Not Disheartened by Cancellation of Energy Storage Tenders in India: IESA Director


There is a growing market for battery and energy storage in India, but the pace of that growth is manifesting in a slow and steady manner as sector participants await the formation of supportive government policies, according to India Energy Storage Alliance (IESA) Director Debi Prasad Dash. Dash spoke about this and other recent developments in the sector, such as the cancellation of tenders by SECI and NTPC, in an interview with Mercom India. The following is an excerpt from that conversation.

What do you think about the Indian market when it comes to battery and energy storage?

The Indian market is not a new market. It is already a $6 billion market in lead acid batteries. Apart from lead acid batteries, other new technologies are also coming into the Indian market. The market is evolving with the changing times as new technologies find their footing.

What is the future scope of battery and energy storage?

Apart from the conventional utilization, new areas have emerged. These are renewable energy integration, diesel usage optimization, and electric vehicles (EVs). These will provide a demand push. A big market is coming up for energy storage in the private sector. In private commercial and industrial establishments planners are now including energy storage systems with their rooftop solar installations. A few examples of this are hospitals, resorts, hotels, and the like. This is only going to pick up with the passage of time.

The EV market in India is gradually booming. The energy storage unit is the most important component of any EV, whether it’s a two-wheeler, a three-wheeler, a four-wheeler, or others. NITI Aayog’s estimate that India’s market for EV batteries could be worth as much as a $300 billion in a 100% EV Nation is very ambitious. But IESA estimates that in the next five years the EV battery market will be worth a minimum of between $30 billion to $40 billion.

Why is the energy storage segment lagging in India?

You cannot say it is lagging. The Indian energy storage segment is unique. It is not like other segments such as solar that it will evolve within a span of a few days or months. A fast-paced evolution of this market segment would not be beneficial. The solar energy sector grew at break-neck speed in the past two years and now low bidding prices are creating hurdles for business sustainability for many companies in India.

A sustainable market is needed for energy storage and it will take time. We are waiting, not lagging.  At present, we are happy that the government has started listening to the problems faced by the energy storage sector. The government has realized that energy storage is required and is of great importance to fulfil the integration of 175 GW of renewable energy capacity into India’s power grid.

The policy formation is taking some time and due to that we must wait.

What steps has IESA taken to promote energy storage in India?

IESA has written to the government to contest the cancellation of the BESS tenders issued by the Solar Energy Corporation of India (SECI) and the National Thermal Power Corporation (NTPC). We have also met with government agencies to discuss the same matter.  In October, IESA also hosted stakeholder consultations at Andaman Nicobar Island.

How do you feel about the cancellation of these tenders?

In the end, we are not disheartened by the cancellation of these tenders, because larger opportunities exist in the private sector. But the implementing agencies are still figuring out best practices for energy storage adoption.

Any comments on the low price quoted by Mahindra Susten in the BESS tender conducted by the Neyvveli Lignite Corporation (NLC)?

The price quoted is realistic. Many people were shocked by it, but the math done by Mahindra is based on future pricing. The price of energy storage units is falling.

The project will not be developed today. Mahindra will only begin working on the installation of the project after the letter of award (LoA) is issued. Per the tender document, Mahindra has 18 months to install the project after the LoA is issued.

Such a time period is enough for the price of Li-ion batteries to go down. In the past 10 years, Li-ion prices have gone down by 90 percent.

What is the current Li-ion manufacturing capacity in India?

As of now, there are no Li-ion cell manufacturers in India. There are 15 Li-ion assembly units in India. In the next two to three years, two or three Li-ion cell manufacturers may open units in India.

Do you have any other comments?

The energy storage sector needs government support to grow and facilitate its evolution. We a have goods and services tax (GST) rate of 28 percent, the government should bring that down and provide incentives.