India Eyes 50% Local Content For Battery Storage In Wind, Solar Projects Amid China Concerns

The government is working on a new policy that will ensure that 50% of the content of battery energy storage systems employed by wind and solar power projects is domestic. The Ministry of New and Renewable Energy sparked this initiative with the hope of reducing the reliance on imports within the renewable energy market.

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Reducing Import Dependence-China

This plan represents a drastic departure from depending on foreign countries, particularly China, which is dominating the overall lithium-ion battery market globally. Also, while India has undergone immense development in the production of renewable energy, the most important battery component is still linked to international supply chains. It is important to ensure that the battery component of energy does not become a bottleneck in the overall energy security of the nation in the manner that happened in the overall solar modules segment with the launch of the Approved List of Models and Manufacturers.

Currently, many Indian manufacturing firms import lithium cells, which are essentially the heart of every cell that needs to “store” energy, and assemble them into packs in their setups based in India. Such “pack assembly” creates very little value, 20-30% at best.

Enhancing Upstream Manufacturing

The reality of achieving this ambitious target is dependent on the success of the Production-Linked Incentive Scheme for the Advanced Chemistry Cell (ACC) battery storage. The government has actually channeled a lot of money into encouraging organisations to develop giga-factories for the production of cells.
Technically, the components of a battery storage system would comprise battery cells, battery management system, thermal management system, and the casing. Battery cells comprise a major cost component. Meeting 50% local content without localizing battery cell production would mathematically be difficult. This new policy is expected to draw demand so that PLI-supported capacity will have a market.

Binding Liaisons with Green Energy Schemes

Energy storage is at the forefront of India’s efforts to change its energy mix. With a target of achieving a total of 500 GW of non-fossil fuel-based capacity by the year 2030, it is essential for the country to address the raised-aneyebrows intermittency of wind and solar power. Energy storage solutions promise a stable supply of ‘firm’ power by ‘absorbing’ sunlight during daylight and ‘releasing’ power during the most critical peak hours in the evenings.

The localisation policy norms are likely to be implemented in a phased manner, allowing time for the development of scale in the home industry. This fits well in the Make in India initiative, trying to ensure that the green subsidy money stays in the home country instead of being used for funding jobs in foreign factories. A certain initial premium in sourcing may be involved in this focus on localisation, until the Indian gigafactories gain full scale.