As global discussions pervade on the sharp decline in the price of Energy Storage making battery-backed solar power more viable, and Tesla prepares the ground to install 100 MWh of Storage in Australia, India’s closest equivalent – the Mahindra Group – has set a new global benchmark for Energy Storage with the lowest bid of Rs. 3.55 cr/ MWh ($0.53 million/ MW) in the 28 MWh tender floated by the National Lignite Corporation (NLC) which calls for the establishment of 2×10 MW Solar Parks in Andaman & Nicobar.
This cost is 38% lower than the Government’s estimate leading to an approximate saving of Rs. 70 cr ($10.5 million) in the form of Viability Gap funding which was to be disbursed as a part of this tender. With this validation of the declining cost of Energy Storage, India may soon be on the path to achieving the sort of exponential reduction in the cost of large-scale storage as has been witnessed in the normalization of tariffs in the Solar sector wherein the annualized cost of energy production has fallen 87% from Rs. 17.91/ kWh ($0.27/ kWh) to Rs. 2.34/ kWh ($0.035/kWh) over the past 7 years.
A comparative analysis of the bids received from 10 leading Energy corporations as aggregated by our team of energy experts shows that Mahindra was able to emerge as the L1 bidder basis it’s cost competitiveness in O&M – which may be attributed to their having an installed capacity in excess of ~800 MW in India as on date.
TOTAL COST GRAPH
Further, with Mahindra being the only company having forayed into Energy Storage and having a sound understanding of Li-ion battery technologies through the development of their Electric Mobility solutions – their estimated quote for the Storage solution as desired by NLC is 69.6% lower than the next lowest bidder as evidenced in the graph below.
ENERGY STORAGE COST GRAPH
With the announcement of this result, we expect a number of International companies to enter the Indian Energy Storage market, which has been a keen source of interest for foreign investment as the huge potential for solar power in India would be a lost opportunity if not supplemented with Storage as the grid’s ability to absorb and transmit the variable power influx through high renewable energy penetration would destabilize the existing transmission infrastructure.
Under the NDA’s leadership, India’s solar-power capacity has grown exponentially over the past 3 years having crossed 17.4 gigawatts (GW) as of Oct ’17. The government has taken up the biggest addition of solar power in the history of humankind with a targeted capacity addition of 100 GW by 2022. However, storage has been a missing link thus far and the government is now acknowledging the need for it.
Surprisingly though, inspite of the government’s best efforts to supplement Solar power capacity with Energy Storage, the industry had so far not witnessed a single large scale tender having been awarded – although there had been 7 independent tenders floated by the Solar Energy Corporation of India (SECI) over the past 18 months.
In this context, the result of the 28 MWh Energy storage tender of the National Lignite Corporation (NLC) which was keenly awaited, now provides a concrete indication of the opportunity that the Indian Storage Industry holds which has been estimated at 70 GWh by 2022 – out of which 35 GWh is expected to come from the wind and Solar sectors.