 8 years

Apart from this, few business cases have been identified in the MoP guidelines in which BESS can be utilized. This includes BESS coupled with RE/ with transmission infrastructure, storage for distribution/ for ancillary services.

Thus, the new guidelines are furnished with the aim of facilitating the procurement of battery storage systems to be utilized either in combination with renewable energy or as a standalone asset. With the falling battery prices, the BESS guidelines will serve as a base to streamline future developments in this sector. These guidelines will also play a critical role in achieving the nation’s renewable energy and decarbonisation goals i.e., to reach net zero emissions target set by India.