By Hiren Pravin Shah
Demands for battery storage in India are increasing fast keeping pace with the global growth. With the rising number of electric vehicles, battery storage demands in India are expected to increase further.
The Indian Government’s announcement of the 2014 100GW solar target, and of 2015 for 175GW renewable energy (RE) by 2022, sounded audacious at that time. Today, India is on the cusp of achieving the latter target, while considerable progress has been on the former. To start with, this proves India’s capacity as a rapidly progressing country to soon become self-reliant or in other words ‘Atmanirbhar’. In the meantime, India has declared even more bold targets of achieving RE of 275GW by 2027, and 500GW by 2030.
Learning from the success achieved to attain energy sufficiency by reducing demand for coal & gas in the power sector, through large-scale integration of RE, the Indian Government has also announced major initiatives to decarbonize the transportation sector, which remains the single biggest energy guzzler, and heavily dependent on imports. Promoting Electric Vehicles (EV) would not only lead to a significant reduction in CO2 but also bring down our dependence on imported crude oil.
As already witnessed in parts of leading economies like the USA, UK, some countries of Europe and Australia, the large-scale adoption of RE gives natural rise to associated intermittency in a generation. It is extremely important to have measures in place to smoothen this, for the overall robustness of the grid. Considering its importance, the Indian Government think tank has innovatively structured RE tenders with round-the-clock (RTC) and peak power supply arrangements, thereby making possible better schedulable load-following RE supply. This initiative has given rise to the need for Energy Storage Systems, both at RE generator, mainly for intermittency smoothening, and at the Grid level, for providing various ancillary services.
India is currently almost completely dependent on countries like China, South Korea, Japan, etc. for the lithium-ion cells.
In recent times, it has been seen that the present fast response ancillary services are not able to maintain the frequency of the grid between the 49.90 Hz – 50.05 Hz band, as prescribed by IEGC. Mega scale addition of RE, and simultaneous reduction of power generation by conventional generators, have also led to a reduction of much-needed inertia in the system. The additional advantage of grid-scale Energy Storage Systems is that they can provide this much-required inertia. Deployment of Energy Storage Systems in foreign markets for applications like Power Back-up (DG displacement/replacement), De-congestion for T&D networks, Ancillary Services, Improving Power Quality, Peak Demand Response, etc. have resulted in many successful and even profitable cases.
Currently, India is almost completely dependent on countries like China, South Korea, Japan, etc. for lithium-ion cells, which are needed both for Battery Energy Storage Systems for Residential/Commercial & Industrial/Grid-Scale applications and for Batteries for EVs. In the last few years, some manufacturing set-up has been established within our country to assemble these cells in the form of Modules to Racks for Stationary, and Modules to Packs for Electric Mobility applications, although in many of the cases, it is not of the desired quality.
India lacks a few critical minerals & materials which are imperative for manufacturing lithium-ion cells.
Considering that India also lacks a few critical minerals & materials which are imperative for manufacturing lithium-ion cells, it is feared that while on one hand we successfully reduce our dependency on imported fossil fuels, on the other hand, we as a nation might become dependent on imported lithium-ion cells and/or materials for manufacturing them, which would not be a wise move. Surely, we would not like to repeat the same mistake which we did in becoming dependent on other countries (mainly China) for solar cells & modules. In view of this, we have no choice but to become ‘Atmanirbhar’ in battery storage as soon as possible.
Keeping in mind the sensitivity and criticality of the role of battery storage in the energy security of our country, the Indian Government has proactively taken steps in the right direction through major initiatives to boost local manufacturing. One of such measures is the Production Linked Incentive (PLI) scheme for domestic manufacturing of Advanced Chemistry Cells, which has already taken good shape with the successful choice of four bidders vying for a total of 50GWh of manufacturing.
The PLI Scheme can be explored further by linking domestic manufacturing with the raw material refining industry, with this India will truly achieve the goal of ‘Atmanirbhar’ by developing the complete end-to-end ecosystem for the battery storage domain. Extraction, refining, processing, and manufacturing of raw materials in India will be a valuable addition to boost the PLI scheme & put India on the path to becoming a developed nation across the globe.
Apart from this, many State Governments have also announced their own set of incentives to attract investment from other companies who are interested in set-up local manufacturing of lithium-ion cells. Moreover, the Central Government has given the responsibility to Khanij Bidesh India Ltd. (KABIL), a mining joint-venture created by the Ministry of Mines to ensure mineral security and to attain ‘Atmanirbharta’ in critical and strategic minerals, to explore the required minerals in countries which are rich in such resources. Recently, KABIL and the Australian government’s Critical Minerals Facilitation Office (CMFO) have signed a pact to carry out joint due diligence for select projects to identify lithium and cobalt mineral assets in Australia.
While the favourable schemes are being regulated & soon getting implemented, there are other noteworthy activities under consideration by the Ministry of Power & Electricity Boards to create demand for Battery Storage. Recently, the Indian market has also witnessed large GWh scale BESS tenders issued by SECI, NTPC & RVUNL which will accelerate the adoption of BESS systems.
With the new BESS projects adding up in the future pipeline, a very strong & impactful direction is also being driven by the Government of India to create a demand for energy storage. This will further enhance the effective implementation of PLI schemes & policies issued till now
To accelerate the pull from the Indian market certain very critical regulatory and policy frameworks are being finalized by several government entities:
- Availability of Single Window or Centralized “Green Open Access Portal” to ease out the registration and approval process of projects
- Exemption on open access charges
- Define % of BESS Installations in Renewable Plants as per CERC regulations
- DISCOM to ensure DG Sets are banned in Tier 1 & Tier 2 cities
- GST which is currently 18% may get revised either to 0% or 5%, subject to deliberations
- Basic Customs Duty (BCD) may be revised and would be applied either in the form of differential BCD (different BCD at the component level) or preferential BCD
- Govt may offer Viability-Gap Funding (VGF) or grants to companies for putting-up energy storage projects
In the meantime, many local startups, joint-venture companies promoted by well-established Indian companies, etc. have made investments / are in the process of making investments, to carry out high-quality assembly manufacturing of lithium-ion cells to feed the upcoming markets for Stationary, and EV applications. It is heartening to see that India has taken much-needed timely initiatives to become ‘Atmanirbhar’ in battery storage.
(Hiren Pravin Shah is Executive Director & CEO, Replus, a part of LNJ Bhilwara Group.)
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