By on Tuesday, 10 October 2023
Category: TOP STORIES

No looking back: Energy transition in India

In many ways, this year was the tipping point for renewable energy. The world has woken up to the imperative of energy transition, and countries around the world have made progress on this front, albeit in different degrees. We take stock of their situation in this multi-part series.

The Government of India has set a target of achieving 500 GW of renewable energy by the year 2030. This should provide a fillip to the energy storage sector, as penetration of RE in the grid necessitates energy storage systems for grid balancing. Further, the Ministry of New and Renewable Energy has indicated that it is considering all future renewable tenders with inclusion of energy storage.

India's Central Electricity Authority (CEA) has modeled a need for 27 GW/ 108 GWh of battery storage by 2030 to meet the national demand, while battery storage could be an export opportunity as well.

Developing markets like India, Brazil, and South East Asia are expected to continue registering higher y-o-y growth rates in EV sales, although the markets are largely limited to low-end E2Ws and E3Ws and volumes are relatively lower than that of developed markets or conventional (ICE) vehicle sales in those markets. India registered one-million-unit annual sales for the first time in 2022, with 2023 opening with a better monthly average in the first quarter. The country FAME II incentives to EV buyers are available till March 2024, which can act as a further boost to increase pre-buying this year. India is also expected to see higher adoption of electric buses this year, as industry experts predict fresh tenders by state-owned operators.

Energy Storage

In FY 2022-23, India generated 203,552 million units (MU) of renewable energy, a growth of 19 percent over the previous year, according to the CEA. India's installed battery energy storage capacity was just 20 MW in 2021, but is projected to reach 38 GW by 2030 to support the country's ambitious goal of 500 GW of renewable capacity by that year. India currently has over 160 GW of renewable energy capacity, constituting 40 percent of its total power capacity.

India is home to the world's largest solar farm, but the bulk of the country's energy storage is made up of hydroelectric power. Hydro projects, including pumped hydro, stood at 46 GW as of March 2022. Nevertheless, renewables are expected to dominate the energy mix, accounting for nearly half of the power generation capacity by 2030.

The Indian government's initiatives and the decreasing costs of lithium-ion batteries are poised to drive the growth of the India battery energy storage systems (BESS) market. A significant development is the Union Cabinet's approval of a viability gap funding (VGF) scheme for creating a robust storage system for excess wind and solar power. This scheme aims to develop 4,000 MWh of BESS projects by FY31, with an initial outlay of ₹9,400 crore, including budgetary support of ₹3,760 crore.

Some notable developments in the BESS segment include:


Battery manufacturing

India is gearing up for a significant leap in lithium-ion battery manufacturing to support electric vehicles (EVs) and renewable energy. The nation aims to establish 12 giga factories by 2030, potentially turning into a net battery exporter to meet global demand. This initiative targets a massive 1,000 megawatt-hours of battery capacity, equivalent to powering 10 lakh homes or around 30,000 electric cars for a year. Current progress in the Indian battery manufacturing scenario:


E-mobility

India is poised to become a major player in the electric vehicle (EV) market by 2030, with an estimated annual growth rate of 49 percent. The government's initiatives, environmental concerns, and rising fuel prices are driving this growth. India's EV market presents an investment opportunity exceeding $200 billion over the next decade.

According to media reports, India's EV market has grown at an impressive 55 percent annual rate since 2018, particularly in electric 2-wheelers and 3-wheelers. In 2022, the country achieved a significant milestone with the sale of 1 million EVs.

According to data from the Vahan portal, EV registrations in India surged to 10,20,679 in 2022 from 3,29,808 in 2021. As of March 2023, a total of 2,78,976 EV registrations were recorded. The Economic Survey 2023 predicts that annual sales could reach 1 crore units by 2030.

​Upcoming EV Launches:

Tata Motors: The company which leads the passenger EV segment with models like Tata Nexon EV, Tiago EV, will be launching the Sierra, Curvv, Avinya, Altroz, and Tata Punch EV (expected in November 2023).

Hyundai: Offers the Kona and is set to introduce the Ioniq 5 EV.

Mahindra: Set to launch the XUV 400 electric SUV.

VW-owned Skoda: Planning to launch the Enyaq iV early next year. Volkswagen is also testing the ID.4, set to launch in May 2024.

Volvo: Launching the XC40 Recharge and plans to introduce the C40 Recharge coupe SUV in 2023.

Mercedes-Benz: Currently offering the EQC and planning to launch EQS, EQA, and EQS SUV, with local assembly in India.

BMW: Launching the i7, i4 electric sedan, and iX1 this year.

MG Motor India: Preparing to launch the MG Air EV, with locally sourced batteries from Tata AutoComp.

Citroen India: Recently introduced its first electric car, ëC3, to the Indian market.

Green Hydrogen

India's hydrogen demand is on the rise, driven by decarbonization efforts and decreasing prices, with current demand at approximately 6 million metric tons per annum (MTPA). By 2040, it is expected to increase significantly, potentially reaching 15-25 MTPA, though it is unlikely to exceed five percent of the nation's total primary energy consumption.

Hydrogen demand will be concentrated around regions with refineries and fertilizer plants. Establishing green hydrogen supply hubs near these demand centers is seen as a cost-effective solution.

India is making rapid strides toward reducing its reliance on fossil fuels and transitioning to green energy. The government aims to produce five million tons of green hydrogen by 2030, as part of its carbon neutrality target for 2070. The National Green Hydrogen Mission supports this effort by offering incentives for green hydrogen and green ammonia production.

Several private sector conglomerates and organizations are investing heavily in green hydrogen production and energy storage:


To see other articles in this series, click here.​

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