Everything you need to know about Battery Energy Storage System (BESS) | Markets by Zerodha Hindi

Summary

This video script explores the rapidly evolving Battery Energy Storage System (BESS) sector in India, emphasizing its role in enhancing the reliability and efficiency of renewable energy. The script highlights major players like Tata Power, Adani, and JSW Energy, and discusses various revenue models, including ancillary services, energy arbitrage, and capacity markets. The growing demand for BESS, technological advancements, and challenges such as rising costs and potential over-capacity are also covered. Despite challenges, BESS is seen as a crucial bridge to achieving India's renewable energy goals, with significant growth expected by 2032.

Takeaways

• 😀 India's energy future aims for reliable, uninterrupted power, especially through renewable sources, with Battery Energy Storage Systems (BESS) playing a key role.
• 🌞 Renewable energy, like solar and wind, faces challenges such as variability and intermittency, which BESS helps address by storing excess energy for later use.
• 🔋 BESS can solve major grid issues, such as voltage fluctuations, load shedding, and transformer damage, by stabilizing the energy supply.
• 🌍 By 2026, the BESS ecosystem is expected to grow 10x, with key players like Tata Power, Adani Green Energy, JSW Energy, and Reliance Industries investing heavily in this technology.
• 💰 BESS companies have multiple revenue streams, including ancillary services, energy arbitrage, and capacity markets, each offering unique business opportunities.
• ⚡ Tata Power and Adani are exploring both upstream and downstream opportunities in the BESS sector, integrating it with their renewable energy projects to reduce costs and improve energy efficiency.
• 🛠️ The main BESS technologies in use today are pumped storage projects (PSPs) and lithium-ion batteries, with BESS gaining preference due to its modularity, lower setup time, and decreasing costs.
• 🔧 The cost of BESS continues to fall, with lithium-ion battery prices dropping by 31% between 2022-2024, making the technology more accessible and competitive.
• 📉 Despite growth potential, BESS faces challenges related to import dependence, rising material costs, and long-term contract risks, which could impact financial viability for some companies.
• 💡 The Indian BESS market is still in its early stages, and significant progress is expected as demand grows, government support increases, and technology continues to evolve.

Q & A

What is the main concept behind Battery Energy Storage Systems (BESS)?

BESS is a technology that allows excess electricity to be stored and used later, addressing issues related to energy variability and intermittency in renewable energy sources like solar and wind.

How does BESS contribute to grid stability in India?

BESS helps balance the supply and demand of electricity, mitigates issues like voltage fluctuations, and provides stored energy during peak demand, reducing the burden on power generation companies and the grid.

What challenges do renewable energy sources like solar and wind face in India?

Renewable energy sources are unpredictable; for example, solar power is available only during the day, and wind speed can vary. This results in energy intermittency, making it difficult to maintain a stable supply.

Why is BESS seen as a solution to these challenges in India?

BESS stores excess energy produced during periods of low demand (e.g., sunny days) and makes it available when demand is high or renewable energy generation is low, thus ensuring a stable and reliable energy supply.

What are the key revenue models for companies in the BESS sector?

Companies in the BESS sector primarily generate revenue through three models: Ancillary services (providing grid stability), energy arbitrage (buying electricity at low prices and selling it at higher rates), and capacity markets (providing backup energy during shortages).

How does energy arbitrage work in the context of BESS?

Energy arbitrage involves purchasing electricity during times of low demand when prices are low, storing it, and then selling it when demand is high and prices are higher, thereby profiting from price differences.

What are the two most popular energy storage technologies in India?

The two most popular energy storage technologies in India are pumped storage projects (PSPs) and Battery Energy Storage Systems (BESS). While PSPs have a cost advantage in the short term, BESS is rapidly becoming more affordable and scalable.

How is the cost of BESS expected to change in the coming years?

The cost of BESS is expected to decrease significantly due to advancements in technology and a drop in the price of lithium-ion batteries. This makes BESS a more attractive and affordable option compared to traditional energy storage methods.

Why are companies like Adani and Tata Power investing heavily in BESS?

Adani and Tata Power are investing in BESS to capitalize on the growing demand for reliable energy storage systems, reduce the cost of energy supply, and integrate renewable energy into their power generation portfolios.

What are the potential challenges faced by BESS operators in India?

BESS operators in India face challenges such as reliance on imports for critical components, increasing costs due to global price fluctuations in battery materials, and regulatory hurdles like long-term contract agreements that limit pricing flexibility.