India Gets Its First Large Grid Storage Project Going In Its Southern Island Archipelago

India’s first Solar plus Storage project in Andaman and Nicobar

While India has managed to show rapid growth in the pace of its solar energy installations, becoming the country with the 4^th highest newly installed solar capacity in 2016, its efforts in the storage side have been modest, to say the least. Lithium battery storage has not really caught up in India mainly as rooftop solar has not taken off. Also with the current penetration of renewable energy being low in India’s overall power system, the use of storage has been non-existent. Some pilot tenders with solar plus storage floated by India’s government agencies have also been a non-starter with most failing to get executed.

However, India recently managed to successfully tender and award a relatively decent size 20 MW solar plus 28 MWH storage project for its island archipelago in the south. Andaman and Nicobar islands which are mostly known as a strategic military base, as well as a tourist destination, will play home to India’s first solar plus storage project. After a number of failures, Indian owned lignite producer NLC awarded the project to Indian conglomerate the Mahindra group which put in the lowest bid. The price bid of $0.5 million/MwH was surprisingly low and allows the islands to get much cheaper power than what it was getting now. With diesel powered power plants in the islands generating power at around INR 20-30/unit, the new solar plus storage plant will be generating power at much cheaper costs of lower than INR 12/unit.

While solar costs in the country have fallen drastically, storage costs have not come down much as there is no large-scale demand for lithium batteries in the country. For islands, solar plus storage is an ideal solution as it is not only much economically cheaper but also reduces pollution drastically. Diesel plants are one of the worst polluting industrial installations causing substantial levels of pollution especially in clean idyllic places like the Andaman Islands.

Also, read 7 Cents Solar Plus Storage Price By 2022 Could Bankrupt Most Indian Power Utilities

Mahindra Group has been one of the pioneers in the EV and storage areas and it managed to win the tender by bidding for very low O&M costs for the storage projects which required 25 years of complete upkeep.  The bids had a high range between the lowest and highest which is natural given that it was the first tender of its kind in India. As the storage industry matures, the price bids will bunch closer together as the industry gets a better idea about the right costs and margins for storage technology. There was a decent amount of competition with players like Exide, Adani, Sterling and Wilson and others bidding for this pioneering project.

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