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Share of generation from RE capacity likely to increase to close to 40% of the all-India electricity generation by FY30: ICRA
May-02-2024

Credit rating agency ICRA in its latest report has said that the share of generation from the renewable energy (RE) capacity, including large hydro, is likely to increase to close to 40% of the all-India electricity generation by FY2030 from less than 25% currently, driven by the large capacity addition under way. It noted that achieving such a high level of RE share would require development of energy storage systems (ESS) to manage the intermittency associated with wind and solar power. The ESS is currently mainly driven by the battery energy storage systems (BESS) and pumped hydro storage projects (PSP). 

According to the report, the recent appreciable decline in battery costs is encouraging, and it expects to hasten the adoption of BESS projects. The ESS also plays a role in improving grid stability, providing ancillary support services and peak load shifting. Post the notification of the bidding guidelines by the Ministry of Power for BESS projects, there have been multiple bids called by Central nodal agencies and state distribution utilities. The tariff under these bids is fixed and payable based on the availability and round trip efficiency.

The report further said the decline in battery costs over the past decade leading up to 2021 helped reduce the cost of energy storage and adoption of BESS projects globally. It said while the prices went up in 2022, they declined in 2023 to an all-time low, led by the moderation in raw material prices, amid the increase in production across the value chain. It added that cheaper battery prices are the key to increased adoption of BESS projects.

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