October 05, 2016; IIC New Delhi

1. Energy Storage in India October 05, 2016; IIC New Delhi Mr. RajsekharBudhavarapu 1

2. Global Evolution of ES industry & way forward Storage 2.0 [2009 to 2012] • Market reforms like FERC Order 890, 1000 & 792 & 755 opened markets for energy storage • In California, the Self-Generation Incentive Program (SGIP) in 2009 put behind-the-meter storage on par with other new distributed generation technologies • Passage of AB 2514 in the state provided a precedent-setting pathway to have the system-wide value of storage defined and embedded into the planning process through its resulting procurement targets’ • FERC Order 755 in 2011, opened up ancillary services to recognize the value that energy storage create • As the markets evolved, lithium-ion emerged as the de facto choice for commercial deployments largely because the combination of technical maturity, product availability, declining cost, and warranty backing by large-balance-sheet entities made project risks manageable for developers Storage 1.0 [Phase till 2009] • By late '70s and early '80s mark a period where storage became widely recognized as a potential key component of the electrical grid’s generation sector in addition to networks and load • Storage tech such as redox-flow batteries were conceived to spur broad deployment • Lead-acid were still in wide use for backup & off-grid applications • By late '90s & mid-2000s, saw an expanding array of companies racing to develop systems in virtually every subclass of storage technology -- including lithium-ion, super-capacitors, redox flow, aqueous sodium, flywheels, compressed air energy storage, liquid air energy storage, and ice • US DoE’s 2009 ARRA storage demonstration program provided funding by far to demonstrate value propositions for over 530 megawatts of “shovel-ready” systems in large-scale use cases, as well as several new storage technologies with promise to catalyze new use cases.

3. Global Evolution of ES industry & way forward Storage 3.0 [2012 till 2015 ] • More sophisticated markets quickly grew the stock of deployment both in front of & behind the meter • The use cases have, for the most part, been more suited to storage systems with high power-to-energy ratio configurations. • Quick uptick in installations seen in 2015 can largely be attributed to the modification of market rules to comply with FERC Order 755 in late 2012 • Though project deployments are on the rise, the use cases are mostly limited to either frequency regulation and similar grid services or behind-the-meter demand management • Other use cases such as ramping capacity, reserves, solar integration, and T&D deferral have been demonstrated, but tariff structures have had limited commercial viability to this point • In US for 2015, 92 percent of the power capacity and 87 percent of the storage capacity have been installed in PJM (front-of-meter) and California (behind-the-meter, nearly all funded in part by the SGIP) • Storage 3.0 [International till 2015 ] • International markets are at a similar stage. Thousands of behind-the-meter residential units have been deployed in Germany, Australia, Japan & South Korea while large-scale, front-of-meter projects are increasingly being deployed for frequency control and energy arbitrage • Energy Storage is increasingly considered important as the most cost-effective option for grid operators to balance renewable generation • Valuable experience gained in designing, • developing, financing, building, and operating energy storage power plants. • Commercial structures such as defect warranties and performance guarantees, which reduce project risk to levels that financiers and utility customers find acceptable, are now available.  • Successes & shortfalls from Storage 2.0 will unearth value streams that open markets for systems with other than high energy-to-power ratios (e.g., peaker replacement) while providing concrete differentiation for alternates to LIB

4. Energy Storage Way Forward 4.0 [2016 to 2018] • Storage 4.0 will see wide availability of new technologies and total deployments exceeding many GWhs per year. Number of RFPs and project announcements for long-duration storage systems is increasing & expect to see Industry speed picking up by the end of 2017 • Concurrently, we are seeing initial signs that rising levels of RE deployments across the United States, Japan, Australia, South Korea and Europe are leading to export constraints, as neighboring grids within these regions reach their own saturation points. • Will be an important market driver for Storage 5.0 from 2019 onwards. Markets will emerge that leverage the multiple benefits that long-duration storage provides due to a combination of regulatory changes, evolution of the generation mix, and falling storage costs • Value propositions for technologies are emerging with high-volume mnf costs by 2019 • Will see centralized and aggregated storage systems deployed providing combinations of investment deferral, congestion relief, time shifting of Energy, local capacity, frequency regulation/frequency control, and backup as primary, secondary and tertiary services. • A key component in operation of these increasingly complex projects will be the availability of software that controls and manages dispatch of these storage assets to deliver forecasted revenue without compromising their state of health.  • As we exit Storage 4.0 in 2019, will see solar- and/or wind-plus-storage projects in the 10- to 100-megawatt range, making them commonplace in island and weak grids around the world

5. Energy Storage Industry 5.0 Phase [2019 onwards] • The Storage 5.0 phase will begin in the early 2019. During this period, a spectrum of available storage system products, their associated low LCOS, and fully evolved market designs will create an environment where deployments exceed 50 GWh per year. Storage will be ubiquitous.  • By this point, storage will have fully matured as an energy technology, making this a prolonged phase compared to the previous two phases. Standalone storage power plants located throughout urban areas will improve infrastructure utilization, maintain stability within the local network, and provide reliable backup. These systems and plants will mostly be aggregated to provide system operators with the capabilities of today’s central thermal generation plants, which they will replace.  • As we transition fully into Storage 5.0, we will see one or more technology product lines that provide LCOS levels below $150 per MWh for a 6-hour storage system. India needs to capitalize on this ‘game-changing’ industry

6. Ambitious Wind and Solar Targets of GOI

7. Key Drivers for Energy Storage In India • Supporting the growth of intermittent renewable energy sources • CERC working to mandate forecasting and scheduling of RE generation • Introduction of ancillary service markets • CERC working to introduce ancillary markets in India [Hz regulations] • Micro grid opportunities for Special Economic Zones (SEZs) • High quality grid power required for supporting high-technology manufacturing/industry • Power access to all by 2019 • Electrifying an extra 400 million households, many of them off-grid requiring micro grid with energy storage • Telecom Sector • With over 300,000 telecom towers, need back up power using renewables • Growing need for backup solutions for data centers • National Electric Mobility Mission Plan (NEMMP) • NEMMP putting 6-7 million electric and hybrid vehicles on the streets by 2020

8. Conceptual Use of Energy Storage Batteries Variable Generation Dispatchable Power 8

9. Energy Storage Batteries technologies and their potential applications Electricity Energy Storage Technology Options; EPRI ; December, 2010

10. Deployment and experience with ESS Global Policy-push Overview California, USA • Required the utilities to develop collectively 1.3 GW of Energy Storage by 2020 New York, USA • Subsidies for storage at $2,100/kW for battery storage and $2,600 for thermal storage Ontario, USA • Published a road map for procuring 50 MW of Energy Storage Puerto Rico, USA • All new utility-scale renewable energy projects add storage equal to 30 percent of their capacity Germany • Total subsidy of €25 million ($34.8 million) ; for each house owners, 30% of ES component Japan • 10 billion yen ($98.3 million) in subsidies for Energy storage. • Subsidy capped at ¥1 million (US$9,846)  for individuals and at ¥100 million (US$982,000) for businesses Source : http://www.eenews.net/stories/1059996345

11. Example of an Operational Wind – Storage Project in Japan • The 51 MW Wind Farm with energy storage capacity of 34 MW Sodium-Sulfur (NaS) batteries • Storage of low cost off-peak wind power for sale during peak demand times • NaS battery sets to charge primarily at night when demand for power is lower • Stored electricity to be supplied to utility grid, along with power directly generated by the wind turbines, during peak demand times • This system ensures a steady supply of power to the grid even during low wind speed   Source: http://www.eei.org/meetings/Meeting_Documents/Abe.pdf

12. Indian Energy Storage Market Potential IHS forecasted 40 GW World-wide installation of grid-connected energy storage by 2022, January 2014 Each segment needs different regulatory & market business model after analyzing the monetizable benefits of Energy Storage Needs to be verified by detailed market studies Need for a National Energy Storage Mission Indian Energy Storage market could be segmented as: • Utility Scale involving • Grid Ancillary Services • T&D deferral or congestion easing • Distributed bulk generating IPP plants of • Wind & Solar PV • Distributed consumer load end generation points like • Solar roof top • Off-grid projects • Diesel consumption abatement at DG operating points

13. Way Forward Regulatory, Market & Industry Development thrust • Under the India-Japan Energy partnership dialogue initiate a comprehensive Energy Storage market development programme with financial support from Bilateral financial institutions from US, Germany and Japan • The objective of such an exercise is to • Market Assessment: Identify specific applications and combination of applications that are particularly suited for energy storage system • Estimate the monitizeable benefits of energy storage for each application segments • Evolve suitable business Models for commercialization • Estimate the cost reduction through local manufacturing (Li-ion, Flow Batteries & NAS batteries) • Advantages/benefits to Global Industry partnering g with India • ES Industry to have access & market for the large potential Indian market • Allows ES Industry to be globally competitive based on Indian manufacturing base Indian Industry has an unique opportunity to Leap-Frog this technology (the HOLY-GRAIL of the Electricity Sector) by undertaking a proactive role led by the Government, as Globally the Energy Storage industry is at cusp of exploding in the coming 3 to 4 years Demonstration, Innovation and R&D thrust needed • Establish Energy Storage demonstration projects for each of the 3 market segments with defined objective to address • Regulatory and operational challenges • Map and quantify the monitizeable benefits to various stakeholders ( IPPs, Customers, DISCOM, STU, CTU, carbon abatement) • Start Industry linked R& D in India with funding support for design, development, testing, Evolution of Standards and manufacturing (including Technology transfer, and joint R&D with intellectual rights sharing) • Some of the Indian Research Centers working in ES sector are • International Advanced Research Center (ARCI) • Indian Institute of Chemical Technology,  Hyderabad • National Chemical Laboratory, Pune • IIT Madras, Dept of. Chemical • CECRI, Chennai • IIT Delhi • IIT Bombay, dept of Earth Science and Engg

14. What is needed in the Electricity Amendment Bill 2014- from Energy Storage perspective ?

15. Thank You