Battery prices are set to hit an all-time low in 2023 due to softening raw material prices amid increased production across the value chain, the agency said in a report.
Achieving such a high renewable energy share will require the development of energy storage systems (ESS) to manage disruptions associated with wind and solar power. ESS is currently primarily driven by battery energy storage systems (BESS) and pumped hydro storage projects (PSP). It added that the recent significant decline in battery costs is expected to accelerate the adoption of BESS projects.
ESS also plays a role in improving grid stability, providing auxiliary support services and peak load shifting.Following the notification of bidding guidelines by the Ministry of Power for BESS projects, several bids have been called by the Central Nodal Agencies and State Distribution Utilities. Tariff under these bids is fixed and payable based on availability and round trip efficiency.
Commenting on the bidding trends, Girishkumar Kadam, Group Head – Corporate Ratings, ICRA, said, “The tariff discovered under BESS tenders at First Solar Energy Corporation of India (SECI) is halved to Rs 10.84 lakh/MW/month. Has gone. The final tender by Gujarat in March 2024 at Rs 4.49 lakh/MW/month reflects the decline in battery prices in August 2022 and improvement in the competitiveness of such projects.,
The feasibility of these projects is linked to the capital cost of BESS, based on the average battery cost of $140/kWh seen in 2023 with associated taxes/fees and remaining plant costs, the capital cost is expected to be in the range, he said. , of $220-230/kWh. The decline in battery costs over the past decade to 2021 has helped drive down the cost of adopting energy storage and BESS projects globally. While prices rose in 2022, they fell to an all-time low in 2023 due to softening raw material prices amid increased production across the value chain. In ICRA's view, affordable battery prices are the key to adoption of BES projects.Kadam said, “Based on current battery costs, the storage cost of using BESS is projected to decline from Rs 8.0-9.0 per unit currently to Rs 6.0-7.0 per unit in 2022. Battery prices for energy storage will continue to decline. And the relatively short construction period for these projects is expected to facilitate greater adoption of energy storage in the future."
Achieving such a high renewable energy share will require the development of energy storage systems (ESS) to manage disruptions associated with wind and solar power. ESS is currently primarily driven by battery energy storage systems (BESS) and pumped hydro storage projects (PSP). It added that the recent significant decline in battery costs is expected to accelerate the adoption of BESS projects.
ESS also plays a role in improving grid stability, providing auxiliary support services and peak load shifting.Following the notification of bidding guidelines by the Ministry of Power for BESS projects, several bids have been called by the Central Nodal Agencies and State Distribution Utilities. Tariff under these bids is fixed and payable based on availability and round trip efficiency.
Commenting on the bidding trends, Girishkumar Kadam, Group Head – Corporate Ratings, ICRA, said, “The tariff discovered under BESS tenders at First Solar Energy Corporation of India (SECI) is halved to Rs 10.84 lakh/MW/month. Has gone. The final tender by Gujarat in March 2024 at Rs 4.49 lakh/MW/month reflects the decline in battery prices in August 2022 and improvement in the competitiveness of such projects.,
The feasibility of these projects is linked to the capital cost of BESS, based on the average battery cost of $140/kWh seen in 2023 with associated taxes/fees and remaining plant costs, the capital cost is expected to be in the range, he said. , of $220-230/kWh. The decline in battery costs over the past decade to 2021 has helped drive down the cost of adopting energy storage and BESS projects globally. While prices rose in 2022, they fell to an all-time low in 2023 due to softening raw material prices amid increased production across the value chain. In ICRA's view, affordable battery prices are the key to adoption of BES projects.Kadam said, “Based on current battery costs, the storage cost of using BESS is projected to decline from Rs 8.0-9.0 per unit currently to Rs 6.0-7.0 per unit in 2022. Battery prices for energy storage will continue to decline. And the relatively short construction period for these projects is expected to facilitate greater adoption of energy storage in the future."
