Although, India´s power deficit has been come down to 2.5 per cent, primarily due to capacity additions, the demand for power backup still holds the ground. It is believed, mostly by the major players in this segment that the power backup sector to see an upward trend from the current USD 1.5 billion to USD 2.6 billion by the end of this year. This will also reflect demand for components required for power generation business.

What will aid power backup?
With the advent of Make in India initiatives, coupled with industry friendly policies in place, the growth of manufacturing sector looks promising and corresponding growth of the power electronics segment looks inevitable. As factory automation, comfortable lifestyle and energy conservation are growing businesses, the number of variable frequency drives produced worldwide keep growing.

The government´s announcements to boost the renewable energy sector and increasing domestic production of coal, exemplify the Government´s efforts to improve the power situation. According to International Energy Agency (IEA) 2015 outlook, India would need an investment of $100 billion a year to boost its energy sector - development of power plants, refineries, grids and gas fields.

´As a result of all this, the power backup industry has seen rapid growth and demand for alternative/ backup power sources in the form of generator sets, power inverters, UPS, battery, etc. is expected to rise further in coming years,´ says Farrokh N. Cooper, Chairman and Managing Director, Cooper Corporation Pvt Ltd.

That said, with the government´s impetus for infrastructure projects, data centers, industries including the pharmaceuticals and retail, is all likely to aid the power backup industry in the country.

´Our forecast suggests that the power backup sector will grow by 10 per cent year-on-year,´ says an optimistic Sameer Gupta, Chairman and Managing Director, Jakson Group.

What´s more? Another area which is sourcing the services of power backup industry is telecom industry. The Telecom Regulatory Authority of India (TRAI) has mandated use of renewable power for telecom towers in India that are currently utilising the diesel power as a primary source of energy.

The policy initiatives have resulted in tremendous opportunities for integration of energy storage technologies for a variety of applications. The advanced energy storage market in India is in its infancy, however, it carries significant market potential. A recent market assessment by India Energy Storage Alliance suggests a potential of 15-20 GW by 2020 in India.

Immediate applications range from telecom tower backups to grid ancillary services and renewable integration. The $300-million orders during 2013 by Indian telecom companies for purchasing Li-Ion batteries for telecom tower backup is a perfect example of the value proposition of the advanced storage technologies, and willingness of Indian businesses to adopt such technologies.

Micro-grids to the rural rescue
While grid connectivity is expected to improve over the next 10 years, at the current rate of grid expansion, urbanisation and population growth, 70-75 million households will still lack access to grid electricity by 2024. Since 90 per cent of these households live in rural areas, a significant reduction in the 83 million rural households who are currently not served or underserved by the grid is unlikely.

India´s 77 million households (about 360 million people) who lack adequate access to grid-electricity, and another 20 million underserved households (approximately 95 million peoplein all) who receive less than four hours of electricity in a day, there happens to be a tiny, or rather, micro-ray of hope courtesy micro-grids.

According to Bharath Jairaj, Senior Associate, Governance Center, World Resources Institute for micro-grid developers, areas with a staggering number of people living without electricity make a good business proposition.

´This itself can give you an indication about how big is the market in India in terms of volumes, especially in hinterland where the chances are bleak for grid expansion network and electricity boards are reluctant to invest heavily,´ he reveals.

Overall, experts estimate the market size of the micro-grid space to be at least Rs 933 crore by 2018, largely driven by B2B revenues. Not all B2B companies will expand to household distributed renewable energy (DRE) offerings, but experts have seen some B2B enterprises begin to do so.

Off-grid micro-grids businesses serve close to 100,000 households today, and this number is set to grow rapidly at 60-70 per cent annually to around 900,000 by 2018. While the household market will generate annual revenues of Rs 280 crore by 2018, commercial rural infrastructure is growing and presents a huge B2B opportunity to ensure stable revenues from anchor clients alongside households.

As per Shyam Patra, Founder, Naturetech Infra, the minimum size of the micro-grid should be around 120 watts to 10 kW for a 15-100 household village catering to households and village enterprise needs, including water pumping.

´Normally, economics does not fit well for higher size micro-grids as the rural household customers fail to pay anything more than Rs 300 a month for the energy services, no matter whatever the connected load and quantum of energy supplied to them,´ he cautioned.

Companies looking to serve businesses can tap into a range of enterprises such as rural mobile towers, automated teller machines (ATM) and petrol pumps, and secure large scale contracts to drive expansion. Potential revenues from serving rural mobile towers alone could grow to at least Rs 540 crore by 2018. And in light of a government of India mandate requiring 50 per cent of all rural cell towers to shift to renewable energy, this number could be significantly higher.

Conservative estimates suggest that the sector will grow at a cumulative average rate of 50-60 per cent over the next five years (2015-19). At this rate, the installed mini-grid capacity would reach 90 MW by 2019, requiring an investment of around Rs 1,555 crore in plant assets between 2015-19.

Betting on batteries
Indian consumers are expecting their batteries to work for long hours and to carry the entire load in their households, factories and shops. Flooded lead-acid batteries have so far played the role of energy storage devices, but they are yet to deliver the customers´ expectation. Additionally, many residential, commercial and industrial complexes have started installing rooftop solar PV modules along with inverters and battery storage. Consumer expectations will certainly spike in the future.

Emerging technologies across the energy storage spectrum are covering electrochemical batteries, ultra capacitors, thermal storage, fuel cells etc. ´Though India is expected to adopt these technologies, but at the same time various national laboratories such as National Chemical Laboratory, IITs as well as other research universities have researchers working on developing next generation breakthrough in energy storage,´ said Walawalkar.

More and more VRLA (valve-regulated lead-acid) battery makers are also coming forward with their products, side-by-side with tubular flooded battery companies, for supplying for solar applications of up to 400Ah, spicing up the market.

For the first time, a lithium battery manufacturer, Panasonic is eyeing to sell its products to the roof-top solar PV market in India. At a price point of $360/kWh, they will definitely find a few solar PV customers. Perhaps it will be the company to manufacture of Li-ion batteries, 80,000 sets of which will be supplied to Reliance Jio (a telecom company) for powering their telecom towers. Similar orders were also bagged by Saft, Coslight and Narada, besides Panasonic.

As the rooftop solar market evolves as part of the ´100GW solar by 2022´ vision of the Centre, India is expected to witness introduction of advanced hybrid inverters and PCS solutions by global leaders such as Siemens, Eaton, S&C, ABB and SMA, most of which are also considering taking benefits of localisation potential in India and to bring down costs of these solutions.

With a further reduction in the prices of solar PV and advanced storage technologies, the storage market might witness a big change. Other battery technologies like UltraBattery (a combination of VRLA and ultra-capacitor) and flow batteries are investing time, money and effort to gain a share in the big pie of the estimated over-US$1.3 billion (Quote needed) annual battery storage market in India. If the prices of Li-ion battery were to fall below US$300/kWh, it is set to disrupt various industrial and commercial energy storage applications in its stride.