The industry of Energy Storage Systems (ESS) encompasses all the ways via which surplus energy is captured and stored for future use. These ways range from battery storage to pumped hydro-energy storage to grid energy storage.
Small-scale batteries have been in use for a long time; however, the focus on large-scale battery storage is relatively new, beginning in the 1990s. Amongst all energy storage systems, International Energy Association (IEA) expects lithium-ion battery to dominate the industry.
In the 21st century, the industry is prominently talked about, given the integral role of ESS in the world’s aim towards reducing carbon emissions, and attaining carbon neutrality. Furthermore, the importance of ESS has been materialized with the fluctuations observed in the availability and prices of different energy sources in the past couple of years. This has been specifically observed in the area of non-renewable energy sources like coal and crude oil.
The extent of demand in the industry can be gauged by McKinsey’s estimates. In the 2022–30 period, demand for lithium-ion batteries is expected to rise from 700 GW in 2022 to 4.7 TW by 2030, resulting in the expansion of the market from $85 billion to $400 billion.
Utilization of lithium-ion battery is being led by the shift to Electric Vehicles. Multiple countries have set goals to have EVs lead with a share of 90% amongst all running passenger vehicles by 2030. In the period, 2022–30, significant demand for lithium-ion batteries is led by mobility, specifically EVs, followed by stationary storage, i.e., storage of renewable energy.
Source: McKinsey
With the realization of lithium-ion batteries’ importance and its rising demand, countries have begun to compete against each other to lead the industry and tread the path of self-reliance.
In terms of battery cell manufacturing, China leads by manufacturing 77% of the world’s capacity. India, on the other hand, carries a share of mere 0.2%. Moreover, with India’s population and its energy requirements, India needs to expand the battery energy storage system industry to reduce its carbon footprint. As per CEEW (Council on Energy, Environment and Water), India requires 903 GW of energy storage batteries to attain net neutrality in the mobility and power sectors. Therefore, to incentivize production in India, the Government of India put forth the Production-Linked Incentive Scheme for Advanced Chemistry Cells. To support this, India has set targets in multiple respects:
- Target of EV penetration for 2030: 30% of private cars, 70% of commercial vehicles and 80% of two-wheelers and three-wheelers
- Reduce dependence on fossil fuels that are primarily imported: 80–85% in case of crude oil and 50% in case of natural gas
- NDC of 500 GW of installed renewable energy by 2030, unveiled in CoP26: 280 GW of solar power and 140 GW of wind power
Consequently, India’s Battery Energy Storage Systems Market is poised to grow at a CAGR of 10.5% in the period 2022–28.
India’s EV market is currently valued at $5.32 billion, with estimates of it reaching $9.15 billion by 2027 (CAGR of 11.45%). To encourage growth, the GoI has introduced PLI for manufacturing of electric automobiles and automotive components.
While the mobility space observed active application of Battery Energy Storage System to get closer to carbon neutrality, entities are acknowledging the importance of their applications in the space of power, i.e., facilitating the journey towards renewable energy.
Observer Research Foundation (ORF) states power is responsible for one-third of India’s carbon emissions, followed by transportation with 19% share. Consequently, India is increasingly working towards expanding the use of solar power and hydrogen fuel. The former is accompanied with India’s National Solar Mission and its membership in OSOWOG. The latter is uplifted by National Green Hydrogen Mission.
Transition to Sodium-Ion Battery
Researchers and innovators are developing sodium-ion batteries, shifting away from lithium-ion batteries. The former are preferred over the latter for three key reasons. Firstly, sodium is 500x more abundant than lithium, making it a cheaper option. Secondly, lithium-ion batteries need to be strictly stored in low temperatures to avoid the risk of fire, necessitating use of more power for its storage, while sodium-ion batteries carry no prospect of fire. Finally, mining of lithium and cobalt requires utilization of heaving machinery and energy, as opposed to sodium, making lithium-ion battery a relatively inefficient option.
With the comparative benefit of sodium-ion batteries, the market is expected to register a CAGR of 14.68% in the period 2020–27 from ₹200 billion in 2020 to ₹500 billion in 2027.
