According to CareEdge Ratings, the Indian energy storage sector is undergoing a significant transformation due to the government’s revised Renewable Purchase Obligation (RPO) and Energy Storage Obligation (ESO) norms. The regulations are expected to drive the expansion of energy storage systems (ESS), with a projected requirement of 12 GW capacity in FY24, rising to 70 GW by FY30. The growth aligns with India’s strategic goal of enhancing its renewable energy (RE) portfolio, aiming for a cumulative non-fossil fuel-based capacity installation of 500 GW by the end of the decade.
CareEdge Ratings emphasizes the crucial role of Pumped Storage Projects (PSP) and Battery Energy Storage Systems (BESS) in this renewable energy revolution. The report suggests that an estimated ₹14 lakh crore in incremental debt financing will be needed to reach a 425 GW installed RE capacity, alongside the development of 19 GW of PSP capacity and 42 GW of BESS capacity by 2030, signifying substantial financial implications.
The analysis highlights the competitive levelized cost of storage from PSP at ₹4.81 per unit compared to ₹11.64 per unit from BESS, demonstrating the economic viability of PSP for long-duration energy storage. PSP is identified as a more cost-effective solution for round-the-clock RE supply, with a landed cost of approximately ₹4.74 per unit versus ₹6.59 per unit from BESS. However, the report acknowledges the need for significant technological advancements, economies of scale, and financial stimuli to enhance the viability of BESS, which offers advantages in terms of deployment flexibility and lower land requirements.
As reported by SOLARQUARTER, The government’s proactive policy measures, including the RPO and ESO targets, play a crucial role in driving the adoption of renewable energy and integrating storage solutions into the energy mix. CareEdge Ratings points out that these targets, along with supportive policies like simplification of project approvals, viability gap funding (VGF) for BESS, and incentives for PSP development, are essential for the sector’s growth.
