India to launch battery energy storage manufacturing capability

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India is to plough Rs.18,100 crore (US$2.5 billion) into setting up 50GWh of advanced chemistry cell battery storage manufacturing facilities.

The Indian government’s ‘National Programme on Advanced Chemistry Cell Battery Storage’ will seek manufacturers through a competitive bidding process, which will be required to commission manufacturing facilities of minimum 5GWh capacity within a period of two years.

Several Indian companies have started investing in battery packs but the capacities of these facilities are small when compared to others globally and so far there has been little investment in manufacturing or value addition to battery storage nationally.

The programme under India’s Ministry of Heavy Industries and Public Enterprises is aimed to reduce the dependence on imported products and forms part of the Atmanirbhar Bharat post-COVID stimulus initiative to enable the country to become more self-reliant across the economy and other fronts.

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It also is expected to accelerate the adoption of electric vehicles and to be a key contributor to reducing India’s greenhouse gas emissions.

The programme brings an incentive scheme, which will be disbursed over a period of five years once manufacturing commences. The incentive amount will increase with increased specific energy density and cycles and increased local value addition, with a minimum 60% domestic value addition required within five years.

The programme is expected to lead to direct investment of around Rs.45,000 crore in advanced chemistry cell battery storage manufacturing projects.

Benefits envisaged include import substitution of around Rs.20,000 crore per annum – this being the value of battery storage equipment currently imported into India – and net savings on oil imports due to EV adoption of up to Rs.250,000 crore.

The programme also is anticipated to give impetus to battery R&D and to promote newer and niche cell technologies.

The initiative has been widely welcomed.

“It will be a paradigm shift. Given the budget allocation I am positive it will get some real big players into the battery space,” said Sanjay Singh Negi, Vice President – EY Policy and Regulatory Services in India, in a Linkedin commentary.

Sumit Dhanuka, Founder and Managing Partner of PreCog Innovation Partners, said: “The supply side incentive should have a positive impact in creating an indigenous supply chain and driving down costs for the Indian battery industry.”

Dr Rahul Walawalkar, President of the India Energy Storage Alliance (IESA), which participated in the crafting of the programme and will be involved in its implementation, was quoted as saying: “The approval of the programme will enable Indian conglomerates to take the first steps to become part of the global advanced battery manufacturing ecosystem and attract global technology leaders and investors to invest in India.”

IESA has estimated the Indian storage market to reach over 500GWh by 2027 split approximately equally between stationary and mobile applications.