{"id":347562,"date":"2025-10-07T19:19:49","date_gmt":"2025-10-07T13:49:49","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=347562"},"modified":"2025-10-11T13:20:43","modified_gmt":"2025-10-11T07:50:43","slug":"time-to-prioritise-energy-storage","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/time-to-prioritise-energy-storage\/","title":{"rendered":"Time to prioritise energy storage"},"content":{"rendered":"

UPSC Syllabus Topic:<\/strong> GS Paper 3-<\/strong>Infrastructure ( Energy)<\/p>\n

Introduction<\/strong><\/h2>\n

Recently, Andhra Pradesh Chief Minister N. Chandrababu Naidu announced lower electricity charges. He credited power swapping<\/strong> and tighter system management. This sparked a wider debate. Swapping helps in the short term, but a rising renewable share needs energy banking and storage<\/strong> so surplus power is not wasted and demand peaks are met without expensive market buys<\/strong>. Time to prioritise energy storage.<\/strong><\/p>\n

\"Time<\/p>\n

Concept of Power swapping<\/strong><\/h2>\n
    \n
  1. Power swapping means two States or utilities agree to use each other<\/strong>\u2019<\/strong>s power so supply and demand stay balanced.<\/strong><\/li>\n
  2. At an inter-State generating station (ISGS)<\/strong>, each State has an allotted share (its entitlement).<\/li>\n
  3. When one State\u2019s demand is low, another State facing higher demand can use that share for a period.<\/li>\n
  4. The buying State pays a fixed reservation fee (capacity charge)<\/strong> for the borrowed ISGS share and the per-unit energy charge<\/strong> for what it uses. The relieving State doesn<\/strong>\u2019<\/strong>t pay the reservation fee<\/strong> on capacity it isn\u2019t using. This way, both sides cut costs<\/strong> and manage demand better.<\/li>\n<\/ol>\n

    Benefits of Power swapping<\/strong><\/h2>\n
      \n
    1. Both sides can lower near-term costs.<\/strong> The buying State avoids expensive market power during peaks. The relieving State saves capacity charges on idle allocation.<\/li>\n
    2. Consumers gain when peak-time purchases are curbed.<\/strong> Efficient system management over months can translate into lower tariffs.<\/li>\n<\/ol>\n

      Limits of Power swapping<\/strong><\/h2>\n
        \n
      1. Uneconomical<\/strong>: Inter-State transmission charges and losses can erode savings.<\/strong> This makes some swaps uneconomical.<\/li>\n
      2. Swapping is not a structural fix.<\/strong> Better power-purchase planning and a balanced thermal-hydel-RE mix are still needed. Swapping works better when paired with energy banking.<\/strong><\/li>\n<\/ol>\n

        Concept of Energy banking<\/strong><\/h2>\n
          \n
        1. Energy banking is electricity-for-electricity<\/strong>. Surplus renewable energy is injected into the grid when generation exceeds demand and is drawn later when required.
          \n2. It is vital for open-access commercial and industrial users<\/strong>. Discoms provide banking for a charge, in kind or cash<\/strong>.<\/li>\n<\/ol>\n

          Advantages of Energy banking<\/strong><\/h2>\n
            \n
          1. It smooths variability and supports grid security.<\/strong> Discoms can use banked power when their own generation dips.<\/li>\n
          2. Energy cost savings.<\/strong> By banking during surplus periods and withdrawing in high-tariff periods, companies can reduce overall costs.<\/li>\n
          3. Seasonal matching matters for renewables.<\/strong> Banking stores credits from surplus periods and returns them later, helping Commercial and Industrial users<\/strong> and discoms manage variability and costs.<\/li>\n<\/ol>\n

            Limits of Energy banking<\/strong><\/h2>\n
              \n
            1. Discoms face cost mismatches.<\/strong> Banked RE is injected when system costs are low (e.g., monsoon wind or midday solar) but drawn during expensive peaks (e.g., summer evenings). This price\u2013time gap<\/strong> strains finances. Some cases also allege capacity oversizing<\/strong> by developers relative to stated drawal.<\/li>\n
            2. State-specific regulations vary widely.<\/strong> Discoms operating in multiple States struggle to harmonise strategies due to differing policies, charges, and settlement periods.<\/li>\n
            3. Banking charges and technical losses<\/strong> can reduce financial viability. Transmission and distribution losses further erode benefits.<\/li>\n
            4. Limited banking periods<\/strong> in some States make it hard to fully utilise banked energy, causing lapses and financial loss.<\/li>\n<\/ol>\n

              Government initiatives<\/strong><\/h2>\n
                \n
              1. Target: 50% cumulative installed capacity from non-fossil resources by 2030.<\/strong> Faster solar and wind additions increase the need for banking and storage<\/strong> to match supply with demand.<\/li>\n
              2. Green Energy Open Access Rules, 2022:<\/strong> The central rules recognise banking for renewable open-access users. They allow banking at least monthly<\/strong> on payment of charges and permit at least 30%<\/strong> of monthly consumption as banked energy.<\/li>\n
              3. State Electricity Regulatory Commissions<\/strong> define banking charges, periods, and settlement<\/strong>. Provisions differ widely across States.<\/li>\n<\/ol>\n

                Way forward<\/strong><\/h2>\n
                  \n
                1. Build storage at scale:
                  \n<\/strong>\u2022 The share of renewables in electricity generation is expected to rise to over 35% by 2030<\/strong> from 22% in FY2025<\/strong>. ICRA estimates about 50 GW<\/strong> of storage with 5\u20136 hours<\/strong> by 2030.
                  \n\u2022 This need can be met through a mix of battery energy storage systems<\/strong> and pumped hydro<\/strong> projects.
                  \n\u2022 Such storage lets Distribution Companies (DISCOMs)<\/strong> store surplus renewable power and serve the peak when renewable output is low.<\/li>\n
                2. Match procurement with demand:
                  \n<\/strong>Make prudent power-purchase decisions across thermal, hydel, and renewables<\/strong> to match a fluctuating demand curve with the available power mix. This approach avoids chronic surplus or deficit and reduces exposure to expensive market purchases.<\/li>\n
                3. Create a uniform, data-driven energy banking framework:
                  \n<\/strong>\u2022 The Central Electricity Authority (CEA)<\/strong> should lead financial and scientific studies to measure real costs and grid impacts.
                  \n\u2022 Based on these studies, adopt one common method to calculate banking charges<\/strong> across all States and enable transparent price discovery so costs and responsibilities are allocated fairly among renewable developers, DISCOMs, and consumers<\/strong>.<\/li>\n
                4. Enable trade capacity: <\/strong>Enable capacity trading<\/strong> quickly so generators can sell unused contracted capacity to others, keeping plants and transmission lines productively used, lowering system costs, and improving reliability.<\/li>\n
                5. Ensure regulatory certainty: <\/strong>Do not change rules retroactively. Align banking periods<\/strong> with seasonal <\/strong>patterns, and harmonise State regulations<\/strong> to support renewable open access<\/strong> (buyers taking power directly from generators).<\/li>\n<\/ol>\n

                  Conclusion<\/strong><\/h2>\n

                  Energy<\/strong> Swapping cuts immediate costs,<\/strong> but it is not a full solution. Energy banking and scalable storage<\/strong> are essential to manage variability, protect discom finances, and keep tariffs stable. Data-based rules and capacity trading<\/strong> will support a reliable, affordable transition to clean power.<\/p>\n

                  Question for practice:<\/strong><\/p>\n

                  Discuss how power swapping and energy banking differ in concept, benefits, and limits, and explain the key steps needed on storage and regulation to make renewables reliable and affordable.<\/p>\n

                  Source<\/strong>: Businessline<\/p>\n","protected":false},"excerpt":{"rendered":"

                  UPSC Syllabus Topic: GS Paper 3-Infrastructure ( Energy) Introduction Recently, Andhra Pradesh Chief Minister N. Chandrababu Naidu announced lower electricity charges. He credited power swapping and tighter system management. This sparked a wider debate. Swapping helps in the short term, but a rising renewable share needs energy banking and storage so surplus power is not… Continue reading Time to prioritise energy storage<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":347821,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[12044,216,8684],"class_list":["post-347562","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-business-line","tag-gs-paper-3","tag-infrastructure-energy","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/Time-to-prioritise-energy-storage.png?fit=1280%2C850&ssl=1","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/347562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=347562"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/347562\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/347821"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=347562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=347562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=347562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}