No Free Power Obligation On Pumped Storage Projects, Centre Tells States: CII Report

The Union power ministry has asked states not to levy any free power requirement on pumped storage projects (PSPs), a report by the Confederation of Indian Industry (CII) on India's Outlook on Clean Energy Storage stated.

This is in contrast to the normal practice of allocating a percentage of the generated electricity to the home state at no cost.

This is part of a host of conducive policy measures that the government has taken to promote the growth of the energy storage sector as the country incorporates more renewable energy capacity, the report added. Energy storage plays a crucial role as it helps the infirm renewable power convert into a 'Round The Clock' option when combined with storage, it added.

Speaking at a workshop organised by the Confederation of Indian Industry on India's Outlook on Clean Energy Storage: A Roadmap to Net Zero today, Srikant Nagulapalli, additional secretary, Ministry of Power, said the Union power ministry had discussions with the state government representatives at a recent State Power Ministers' conference in New Delhi. He said the government was moving from financial analysis to economic analysis for PSPs.

Nagulapalli also said tenders related to battery energy storage systems would be out over the next year under the viability gap funding scheme. The Central Electricity Authority is appraising 60 GW of storage projects which are expected to be commissioned over the next six to eight years.

During the event, CII released a comprehensive analysis for "India's Outlook on Clean Energy Storage: A Roadmap to Net Zero". The analysis focused on the current state, challenges, and prospects of Energy Storage Systems in India's renewable energy landscape, providing insights and recommendations for stakeholders and ways to optimise the mix of pumped hydro and battery storage systems.

Vikram Handa, Chairman, of CII Initiative on Clean Energy Storage System and Managing Director, of Epsilon Advance Materials highlighted that flexibility, efficiency, low operating cost, and no-waste, to name a few are reasons that will drive a 12-fold growth in the energy storage market by 2030. He also said "Significant costs of capital and investments, and the issue of raw material vulnerability are among the key challenges that stall the progression of the supply chain".

The analysis prepared in partnership with 6Wresearch has simultaneously focused on the much-needed circular economy for batteries to extract reusable elements and dispose batteries safely into the environment. The report also has consolidated recommendations from the industry not just the renewable energy sector, but also from the automobiles and ancillaries of battery manufacturers, developers of pumped hydro, grid operators, and so on.

Apart from these, the report also analysed various other storage technologies such as flow batteries, compressed air energy storage (CAES), flywheels, thermal energy storage (TES), etc also highlighted their importance in the storage mix and their cost vis-a-vis energy densities.

Apart from VGF covering more than 40 per cent of capital costs for BESS projects, and expediting environmental and forest clearances for PHS.

The report also recommended a Tax holiday for projects involving standalone Battery Energy Storage Systems (BESS) charged with renewable energy, storage coupled with transmission elements, and storage integrated with renewable plants.

It recomended a uniform reduction of GST to 5 per cent across all advanced battery chemistries to facilitate large-scale deployment and reduce overall system costs. Going further, it added that double taxation on electricity duty (ED) and cross-subsidy surcharge (CSS) should not be applied to the input power used for charging ESS, as these systems are merely facilitating energy conversion. (ANI)