Government approves Rs 18,100 crore PLI scheme for ACC Battery Storage

The government of India has approved the proposal of the Department of Heavy Industry for the implementation of the Production Linked Incentive (PLI) scheme for 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’. This scheme aims to achieve a manufacturing capacity of 50-Gigawatt hour (GWh) of ACC and 5-GWh of ‘Niche’ ACC with an outlay of Rs 18,100 crore.

• ACC batteries are used in consumer electronics, electric vehicles, advanced electricity grids and more

• Scheme expected to bring direct investment of Rs 45,000 crore in ACC battery manufacturing projects

• Manufacturing of ACC batteries in India will facilitate demand for EVs

PLI scheme for ‘National Programme on Advanced Chemistry Cell Battery Storage’: what is it?

The Minister of Environment, Forest and Climate Change, Information and Broadcasting and Heavy Industries and Public Enterprises, Prakash Javadekar, mentioned that at present India is importing almost Rs 20,000 crore worth of batteries for energy storage.

“With PLI, we will not only reduce import but also enable production of the batteries which are not yet being manufactured in the country. These batteries will accelerate e-mobility in the country. Long-lasting, efficient and quick charging capable batteries are the need of the hour. Till now, the battery storage segment was not growing fast because we were not manufacturing the batteries,” said Javadekar.  

According to the minister, India is one of the largest producers of solar power, with almost 136 gigawatts of energy being produced in the country. But the energy goes wasted if not used in the day, as there is not much of it being stored. Even for grid balancing, battery storage plays an important role. He said that the programme will benefit a number of segments, including consumer electronics, railways and shipping where the government sees huge potential for battery storage. 

ACCs are the new-gen advanced storage technologies that can store electric energy either as electrochemical or as chemical energy, and convert it back to electric energy as and when required. The batteries are used in consumer electronics, electric vehicles, advanced electricity grids and solar rooftop, among others, which are major battery-consuming sectors and are expected to achieve robust growth in the coming years. It is expected that the dominant battery technologies will control some of the world's largest growth sectors.

The government says while several companies have already started investing in battery packs, the capacities of these facilities are too small when compared to global averages, and there still is negligible investment in manufacturing, along with value addition, of ACCs in India. All the demand of the ACCs is currently being met through imports in India. The National Programme on Advanced Chemistry Cell (ACC) Battery Storage aims to reduce import dependence. ACC battery storage manufacturers will be selected through a transparent competitive bidding process. The manufacturing facility would have to be commissioned within a period of two years. The incentive will be disbursed thereafter over a period of five years.

The incentive amount will rise with increased specific energy density and cycles, and increased local value addition. Each selected ACC battery Storage manufacturer would have to commit to set up an ACC manufacturing facility of minimum 5GWh capacity and ensure a minimum 60 percent domestic value addition at the project level within five years. Furthermore, the beneficiary firms will have to achieve a domestic value addition of at least 25 percent and incur the mandatory investment Rs 225 crore /GWh within 2 years and raise it to 60 percent domestic value addition within 5 Years, either at Mother Unit, in-case of an Integrated Unit, or at the Project Level, in-case of ‘Hub and Spoke’ structure.

Effects of the PLI scheme

The PLI scheme is expected to bring outcomes such as –

• Setup a cumulative 50GWh of ACC manufacturing facilities in India under the programme.

• Direct investment of around Rs 45,000 crore in ACC Battery storage manufacturing projects.

• Facilitate demand creation for battery storage in India.

• Greater emphasis upon domestic value-capture and therefore reduction in import dependence.

• Net savings of Indian Rs 2,00,000-2,50,000 crore on account of oil import bill reduction during the period of this programme due to EV adoption. ACCs manufactured under the programme is expected to accelerate EV adoption.

• The manufacturing of ACCs will facilitate demand for EVs, which are proven to be significantly less polluting. As India pursues an ambitious renewable energy agenda, the ACC program will be a key contributing factor to reduce India's Green House Gas (GHG) emissions which will be in line with India's commitment to combat climate change.

• Import substitution of around Rs 20,000 crore every year.

• Impetus to R&D to achieve higher specific energy density and cycles in ACC.

• Promote newer and niche cell technologies.

Javadekar further mentioned that the Heavy Industry Ministry, in addition to procuring electric vehicles for official use, was also setting up 2,800 EV charging stations across the country.

Auto industry welcomes move

Sohinder Gill, director general, Society of Manufacturers of Electric Vehicles (SMEV), said, “We thank the government for approving the PLI scheme for promoting battery storage. It would strengthen our 'Make in India’ initiative and also attract huge investments in the EV industry in the next 1-2 years. Battery occupies a larger portion of any electric vehicle's cost. Thus, the right policy move will help us steer towards green growth in the industry, while exponentially increasing our manufacturing capacity. Once we fully start battery manufacturing operations in the country, it will lead to the reduction of cost on purchase of electric vehicles owing to increased accessibility.”

Akshay Singhal, founder and CEO, Log 9 Materials: “The newly-approved PLI Scheme will be quite beneficial for India's self-reliance in the Energy Storage sector. We at Log 9 are particularly quite impressed with the long-term vision of the government to facilitate the development of advanced battery technologies and provide special impetus on R&D. One of the important requirements for the success of the scheme would be to incentivise peripheral manufacturing companies to develop competency for providing value-added materials for battery manufacturing locally within India.”

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