ICRA says falling battery costs to support Indian storage market

Photovoltaics Markets and Technology

Battery prices reached an all-time low in India in 2023, led by a moderation in raw supplies prices amid rising manufacturing all through the value chain, in step with credit score standing firm ICRA.

ICRA talked about it expects the present decline in battery costs to drive the adoption of battery energy storage system (BESS) initiatives in India. BESS and pumped hydro storage initiatives in the mean time are the dominant energy storage decisions in India.

ICRA talked about it expects the share of expertise from renewable energy, along with big hydro, to increase to round 40% of nationwide expertise by fiscal 2030, from decrease than 25% presently, pushed by big functionality additions that in the mean time are underway. Reaching such an extreme share would require the occasion of energy storage strategies to deal with the intermittency associated to wind and photo voltaic power.

Energy storage strategies moreover play a job in bettering grid stability, providing ancillary help suppliers and peak load shifting. Given that the Ministry of Power has launched bidding ideas for BESS initiatives, there have been a number of bids known as by central nodal companies and state distribution utilities. The tariff beneath these bids is mounted and payable, primarily based totally on the provision and round-trip effectivity.

“The discovered tariff beneath the BESS tenders higher than halved from INR 10.84 lakh ($12,987)/MW/month inside the first Photograph voltaic Energy Corp. of India (SECI) tender in August 2022 to INR 4.49 lakh/MW/month inside the latest tender by Gujarat in March 2024, reflecting the decline in battery prices and bettering competitiveness of such initiatives,” talked about Girishkumar Kadam, senior VP and group head of firm rankings for ICRA. “The viability of these initiatives stays pegged to the capital worth of the BESS. Based on the standard battery worth of $140/kWh seen in 2023 along with associated taxes/duties and the value of the soundness of the plant, the capital worth is anticipated to be inside the differ of $220/kWh to $230/kWh.”

The decline in battery costs during the last decade to 2021 helped cut back the value of energy storage and adoption of BESS initiatives all by means of the world. Whereas prices went up in 2022, they declined in 2023 to an all-time low, led by a moderation in raw supplies prices. Cheaper battery prices are an necessary factor to elevated adoption of BESS initiatives, talked about ICRA.

“The execution risks and gestation interval for the BESS initiatives keep comparatively low compared with PSP hydro,” talked about Kadam. “Complete, a sustained low cost in battery prices and relatively low gestation interval for these initiatives is anticipated to help their bigger adoption for energy storage, going forward.”

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