Solar Rooftop With Storage Will Start Overtaking Conventional Utility Model By 2020
India presents a favorable market for research and development, collaborations and exports of technology for storage
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The Indian power supply is dominated by central and state owned distribution companies - discoms. More than 95% of distribution network is owned by state electricity companies and they have been enjoying monopoly for the past 50 years. However this monopoly could be brought to an end if the Electricity Amendment Bill (EAB), 2014 became an Act. The implementation of EAB could be a game changer and could open up the retail electricity supply market for entry of more private players.
Once these private players find space to operate in the retail supply market, these discoms either lose to private players or have to work smarter and harder to remain in competitive supply business.
Over the years discoms have been submerged under heavy losses and liabilities. The pathetic condition prevails due to lack of investments, low maintenance, inefficient planning, high distribution and transmission losses, theft of electricity. Aggregate Technical and Commercial (AT&C) losses i.e. difference between unit inputs into system and the units for which payment received & inefficient tariff structure are worsening the situation. Over and above that distribution companies are also facing political pressure for keeping skewed tariff structure to favor of domestic & agricultural consumers.
Grid strengthening and monitoring is an important aspect to avoid energy losses and balance impact of ever growing variable renewable generation. Implementation of net metering regulation would prove to be an important tool for adoption of solar roof top system by end customers. Despite all its ups and the central government's continuous efforts, net-metering has not been readily adopted by all states or their discoms. The cause of such apprehensions can be ascribed to the concept being at nascent stage and the mindset of each state discoms to adopt such commercial policies to make net metering at least a revenue neutral model if not profitable initiative.
Overall, lack of policy consistency, absence of reliable and robust grids, inefficient grid management technology to balance load and supply on real time basis, impact on the financial health of discoms is delaying the net metering policy implementation. In a nutshell, a lot of issues have to be discussed openly between policy makers, discoms, power manufacturers and last but not the least, the consumers.
While the discoms tackle issues like investment, poor grid connectivity, thefts and so on, off-grid and on grid renewable energy solutions like solar roof top systems can use this opportunity to fill the gap of electricity supply in the country and demand by consumers through decentralize renewable energy systems. The power supply situation can be improved by creating a synergy between the discoms and solar energy regime with improved storage technology.
Energy storage market in India is undergoing major transformation and will play a key role managing the renewable energy in micro grids. According to Indian Energy Storage Alliance, (IESA) the market potential of energy storage (for all types of energy storage technologies including thermal storage) in India is estimated to be over 15 GW by 2020. The market potential for energy storage is huge and with improved energy storage devices, the costs of solar system with storage will keep coming down and eventually go substantially below retail grid tariffs and ultimately may overtake utility scale solar by 2020.
To get a better perspective of things, let us consider a rooftop solar power plant; a grid-tied plant without a battery. Major components of such a grid -tied solar power plant are solar panels with mounting structure, inverters and standard electrical cables. Now if we consider a 1KW solar power plant with a capex of Rs 80, 000, and an inverter with a shelf-life of 8 years and O&M charges of 5% in every eight years, the cost per unit would be approx. Rs 5.80 and the cost with storage will come around 11-12/- Per unit. With more innovation in technology of Li-ion batteries, the cost of storage will be further going down.
After this calculation, it is quite evident that solar power without storage does cost less than what a residential customer in most of the states pay to our utility as tariff, which ranges between Rs 6 to Rs 7 per unit. Since the tariffs are expected to only go higher, therefore it is safe to say that solar system (with storage) on rooftop will become economical than utility power in another 3-4 years.
India presents a favorable market for research and development, collaborations and exports of technology for storage. With this as a background, a boost to energy storage will change the fate of conventional utility driven supply system and make solar rooftop with storage a compelling and viable option for every Indian in times to come. In near future, Generating, buying and selling of solar power may become fraction of tariffs what will be charged by utility in future. We should all make this future possible by starting today.
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