Government Mandates Two-Hour Energy Storage Integration With Solar Projects In Future Tenders

Ministry of Power has mandated renewable energy implementing agencies to include two hours of co-located energy storage systems, with solar projects in future tenders, to meet demand for peak hours and reduce variability issues.

In an advisory issued on Feb. 18, the ministry said, co-locating energy storage systems with solar projects can increase the storage capacity to 14 GW/28GWh by 2030 from 4.86 GW as of December 2024.

The current installed capacity of ESS includes 4.75 GW of pumped hydro storage and 0.11GW of battery energy storage projects.

According to the National Electricity Plan issued by Central Electricity Authority, to integrate 364 GW of solar and 121 GW of wind capacity by 2031-32, India would require 73.93 GW and 411.4GWh of solar and wind storage capacity, respectively. This includes 25.69 GW/175.18GWh from pumped storage and 47.24 GW/236.22 GWh from battery storage.

To achieve the target, all renewable energy implementing agencies and state utilities have been advised to incorporate a minimum of two-hour co-located storage systems, equivalent to 10% of the installed solar project capacity in future tenders.

"This requirement will help mitigate intermittency issues and provide critical support during peak demand periods," the advisory noted. "A suitable compliance mechanism may also be explicitly mentioned in the bid document, to ensure the availability of storage during non-solar hours."

Even power distribution licensees may consider mandating two-hour co-located storage systems with rooftop solar projects, the advisory said.

The recent decrease in battery prices may also help reduce the power purchase costs during evening hours, when solar generation is unavailable and energy rates in the exchange are high, the advisory said.

"The move was expected given the sharp fall in battery prices," said Rupesh Sankhe, vice president and power sector analyst at Elara Securities.

"Discoms earlier were not keen to sign power sale agreement just for plain vanilla renewable projects like solar or wind. Co-located projects will see lot of traction on solar plus battery or FDRE, like solar, wind pumped storage or battery projects," he said.

Two hours is still very small. Eventually, India will have six-eight hours of BESS to manage four hours of evening peak and two-three hours of morning peak, he said. It will also ensure grid stability when more renewable energy is in the system, Sankhe added.