Four winners have been selected to receive financial incentives from India’s government, to support plans to build 50GWh annual manufacturing capacity of advanced batteries for EVs and ESS.

 

The Ministry of Heavy Industries officially announced the winning bidders that competed for funds through the Production Linked Incentive (PLI) for Advanced Chemistry Cell (ACC) Battery Manufacturing today.

 

PLI schemes exist for other technologies like solar cells, electronics and electric vehicles, with the government describing battery manufacturing as one of this century’s “largest economic opportunities”.

 

A pot of INR181 billion (US$2.42 billion) has been made available for gigafactories with at least 5GWh of annual production capacity per site. The incentives will be disbursed over five years, and the factories must be operational within two years.

 

The winners:

• Rajesh Exports Limited  
• Hyundai Global Motors
• Ola Electric Mobility      
• Reliance New Energy Solar         

India Energy Storage Alliance (IESA) president Dr Rahul Walawalkar told Energy-Storage.news that with the awards and the promise of a quick start to advanced battery manufacturing in the country, India has taken a step towards realising the alliance’s “dream of becoming a global hub for R&D and manufacturing of advanced energy storage technologies”.

 

While the awardees are mostly in the automotive space, Reliance New Energy Solar, a subsidiary of Indian industrial heavyweight Reliance Industries is very much in the renewable energy sector. In the last few months, Reliance New Energy has bought up UK startup Faradion, which works on sodium-ion battery tech and Lithium Werks, which makes lithium iron phosphate (LFP) batteries.

 

Reliance had bid for support for 20GWh of manufacturing capacity and was awarded PLI for 5GWh through the scheme, with a further 15GWh on the waitlist. It was also a winning bidder under the PLI scheme for solar module and cell manufacturing.

 

A further five companies, Mahindra & Mahindra, Exide Industries, Larsen & Toubro, Amara Raja Batteries and India Power Corporation were also waitlisted for capacity plans ranging from 5GWh to 15GWh.

 

The competitive solicitation process had been oversubscribed, with 130GWh of plans submitted.

 

‘Next couple of years are critical’

Dr Rahul Walawalkar from IESA said it was great to see not just the winners of the scheme announced, but that at least five other groups plan to go ahead with gigafactory investments in India within the next two to three years.

 

“The next couple years are critical for India to focus on technology partnerships, skill development and capacity building to support the gigafactories as well as complete supply chain,” the IESA president said.

 

IESA was among stakeholders that had input into the programme’s design and Walawalkar said that the organisation is now working with government think tank NITI Aayog, the Ministry of Power and Ministry of Heavy Industries to ensure demand creation policies and initiatives are accelerated in the next couple of years.

 

Companies that have shown the first-mover initiative in the space should be able to benefit from that leadership, he said.

 

A further 20 or so more bids are expected to come in for another PLI scheme on Niche ACC technologies when it launches in September this year, which would add an additional 5GWh of annual manufacturing capacity in the country.

 

India’s Central Electricity Authority has modelled a need for 27GW/108GWh of battery storage by 2030 to meet national goals of adding 500GW of renewable energy capacity from solar and wind, while battery storage could be an export opportunity as well.

 

Dr Walawalkar said IESA’s roadmap for the manufacturing sector targets India having at least 25GWh of production capacity by 2025, more than 70GWh by 2027 and over 100GWh by 2030.

 

By 2027, IESA anticipates the split of India’s battery manufacturing capacity will be about 60:40 between EVs and ESS.

Evolving in the new age of electric mobility, various subsidies and incentives offered by the Center and state governments form the backbone of the EV market in India.

 

As per a report, the EV market in India will be USD 206 billion by 2030, if India maintains a steady progress to meet its ambitious 2030 target. This would require a cumulative investment of over USD 180 billion in electric vehicle production and charging infrastructure. Another report by India Energy Storage Alliance (IESA) projects that the Indian EV market will grow at a CAGR of 36 percent till 2026. The EV battery market is also projected to grow at a CAGR of 30 percent during the same period.

 

Like any other entity, the growth of EV sector needs the government push both at central as well as state levels. The main area of target remains the high cost of EV production at this nascent stage. Before any technological revolutions and their adoptions, an initial support mechanism is imminent for the growth of EV. Thus, subsidies and incentives by center and states have been put into place so that buyers don’t bear the entire cost of the product.

 

Central Government Subsidy

Faster Adoption and Manufacturing of Hybrid and EV (FAME II) scheme has been launched by the central government in April 2019. To avail benefits under the scheme, any two-wheeler has to go through certain criteria. The two-wheeler must have a mileage of 80km on a single charge. Further, needs to have a speed of at least 40kmph. In addition to this, the two-wheelers also need to have a certain degree of localization.

 

On passing the criteria, the government offers a subsidy of Rs 15,000 per kWh of battery. For example, Ather 450X is eligible for a FAME II subsidy of Rs 43,500 per scooter. It is worth noting that there is also a subsidy cap. The subsidy is only eligible for 40 percent of the vehicle’s total cost.

 

The subsidy is directly passed on to the customer, while EV manufacturers account for this subsidy when quoting the price at the time of purchase. In backdrop of recent slowdown in the economy due to several factors, more prominently Covid19, the government has extended scheme by two years. Now the FAME II subsidy is valid until March 31, 2024.

 

State Government Subsidies

State government also joined hands with center’s efforts for promotion of electric mobility in their states. These largely vary according to the state. Some offer fixed subsidies while some take into account battery capacity, performance and other such aspects before fixing on a price.

 

Gujarat and Maharashtra, for instance, have been instrumental in such efforts. Gujarat has a Rs 10,000 per kWh subsidy scheme. Here, subsidy on a particular two-wheeler cannot exceed 20 percent of the vehicle value.

 

Similarly, in Maharashtra, eligible two-wheelers get a flat Rs 10,000 subsidy. An early-bird scheme that added an extra Rs 15,000, also got extended in 2022. Earlier it was valid until December 31, 2021.

 

Rajasthan and Odisha are also in the race. Rajasthan offers a subsidy of Rs 5,000 for two-wheelers with a 2-kWh battery. In addition, there is subsidy up to Rs 10,000 for a battery bigger than 5 kWh. Odisha, on the other hand, offers a flat subsidy of Rs 5,000.

 

There are complete Road tax waivers for electric vehicles in most states. There are exceptions such as Gujarat and Kerala, where buyers have to pay 50 percent of the total road tax amount.

 

Challenges Ahead

India’s EV space is at a nascent stage. However, looking at it differently – India offers the world’s largest untapped market, especially in the two-wheeler segment. A 100 percent FDI is allowed in this sector under the automatic route. In spite of subsidies and incentives, there are various challenges that need solving if India wants to blast the roof with EV onboard. These challenges are low penetration, high capital costs, Covid19 market disruptions, uncertain policy environment, and the lack of supporting infrastructure. What else? India does not have any known reserves of lithium and cobalt. This makes the country dependent on imports of lithium-ion batteries from Japan and China.

Independent power producers (IPPs) Greenko and Ayana Renewable Power will leverage large-scale energy storage to give industrial customers in India ‘round-the-clock’ renewable power supply.

 

The pair said this week that they are teaming up to offer industrial entities and distribution companies (discoms) decarbonisation solutions with up to 1GW of dispatchable renewable energy.

 

The two companies said the business model they are creating — with green energy supply underpinned by standalone energy storage capacity — could offer a template for such transactions in the country.

 

Ayana Renewable Power is owned by Indian sovereign wealth investment instrument National Investment and Infrastructure Fund (NIIF) and develops utility-scale solar, wind and hybrid renewable energy projects across India.

 

Ayana’s other shareholders are UK government development finance institution CDC Power, which launched the IPP in 2018, and Green Growth Equity Fund, which is managed by EverSource Capital. It already has 1.19GWac of operating renewable energy projects and is developing or managing over 3.59GWac more.

 

Greenko meanwhile is one of the country’s biggest developers, owners and operators of renewables, with an installed base of 7.3GW of solar, wind and hydro across 15 Indian states.

 

In September 2020, an investment of nearly US$1 billion from Japan’s ORIX Corporation took Greenko’s valuation to about US$5.75 billion for its multi-gigawatt renewables development pipeline.

 

It was awarded a contract for a hybrid pumped hydro, solar and wind project in Andra Pradesh by that state’s government earlier in 2020, which at the time was considered the lowest cost renewables-plus-storage project bid made in the world.

 

According to Greenko, it will offer capacity from the 1.5GWh of pumped storage at that site, from a total 6GWh of standalone energy storage it brings to the partnership with Ayana Renewable Power.

 

Energy-Storage.news asked for clarification from the two companies on the likely mix of energy storage technologies comprising that 6GWh figure, but had yet to receive a reply ahead of publication.

 

Greenko said it is constructing a total 30GWh of energy storage capacity and targeting an eventual 100GWh.

 

The partnership follows on the heels of US-headquartered energy storage technology company Fluence announcing a forthcoming joint venture (JV) to target the Indian market with another Indian IPP, ReNew Power. One of the first projects that JV will work on will be a battery-backed round-the-clock renewable energy hybrid system.

 

GE Renewable Energy has also just opened a factory in Chennai, making equipment including solar inverters and integrated battery storage system technology.

 

India’s government keen to support energy storage market takeoff

Regular readers of this site will know that in light of India’s ambitions to deploy 500GW of renewable energy capacity by 2030, the government as well as its industries are keen to support and foster the adoption of energy storage as an enabling technology.

 

Its Central Electricity Authority has modelled a need for about 29GW/108GWh of energy storage connected to the grid by that time.

 

“This transaction marks the first time two independent power producers have joined hands to facilitate the decarbonisation goals of industrial clients in India by developing storage infrastructure that will support India’s commitment to create 500GW of renewable energy capacity by 2030 and reducing emissions intensity of GDP by 45% by 2030,” Ayana Renewable Power managing director and CEO Shivanand Nimbargi said.

 

In the Union Budget announced a couple of weeks ago, Finance Minister Nirmala Sitharaman ruled that energy storage systems can be classified as infrastructure investments.

 

This would go a long way to unlocking financing for both the upstream and downstream industry sectors, expert industry commentators Dr Rahul Walawalkar of the India Energy Storage Alliance (IESA) and Ulka Kelkar of research group WRI India told Energy-Storage.news.

 

Only a few days before that, the Ministry of Power issued a clarification of energy storage’s role in the power sector, including its legal status, how it could be defined as generator, or as part of the grid or wider electricity network and what sort of ownership models could be applied.

 

Government ministers have said that they are prepared to handhold and support the industry until it can stand on its own two feet, including through holding government tenders for both standalone energy storage and hybrid renewable energy projects with storage at strategic locations.

 

There is also an ongoing government scheme to incentivise up to 50GWh of production facilities for advanced chemistry cell (ACC) batteries within the country’s borders.

 

“This partnership between Ayana and Greenko is in line with the Ministry of Power and Ministry of New and Renewable Energy mission to create a standalone storage market in India,” Greenko’s founder, joint managing director and president Mahesh Kolli said.

 

“Such integrated renewable energy and storage projects, offering solutions superior to conventional energy sources in terms of dispatchability and round-the-clock supply, reflect the growing maturity of the renewable sector in India.”

The Indian government’s decision to classify grid-scale energy storage as infrastructure addresses the industry’s “biggest concerns” by making investments easier to facilitate, Energy-Storage.news has heard.

 

As part of the Union Budget 2022-2023 speech and announcements yesterday by Minister of Finance Nirmala Sitharaman, energy storage and data centres were awarded the status. Minister Sitharaman said that this will “facilitate credit availability for digital infrastructure and clean energy storage”.

 

India’s banks and financial institutions have a standard, government-identified list to follow when it comes to choosing what qualifies for infrastructure loans, Ulka Kelkar, director of the climate programme at non-profit research group WRI India, told Energy-Storage.news.

 

“This list includes five types of infrastructure, which are more in the nature of public goods than private goods,” Kelkar said, from energy, transport, communications, water & sanitation to social and commercial infrastructure.

 

“Specifically adding grid-scale energy storage to this list should make it easier to access infrastructure credit.”

 

Kelkar explained that this showed the range of policy instruments a government can deploy is much wider than budgetary allocations and fiscal incentives like taxes or subsidies, but includes other forms of de-risking, from mandates and standards to procurement, aggregation, credit aggregations and more.

 

The budget also included direct support for the upstream end of the clean energy value chain. As reported yesterday by our sister site PV Tech, an allocation of funding for solar PV manufacturing within the country through a scheme called the Production Linked Incentive (PLI) was quadrupled with an addition of Rs19,500 crore (US$2.6 billion).

 

There was also a commitment to establishing battery recycling and battery swap programmes for electric vehicles (EVs), while a separate Production Linked Incentive programme already in place for advanced chemistry battery cell manufacturing is ongoing, aimed at supporting 50GWh of domestic production capacity.

 

India Energy Storage Alliance welcomes ‘progressive budget’

The India Energy Storage Alliance (IESA) told Energy-Storage.news it welcomed the “progressive budget,” which it said addressed many key requests from the industry and would make faster adoption of energy storage and e-mobility in India possible.

 

“Infrastructure status for energy storage sector will address the biggest concerns of industry related to ease of financing,” IEAS president Dr Rahul Walawalkar said.

 

“IESA believes that over the past decade energy storage technologies have made tremendous advancements in improving performance and reducing capital cost, so availability of financing was identified as the key hurdle for rapid adoption.”

 

Infrastructure status for energy storage had been among requests IESA had made to the Ministry of Finance, covering both manufacturing and deployment and Dr Walawalkar said.

 

“We are glad our submission was considered positively,” he said.

 

“As the Harmonised Master List of Infrastructure sub-sectors already includes Electricity Generation and Electricity Transmission, the inclusion of Energy Storage will help cover all the important segments of energy under the Infrastructure Status.”

 

IESA also welcomed that increase in funding for solar PV manufacturing as a close ally sector of energy storage. According to Walawalkar, the Ministry of Finance can be expected to also consider increasing the 50GWh allocation for advanced chemistry cell (ACC) manufacturing support in the coming months.

 

Applications for the ACC incentive had been oversubscribed, with a total of 130GWh of competing bids received and the Ministry may increase the targeted capacity “to ensure India can keep up with the global increase in advanced cell manufacturing,” the IESA president said.

 

WRI India’s Kelkar said the PLI funding increase for solar could have a positive impact on energy storage adoption. 

 

The allocation specifically related to “manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules”.

 

However, Kelkar said, it might help reduce the combined cost of solar and storage for each unit of electricity generated, even though the scheme itself may not directly affect storage.

 

“With such schemes, the focus seems to be on nurturing the indigenous manufacturing industry, creating jobs, and driving down costs,” Kelkar told Energy-Storage.news.

 

IESA also welcomed other measures announced, or referred to as under consideration by the government, that could have a positive impact on India’s energy storage manufacturing and supply chain.

 

For example, while the budget broadly emphasised support for domestically-made goods and included duties on imported products, reforms on customs and duties rates for raw materials that are being discussed could ease supply chain constraints and support domestic makers, Dr Walawalkar said.

 

A concessional 15% tax rate for newly incorporated domestic manufacturers has been extended by a year from 31 March 2023 to 31 March 2024, which will help facilitate investments required in the next two years to get PLI-backed companies —as well as potential component suppliers — up and running.

 

IESA also warmly welcomed measures to support start-ups, green energy sector job opportunities for young people and skills training in digital and other industry sectors and e-mobility. The group also said support for grid-connected microgrids was a positive step, helping boost agribusiness in remote areas.

 

The group did say, however, that a reduction in the General Sales Tax for EV batteries to 5% that is suggested had not been included in the budget, which IESA asked the Ministry of Finance to reconsider.

 

The green hydrogen sector is also “missing in the budget,” Dr Walawalkar said. IESA has suggested the creation of a special fund for green hydrogen and PLI support for green hydrogen electrolyser manufacturing.

 

Nonetheless, the budget appears to have been well received. It follows the announcement a few days ago that India’s Ministry of Power has clarified the role and status of energy storage within the power sector, which again could accelerate adoption.

 

The country already has over 150GW of renewable energy capacity installed and to reach its 2030 target of 500GW, will need about 28GW/108GWh of energy storage, the Central Electricity Authority has forecasted.

 

Previous budget announcements covered by Energy-Storage.news in 2020 and 2021 were welcomed by IESA for their broad support of renewable energy and the green economy, but yesterday’s announcement appears to be the first instance of specific, directly supportive policy announcements pertaining to energy storage by Minister Sitharam.

Top companies in India including Reliance Industries, Larsen & Toubro, Exide, Amara Raja, Lucas TVS, Mahindra and Mahindra, and Ola Electric Mobility are among the 10 companies that have submitted bids for setting up Advanced Chemistry Cell (ACC) battery storage manufacturing in India.

 

South Korea's Hyundai Global Motor Co., India Power Corporation, and Rajesh Exports Ltd, are among the other companies that have applied to the Production Linked Incentive (PLI) scheme.

 

"A total of 10 companies submitted their bids under the Advanced Chemistry Cell (ACC) Battery Storage Programme in India for which Request for Proposal (RFP) was released by Ministry of Heavy Industries (MHI) on 22nd October 2021, Ministry of Heavy Industries (MHI) stated in its official release today.

 

The scheme received an encouraging response from local as well as global investors as bids received is 2.6 times the manufacturing capacity to be awarded i.e. 50 Gwh, MHI noted.

 

The Union Cabinet in May 2021 approved the PLI scheme on ACC battery storage with an outlay of INR 18,100 crore to make India 'Aatmanirbhar' (self-reliant) in the manufacturing of advanced storage technologies. The PLI scheme designed by NITI Aayog and managed by the Department of Heavy Industry (DHI) aims at achieving a manufacturing capacity of 50GWh of ACC and 5 GWh of "Niche" ACC in India by 2027.

"This is great news and a major milestone for the Indian energy storage and e-mobility industry. Thanks to NITI Aayog and DHI team for believing in the vision and dedicated work of IESA over the past five years and taking it to the conclusion," said Dr. Rahul Walawalkar, Founder and President, India Energy Storage Alliance (IESA) -- India's only industry alliance focused on promoting advanced energy storage and e-mobility technologies in India since 2012.

"In 2016, IESA set a vision to make India a global hub for advanced energy storage and e-mobility technologies by 2022. Last year, we have upgraded the vision to build on the ACC PLI with a roadmap for 50+ GWh ACC manufacturing capacity by 2027 and scaling it to 100+ GWh of capacity by 2030. IESA is committed to support the building of a complete supply chain ecosystem for making India a global hub for R&D and manufacturing of advanced energy storage technologies," he added.

IESA thanked the leadership of Amitabh Kant, NITI Aayog, and the DHI leadership team including Arun Goyal, Sudhendu Sinha, and  R P Gupta, including the core team of Sujit Jena, Randheer Singh and Aman Hans, who worked tirelessly over the past two years to gather inputs from all interested stakeholders and developed the ACC PLI scheme.

IESA was anticipating 2-3 bids of 15-20GWh, 3 bids of 10+ GWh, and another 3-4 bids of 5-10 GWh totalling 100 GWh+ capacity to be bid in the ACC PLI.

The alliance estimates, the annual demand for ACC batteries will grow from under 10 GWh at present to over 50 GWh by 2025 and over 150 GWh by 2030-- that makes the PLI, a crucial scheme for making India a global hub for R&D and manufacturing of advanced energy storage technologies.

Currently, battery storage finds use in consumer electronics, electric vehicles, storage for renewable energy, data centres, and others -- these sectors are expected to witness robust growth in the coming years, and with that, the demand for battery storage is expected to surge.

As per Indian government estimates, India imports INR 20,000 crore worth of battery storage equipment.

Further, battery storage is critical to establishing a domestic supply chain for meeting India's ambitious targets of having 30% of car sales to be electric and 50 percent of its energy requirements from renewable energy by 2030.

Debi Prasad Dash, Executive Director of IESA explained that the "ACC PLI program also will kick start investments in the supply chain as the program has a mandate of minimum 60% domestic value addition for receiving the government incentive."

Last December, IESA launched India Battery Supply Chain Council (IBSCC) with 20+ leading supply chain, components, and equipment providers to develop a complete supply chain for supporting giga factories.

"IBSCC is not just for supporting Indian domestic giga factories but the other giga factories being set up in Europe and USA as well," Dash added.

This PLI scheme for Advanced Chemistry Cell (ACC) (₹18,100 crore) along with the already launched PLI Scheme for automotive sector (₹25,938 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (₹10,000 crore) will enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient Electric Vehicles (EV) based system, MHI stated.

Indian Institute of Technology Madras (IITM) will launch a Global Energy Consortium to boost the transformation towards a low carbon future. The institute believes that the energy challenges of the next generation will require inter-disciplinary approaches across multiple domains and need a strong collaborative effort across academia and industry, which will be a key focus of this initiative.

 

Over 50 global faculty with significant expertise and contributions through technologies and highly cited research publications, will work in areas such as carbon capture and storage, gas hydrates and renewable energy systems. This includes applications in desalination and cold storage, electrolyser technologies for CO2 conversion and beyond lithium energy storage technologies.

 

The consortium will be launched at the IIT Madras Energy Summit to be held from December 14 to 16.

 

IIT-Madras has seven dedicated research initiatives working on the energy sector. These initiatives will form the core of the Global Energy Consortium, said Satyanarayanan Seshadri, Associate Professor, Department of Applied Mechanics and Convenor of The Energy Consortium at IITM.

 

“IITM is the first to do this in India as far as I know. A similar initiative exists and has been hugely successful in MIT,” he told BusinessLine.

 

Focus areas

The consortium will focus on research, development, and commercialisation support on technologies across the entire value chain: energy sources, conversion technologies, integration, and storage. This consortium is being established as a premier forum for intense collaboration between industry and academia for identification of research priorities impacting our sustainable energy needs and accelerated development of technology to meet them, he said.

 

The transition to net-zero and eliminating carbon emissions from energy systems requires sustained and translational R&D to build technology and human capital in India for the world. The consortium aims to become the centre or hub that catalyses this change, he said.

 

Rajnish Kumar, Department of Chemical Engineering, and faculty-in-charge of the consortium said, IIT Madras will invite Indian and global industries and organisations to join the consortium and take advantage of the research facilities at IIT Madras, and help in developing commercially viable solutions to achieve the target of net zero CO2 emission by 2070.

 

Energy summit

Speaking about the IITM Energy Summit, Kumar said it would be an in-depth and comprehensive summit on technology aspects related to the future of energy with participation from stakeholders from academia and industry. It will be a hybrid summit with options for both in-person and virtual attendance. The physical events will be hosted by the IIT Madras Research Park, he said.

 

Some of the discussion topics include what are the challenges to achieve 100 per cent renewables and what are potential choices of technology and avenues of research for storage incorporating earth abundant and renewable resources, he said.