Battery Costs & Renewable Energy: Keys to India's Net-Zero Target

India's Energy Transition

With an expected annual electricity demand growth of nearly 6%, India faces a significant challenge in planning and expanding its power system cost-effectively. Achieving net-zero emissions by 2070 requires strategic investments, particularly focusing on lowering battery project costs.

Battery Energy Storage Systems (BESS)

The current cost of BESS, excluding financing, is about Rupee 13 million ($155,192) per MWh. If costs decline to Rupee 6 million/MWh, the need for new coal additions could be eliminated, reducing the utilization factor of existing coal plants from 68% in 2023 to 50% in 2032. An annual 7% decline in battery costs could significantly mitigate coal fleet utilization, addressing lock-in and underutilization risks.

Renewable Energy Additions

Solar Capacity: India's solar capacity is targeted to rise from 84 GW in May 2024 to 375 GW by 2032, requiring an annual addition of 38 GW from 2024 to 2032. Recent additions have ranged from 10 GW to 14 GW annually.
Hydro Capacity: Expected to grow from 47 GW in May 2024 to 64 GW by 2032, growth is mainly constrained by the current project pipeline and planned capacities.

Phased Down Coal Generation

Uncertainties in storage costs, demand growth, and renewable energy costs complicate the timeline for phasing down coal. India has around 27.6 GW of coal capacity in advanced construction stages, with an additional 54 GW in various planning phases. This could bring total coal capacity to approximately 286 GW by 2032.

Challenges and Recommendations

Storage Needs: Significant investments in storage are critical, as solar growth beyond a 25% share in the energy mix will be limited without adequate storage solutions.
Policy and Investment: Supportive policies like green taxonomy and carbon pricing are essential to spur clean energy investments. India estimates that reaching its net-zero goal by 2070 will require over $10 trillion in new investments.