The Indian states of Maharashtra and Gujarat have recently approved battery projects to be set up by their respective state-owned utilities, marking a significant step towards adopting power storage facilities. This move is aimed at addressing the issue of excess electricity from solar-panel farms and supplying it to consumers when the sun is not shining. The drop in battery prices by 30% over the past year and the Center’s provision of funds to plug viability gaps have encouraged these states to seize this opportunity.
However, batteries only store electricity and do not generate it, typically acting as stop-gaps for a short period. India’s capacity for renewable energy has been ramped up, but its supply remains hostage to the weather, impacting not just output but also the ability to charge batteries. To effectively populate various states with these units, utilities need to study consumer demand and weather patterns, which are being reshaped by climate change.
The role of batteries goes beyond supporting clean energy, as they can also plug gaps caused by failures of supply infrastructure, ensuring overall reliability. As adoption rises, batteries could help transform the Indian market, which is riddled with tariff distortions. Bulk consumers setting up their own solar farms have loosened the grip of state-run utilities, but they still rely on utilities during periods of low renewable energy. Cheaper and better batteries will allow them to explore set-ups that reduce their dependence on utilities, reflecting in lower electricity bills.
Evolving battery technology, such as non-lithium chemistry, holds out the promise of lower costs combined with superior safety and reliability. If battery-linked renewable energy facilities mushroom, it may push utilities to reform their tariffs and operations. This could lead to consumers paying for power at rates that reflect costs more closely, relieving over-tariffed businesses. A key measure would be tariffs levied to reflect the real cost of power as it varies around the clock. The penetration of smart meters could enable dynamic pricing, nudging users to optimize their electricity use and helping utilities retain large customers.