Increasing renewables, regulatory support to drive power storage in India, says Fitch

Power storage demand in India will expand at a rapid pace to stabilise the increasing variability on both the power supply side – from rising renewable generation – and the demand side, Fitch Ratings said in a new report.

Investments in power storage will be crucial to stabilise India’s increasing power generation, as the country aims to double, inherently volatile, renewable generation by 2030 as part of its Conference of the Parties (COP26) commitments on climate change.

Fitch expects the majority of the investment in storage to come from the private sector, as government-owned entities act as nodal agencies and intermediate counter-parties. India’s leading renewable generation companies, such as Greenko Energy Holdings (BB/Negative) and ReNew Power Private Limited (BB-/Stable), and other private companies are increasing their investments in the power storage value chain.

“We expect the quantum of storage capacity, and its split across technologies, will depend on the following: power demand curves; power generation mix, especially the share of variable renewable generation; cost of storage technologies; industrial demand for greening purposes; and efforts on demand-side management, including the optimisation of agricultural load,” Fitch said in the report.

Successful implementation of the recent regulatory changes, a stable operating environment that supports long-term cash flow predictability and a competitive level playing field will be critical in spurring investment in power storage, especially given high upfront investment costs and the long operating life of these storage assets, it added.

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