Executive Summary

Indian consumers have been deploying behind-the-meter generation (predominantly diesel backup, and, more recently, photovoltaic) and storage systems (predominantly lead-acid and other kinds of batteries as uninterrupted power supplies) by the millions for decades (Jaiswal et al. 2017; Seetharam et al. 2013; IFC 2019). These storage systems are used by consumers to address reliability issues within the Indian power system, and their deployment is driven by consumer preference rather than any specific government program or policy. However, the same energy storage systems could provide additional services to the consumer and distribution companies if properly regulated and designed from the outset to be grid interactive. Grid-connected distributed solar PV (DPV), or rooftop solar, has also seen wide deployment in India and features prominently in the Government of India’s plans for a transition to clean, reliable, and affordable energy for all. At the same time, many utilities and state governments, as well as the central government in India are currently funding-constrained for both operational and future capital expenditures in the power sector, and some perceive customer-sited resources as exacerbating existing financial challenges.

In that context, behind-the-meter energy storage systems paired with distributed photovoltaic (DPV)— with the capability to act as both generation and load—represent a potentially unique and disruptive power sector technology capable of providing a range of important services to customers, utilities, and the broader power system in India. Globally, jurisdictions with high penetration of DPV have seen faster uptake of behind-the-meter energy storage systems, such as in California and Hawaii (GTM and Energy Storage Association 2019). India, with more than 4 GW of installed rooftop solar, is primed for the uptake of behind-the-meter energy storage, as consumer economics become more attractive with the fast- falling cost of energy storage systems. A proper framework to coordinate the deployment and operation of these distributed systems can balance stakeholder benefits from their presence on the grid. Without appropriate regulations or technical requirements, however, these systems could potentially 1) cause safety concerns for the utility; 2) exacerbate utility revenue losses; or 3) limit the ability for stakeholders to achieve certain policy goals. This report aims to offer a comprehensive, evidence-based approach to designing customer programs based on experience in the United States that can help regulators, utilities, and policymakers in India manage the range of challenges and opportunities that increased behind-the- meter energy storage deployment will bring to the power system, in particular when these systems are paired with DPV.

This report has been prepared by the National Renewable Energy Laboratory (NREL) with support from the U.S. Agency for International Development (USAID) for discussion purposes with a broad range of stakeholders. These include Indian regulatory agencies (such as the Forum of Regulators, the Central Electricity Regulatory Commission, and various State Electricity Regulatory Commissions), policy makers, utilities, and developers to inform a broader dialogue around the future direction of Indian states’ approach to regulating and facilitating DPV-plus-storage systems. Importantly, this report is intended to offer key regulatory considerations for facilitating DPV-plus-storage programs for retail customers. As the role of regulators is often to convene and balance the interests of a broad range of stakeholders, including policymakers, utilities and customers, this report focuses on their role in the development of behind-the-meter DPV-plus-storage programs. Throughout the report, relevant cases from U.S. states are provided as examples of how novel regulatory issues related to behind-the-meter energy storage systems paired with distributed photovoltaic are being addressed in practice.

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