1: Grid-Level Challenges in Decarbonization and Transitioning to Renewables

India has made impressive strides in adding renewable energy capacity to its power grid. The country’s installed renewable capacity stood at over 174 GW by mid-2024, with plans to reach 500 GW by 2030. Solar and wind power are leading the charge, with solar capacity reaching 67 GW and wind at 43 GW. Despite this, India still faces significant grid stability challenges due to the intermittent nature of renewable energy and demand-supply mismatches.

• Peak Demand and Supply Gap: India’s peak power demand recently crossed 234 GW in 2024, yet the supply often falls short, especially during evening hours when solar power is unavailable. The grid needs to bridge a demand-supply gap that can range between 5-10 GW during peak times, leading to frequent power outages or reliance on backup diesel generators, which increase carbon emissions.
• Renewable Curtailment: Due to transmission constraints and fluctuating renewable output, there are periods where renewable energy, particularly solar and wind, has to be curtailed. In 2023, 5-7% of renewable energy generation was curtailed, which equates to around 5-6 GW of potential green energy wasted on average.

The Role of Energy Storage in Addressing Grid Challenges

Energy storage can be a game-changer in solving these problems. LDES technologies allow surplus renewable energy generated during off-peak hours to be stored and dispatched when demand is high, balancing supply and demand. They also provide essential grid stability services such as frequency regulation, voltage support, and black-start capabilities.

• Reducing Curtailment: Storage can significantly reduce the curtailment of renewable energy by storing the excess during periods of high generation (e.g., noon for solar or windy nights for wind) and discharging it when renewable output drops.
• Time-Shifting Energy: LDES solutions allow for time-shifting energy, storing it during low-demand hours and making it available when the grid faces high demand, particularly during evening peak hours.

2: Understanding the Supply-Demand Gap for LDES

Supply Side:

India’s energy storage market is still evolving, and while there are promising technologies on the horizon, the pipeline of long-duration energy storage enterprises is relatively small. Lithium Iron Phosphate (LFP) batteries dominate the market for shorter-duration storage, but their economic viability diminishes when scaled to longer durations (6+ hours).

Other technologies like Vanadium Redox Flow Batteries (VRFB), thermal energy storage, and emerging chemistries such as zinc-ion and iron-air are starting to attract attention. However, many of these are still in the early stages of commercialization, facing higher upfront costs and a lack of established supply chains.

Demand Side:

The demand for energy storage is growing, driven primarily by:

• Utilities: Utilities need energy storage to stabilize their grids and smooth out the variability of renewable power. States like Gujarat, Tamil Nadu, and Rajasthan, which have high renewable capacities, are exploring the deployment of grid-scale storage projects to support their renewable integration goals.
• Commercial and Industrial Users: Large energy consumers are looking at storage as a way to manage their energy costs and improve reliability. Many industrial plants and data centers in India are exploring storage options as backup solutions to replace expensive diesel generators.

3: Current Stage of LDES Solutions in the Innovation Lifecycle

The maturity of LDES technologies varies widely:

• LFP Batteries: LFP technology is mature and widely used in India, but it is primarily suited for shorter-duration storage (2-4 hours). It is commonly used in solar-plus-storage projects and behind-the-meter industrial applications. The Levelized Cost of Storage (LCOS) for LFP in India is around ₹4-6 per kWh for shorter durations.
• Vanadium Redox Flow Batteries (VRFB): VRFBs offer longer durations (6-12 hours) and are ideal for grid-scale applications due to their long cycle life. However, the cost remains high, with an LCOS of around ₹10-12 per kWh. Despite these higher costs, VRFBs are being considered for projects that require consistent, long-duration storage.
• Thermal Energy Storage: This technology is gaining traction in industrial settings where both heat and power are required. Thermal storage has an LCOS of around ₹8-10 per kWh, making it competitive for certain use cases such as grid balancing and industrial energy management.
• Zinc-Ion and Iron-Air Batteries: These technologies are still in the pilot phase but show promise due to their low-cost materials and potential for long-duration energy storage. Zinc-ion batteries are projected to achieve an LCOS of around ₹5-7 per kWh once commercialized.

4: Potential and Future Outlook for Long-Duration Energy Storage in India

The potential for long-duration energy storage in India is vast, as the nation moves toward achieving its 500 GW renewable energy target by 2030. However, to fully realize this potential, LDES technologies must scale rapidly and become cost-competitive with traditional generation sources.

Emerging Trends:

• Declining Battery Costs: While lithium-ion (LFP) costs have declined significantly (around 85% over the past decade), reaching ₹4-6 per kWh, further reductions will be necessary to make longer-duration storage technologies viable for grid-scale applications.
• Supportive Policies and Market Signals: There are emerging trends in regulatory frameworks that will accelerate the adoption of energy storage, such as the National Energy Storage Mission, which aims to provide clearer market signals and support for grid-level storage.
• Increased Demand for Flexibility: As India ramps up renewable energy generation, demand for flexible resources like energy storage will only grow. Storage will play a pivotal role in demand-side management, balancing grid loads, and ensuring uninterrupted power even as the grid decarbonizes.

Conclusion: The Path Forward for India's Energy Storage Market

India’s energy transition is at a critical juncture, where the challenges of grid decarbonization and renewable integration can only be met with robust long-duration energy storage solutions. LDES will help solve the key issues of intermittency, grid instability, and demand-supply mismatch by enabling the country to time-shift renewable energy and stabilize the grid.

The accelerator program we are launching in Chennai, focused on long-duration energy storage, is designed to nurture and scale innovative technologies like VRFBs, thermal storage, zinc-ion, and iron-air batteries. Our goal is to ensure that these technologies reach commercial maturity and are deployed at scale to meet India’s growing energy demands.

By fostering innovation and ensuring cost reductions in these technologies, we can build a resilient, decarbonized power grid that meets India's long-term energy needs. Long-duration energy storage is not just an option—it is a necessity for ensuring that India achieves its renewable energy targets and paves the way for a sustainable, secure, and reliable energy future.

Background of Transition VC

Recognizing the urgency of the climate crisis, Transition VC is dedicated to harnessing the power of capital to safeguard our planet. By investing in breakthrough technologies that promise to revolutionize how the world consumes energy, the fund focuses on engineering solutions that drive the transition from a fossil fuel-driven economy to a sustainable, greener economy, aiming to create a lasting impact on the environment. Transition VC targets innovative Climate Tech solutions through venture capital seed investing, believing in the synergy between financial success and environmental responsibility.