Energy storage plays a critical role in the context of climate change as it allows high penetrations of clean power and anchor the electric-mobility revolution. It is also projected to play an important role in improving the overall energy security situation as the county imports over 80% of overall crude requirements, amounting to ~$100 billion. Having said that, India’s energy storage story is dependent on imports until now. To counter this, govt has earlier this year approved the PLI Scheme For ACC Battery Manufacturing.
In 2019, ‘National Mission for Transformative Mobility and Battery Storage’ housed in NITI Aayog conceptualized a first-of-a-kind initiative to change the import-dependent landscape in batteries.
Falling battery costs globally and rising performance efficiencies are fueling the demand for Advance Chemistry Cell (ACC) battery storage globally.
It is estimated that by 2020-30 India’s ACC cumulative demand would be ~900-1100 GWh, but the concern looms due to the absence of a manufacturing base for ACCs in India and sole reliance on imports to meet its rising demand. As per Government data, India imported more than $1 Billion worth of Lithium-ion cells in 2021, even though there is negligible penetration of electric vehicles and battery storage in the power sector. While India is yet to grab the opportunity, global manufacturers are betting high on battery manufacturing and fast-moving from giga-factories to terra-factories.
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With recent technology disruptions, battery storage has a great opportunity in promoting sustainable development in the country considering Government initiatives to promote e-mobility and renewable power (450 GW energy capacity target by 2030). With rising levels of per capita income, there has been a tremendous demand for consumer electronics in the areas of mobile phones, UPS, laptops, power banks, etc., that require advanced chemistry batteries. This makes the manufacturing of advanced batteries one of the largest economic opportunities of the 21st century globally.
Thus, all these forward and backward integration mechanisms in the economy are expected to achieve robust growth in the coming years, leading to domestic demand for ACC batteries In India to reach 230 GWh by 2030. Considering the fact that currently almost all the domestic demand for advanced chemistry batteries is being met through import, there is an immediate need to take steps to promote domestic manufacturing. This would not only help the nation conserve foreign exchange but also make India a global leader in the manufacturing of batteries and better comply with the COP24 Paris Climate Change Agreement.
Accordingly, Cabinet approved the PLI Scheme For ACC Battery Manufacturing with an outlay of Rs 18,100 crores to set up Giga factories with a cumulative capacity of 50 GWh. Under the said initiative the emphasis of the Government is to achieve greater domestic value addition, while at the same time ensure that the Levelized cost of battery manufacturing in India is globally competitive.
The various direct/indirect incentives expected to be received by the ACC battery Storage manufacturer ranges from Cash Subsidy, Trunk Infrastructure Support from the Centre & State, Income Tax relaxations along with opportunities for a supportive BCD regime in the future.
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The Program expects an investment of ~45,000 crores which will boost domestic manufacturing & also facilitate battery storage demand creation along with the development of a complete domestic supply chain & Foreign direct investment in the country. The Program envisages oil import bill reduction of ~2.0 lakh crores & import bill substitution of ~1.5 lakh crores, reported ET.
The Program supports the Aatmanirbhar Bharat initiative through a transparent implementation framework. Manufacturers will be selected through a transparent (“QCBS”) mechanism. Each selected manufacturer would have to set up an ACC manufacturing facility of a minimum of five (5) GWh capacity and get it commissioned within 2 years. Manufacturers have to achieve a domestic value addition of at least 25% within 2 years & 60% domestic value addition within 5 years.
The program implemented by the Department of Heavy Industries with the support of NITI Aayog will push both the public agencies and private entrepreneurs to embark on a collaborative journey that will benefit the country on a scale hitherto unimagined.