Economics of stationary energy storage systems: Driving faster adoption for behind-the-meter applications in India

Managing the transition to a low carbon economy is a complex challenge that needs both early wins and a longerterm alternate technologies leapfrog, to better supplement existing public policies. Relative to the significant investment and policy focus on renewable energy generation and Electric Vehicles (EV) - both globally and in India - Stationary Energy Storage systems (ESS) have received far lower investment and policy attention.This is an important issue to redress for two key reasons. Firstly, ESS is a key rate limiting constraint to achieve the desired benefits of further increasing the share of renewables in the energy generation mix, in India's case from the current 20-25% to a target 40%+ range by 2030. Secondly, several ESS applications are already/very nearly economically viable.Although the dominant discourse focuses on EVs, our analysis in this paper shows that there is a bigger near term opportunity in India for Stationary Battery Energy Storage Systems (BESS) to replace diesel gensets for power backup. Interestingly India offers a meaningful level of scale for power-backup applications, for adoption directly by end-users. BESS as an alternative to Diesel Generator (DG) for power backup is economically viable in the Telecom sector and for roof-top solar installations; further non-subsidy levers e.g. differential tariffs and an annual cess on DG use, can drive economic viability in large campuses e.g. residential, schools and commercial buildings. These applications could offer a BESS demand ranging from 40 to 145 GWh over the next three years - which is more than the BESS demand estimates for EV segment of 40 GWh.Our study is verified and supported by experiential insights derived through primary research, personal interviews and hosting round-table discussions with relevant private and public policy experts.The conclusions from this paper raise the interesting public policy and business strategy implications,1 of given the economic viability and significant demand why has the adoption up to this potential not yet taken off, and what will it take to achieve this potential?1