In early 2019, Fluence deployed India's first grid-scale energy storage in partnership with The AES Corporation and Mitsubishi Corporation, a 10 MW/10 MWh solution at a Tata Power-DDL substation in northwest Delhi that is providing grid stabilization and peak load management services for consumers in Tata Power-DDL's service area. Since then, Indian developers and government agencies have been working to ramp up procurements of flexibility solutions that can support India's ambitious renewable energy targets.
Fluence VP for Strategy and Partnerships Marek Wolek recently joined the editor of India's Economic Times ETEnergyworld, to talk about India's trajectory in adopting energy storage and growing its base of flexible clean power and how Fluence plans to support that growth over the next two to four years.
Originally published on Economic Times ETEnergyworld.
What is the larger growth philosophy that Fluence follows and what have been the key highlights of its journey so far?
Fluence’s mission, which keeps our team members excited every day, is "transform the way we power our world." We’re a customer-centric energy storage technology company, focused on designing the best technology packages to serve key segments of the market – utilities, network companies, independent power producers and commercial and industrial energy users.
Energy storage is unlike most clean energy technologies: it’s not just generation, not a straightforward commodity. It’s a highly flexible technology – able to not just deliver power but absorb it, capable of responding within hundreds of milliseconds, and able to scale from home batteries to gigawatt-scale installations – and consequently able to serve a wide variety of applications on grids around the world. Those uses range from grid balancing and stability services to longer-duration storing and shifting of solar and wind power, from adding capacity on constrained transmission and distribution networks to helping industrial energy users to better manage electricity costs.
Both power markets and technologies are evolving rapidly as countries change how they generate and deliver power and work to meet emissions reduction targets. We are working to stay at the forefront of this change, innovating our hardware, software and digital offerings to make it easier to rapidly and cost effectively deploy energy storage without sacrificing quality and configurability, as well as to grow the value storage projects can provide. This means that every year there are new incremental changes – all playing a part in accelerating the adoption of energy storage and by extension helping to fight climate change.
I’ll offer two examples of how we innovate. Last year, we announced our latest-generation technology offerings, pairing the benefits of mass-produced, factory-built hardware with a highly configurable and flexible system architecture, designed to allow what we call “mass customization.” This design provides the flexibility to choose the right components for the use case, and take advantage of new economies of scale or technological advances. Last year, we also announced the acquisition of the AI-based technology platform of Advanced Microgrid Solutions (AMS), which allows for much more efficient market dispatch of renewable generation assets and in particular energy storage assets.
All of this continuous development have now led to customers pursuing energy storage projects that range in hundreds of megawatts or even reaching gigawatt-scale. We are involved in many of those, either on a standalone or portfolio basis, where we can use replicable technology packages and deployment models. For example, we’re delivering a portfolio of over 500 MW for a single customer in southeast Asia, consisting of over 20 projects based on a standardized 20 MW blocks, which is allowing our customer to minimize site design time and deliver grid stability services across the national network.
Lastly, we see customers in a number of markets broadening how they use storage, tapping into additional capabilities the technology offers both for energy and capacity and as a digital, inverter-based resource that can strengthen weak areas of the grid or add capacity on constrained transmission corridors. Applications like these can help dense urban grids like those in Delhi and Mumbai to avoid costly and disruptive service outages.
From a strategy point of view, what are the key drivers for the company's growth globally and in markets like India?
First of all, we’re focused on making the technology proposition more valuable, both in terms of the system costs as well as from the benefits created. We are a company driven by the fundamentals: if you show the value, the technology will be adopted. The economic case for energy storage is already extremely strong in many submarkets and segments and is continuously expanding.
Another key focus area is aligning the right market segments and applications, then showing those markets how to utilize energy storage technology to solve their existing challenges or to improve efficiency of the grid for specific applications. Creating that alignment is critical, as it allows us to focus our resources – technology development, expansion, team growth – on the specific needs of those customers. India, for example, is a large potential market and blessed by the existence of abundance renewable resources, but at this point in time the value proposition varies by submarkets, customer segments and applications. The willingness to accept change in the market – and by extension adopt the technology or allow it to compete on specific applications – can also vary by customers and their stakeholders. Doing that hard work brings us together with the innovators who want to drive change.
What is your understanding of the overall market potential for storage globally and in India?
Analysts project global battery storage adoption growing to as much as 219 GW installed capacity by 2030, with roughly 70 GW of that growth coming in India and China. We anticipate this will be driven by the rapid growth of renewables in both countries supported by large amounts of coal as baseload, which is traditionally a inflexible asset. With both countries committed to renewable deployment and specific targets, battery storage will be one of the most effective – and cost-effective – ways to balance the grid and optimize solar and wind output in an economic and environmentally friendly way.
That strong outlook for energy storage growth is what led to the Qatar Investment Authority becoming Fluence’s third investor. In December, QIA committed to invest $125 million in Fluence through a private placement transaction. We intend to use the new capital to further accelerate development of our product offerings, in particular digital products, and deployment of our existing products in more markets globally.
For Fluence, which geographies or regions will contribute the most to the growth of the storage market globally and where does India fit into that focus?
In the near term, we expect to see continued strong growth in the USA, Australia, the UK and across the EU, all markets that have progressed past initial applications (typically ancillary services) to bulk-shifting the output of renewables (in 4-hour or 5-hour durations) or relieving network congestion with “virtual transmission lines.” We expect the next phase of growth will come from the Asia Pacific region, led by China and India and a few other select countries that need flexibility to balance out high renewable energy deployment with a low availability of gas.
There is a view that the energy storage segment in India, though at a nascent stage, is still to grow at a fuller pace pace in terms of new business opportunities. Would you agree? Also, what would be your key recommendations for policy makers when it comes to laying the roadmap for a robust and sustainable growth of the storage market in India?
The potential for battery storage in India is very high. With high evening ramp requirements, ever-growing renewable energy penetration and less flexible coal, storage can offer a great deal of benefit. In addition, India’s climate change ambitions are taking the form of remarkable renewable energy targets, 450 GW by 2030. We’re already seeing how in other parts of the world, procurements of flexible clean power in the form of renewables and storage are displacing natural gas – and its emissions – for providing peak power, with renewables already out-competing coal in some markets on price. As a company focused on the energy transition, we’re excited to see India on a similar track to curb emissions from its power sector.
Adopting energy storage will also lead to a more efficient electric power system in India. Currently coal assets are forced to ramp up and down, or generate near technical minimum loads, which is inefficient for such plants. Battery storage can ensure renewable generation that is procured is used effectively – minimizing curtailments or solar/wind power needing to be sold at negative prices – so that renewable output does not come at a cost to the consumer.
India will also require more and more peakers to provide flexibility. With limited gas supplies and a desire to remain energy independent, battery storage offers the cheapest - and from an energy security perspective, the best - solution.
The company has been active on M&A front in the recent past. Do you think there could be potentially good M&A opportunities in India at present?
None we can announce at this time, but from our formation, Fluence has been an agile company, and we are always looking to new ways to create value for ourselves and our customers.
What would be the key highlights of 2021 for Fluence globally and in India -- M&As, partnerships, large projects or tenders your are eyeing, etc.?
We hope to support market stakeholders in the planning on how to implement revenue streams for battery-based energy storage, to support both renewable energy growth and transmission and distribution grids nationwide. We think there is great value in showing how the Indian network is ready for grid-scale storage and showing that the market is moving with such deployments, so that an ecosystem can be built around these types of projects in India.
When India’s first solar plants were deployed, they were built using imported modules and seasoned developers. Today a robust supply chain, development cycle and operations network exists to keep the industry thriving.
Fluence wants to be part of this story for energy storage in India, from the initial phase of battery deployment to building up a local supply chain over the next 2-4 years, so that the needs of India’s grid can be met by local developers and locally-manufactured solutions.