Can battery-powered storage systems (BESS) or other LDES (long-duration energy storage) solutions replace diesel capacity under captive electricity generation?

Can battery-powered storage systems (BESS) or other LDES (long-duration energy storage) solutions replace diesel capacity under captive electricity generation? - Featured Cover Image

Diesel installed capacity share under captive generation has been above 22%, generating just 1% of total captive electricity.

For FY 2020-21, 2021-22, 2022-23, and 2023-24, diesel capacity has been 17.56, 18.6, 18.08, and 19.6 GW, respectively. 

Can battery-powered storage systems (BESS) or other LDES (long-duration energy storage) solutions replace diesel capacity under captive electricity generation? - Graphic Illustration 1

But, for FY 2020-21, 2021-22, and 2022-23, electricity generation from captive diesel has been around just 1%. 2023-24 was an exception, when captive diesel generation jumped to 4.54% (10.1 billion units).

This is the perfect scenario to incentivise the conversion of diesel to BESS or other LDES solutions

1. Most of the capacity remains idle. They are used for backup power, which requires increased maintenance. There are no extra revenue sources.

2. Diesel has one of the highest generation costs among fossil fuels for electricity generation.

3. BESS provides instantaneous power transfer (milliseconds) during an outage, ensuring seamless operation.

4. BESS are highly efficient (80-90%) in storing and delivering energy compared to diesel generators (35-40%).

5. LDES also supports decarbonizing high-temperature industrial manufacturing while providing round-the-clock power for industrial customers.

5. While upfront costs for BESS can be higher, long-term operating costs are significantly lower due to minimal maintenance and the absence of fuel costs (when charged from the grid or renewable)

6. Additional revenue streams can be leveraged through:

  • Time-of-Use (TOU) Pricing and Arbitrage: A BESS charges overnight when rates are low, then discharges to meet daytime or evening demand, avoiding high TOU rates.
  • Peak Shaving (Demand Charge Reduction): The BESS detects high demand spikes and discharges to reduce the load on the grid, directly cutting the customer’s peak demand charges.
  • Grid Operator Ancillary Services: A BESS can rapidly respond to grid operator signals, injecting power to stabilize frequency or absorb excess solar during midday, earning payments for these critical grid functions. 

7. A number of regulations have been issued by the Central Electricity Regulatory Commission (CERC), the Ministry of Power (MoP), and the Central Electricity Authority (CEA), which collectively create a framework for BESS to provide essential grid services and participate in energy markets. 

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