MAKING INDIA ‘Atma-Nirbhar’ IN ADVANCE BATTERY STORAGE
With growing concerns on environment protection and on achieving energy security, and with major technological advancements, especially in the field of battery storage during last decade, the World is today witnessing an unprecedented disruption in the way the energy sector and mobility once operated. Much can be inferred from the recent market signals – First, the valuation of the global e-vehicle giant Tesla in August 2020, reached USD 380 bn and became more than the next 10 automakers combined. More significantly, its valuation is now more than ExxonMobil, Shell and BP combined, the 3 big Oil giants of the past century. It may be argued by few that there exists some froth in this, but the situation gives a clear indication of financial markets' firm expectation that EVs & batteries are the future growth areas, while Oil shall slowly decay & may probably die out in the next 2 decades, or even faster!
Second, increasing penetration of renewable energy, along-with provision of energy storage solutions (ESS), the World is well poised to leap into the next wave of energy transition. Even today, if ESS component is considered in computing effective cost of RE generation, the per unit is already closer to, or even lower, than the cost of electricity from conventional sources such as coal - typically a greenfield non-pithead plant. This disruption is already evident in India with many recent successful tenders of MNRE with the provision of ESS, enabling the nation to achieve 40% renewable energy penetration target by 2030.
Going forward, once there exist a framework with more conducive policies and with emphasis on support infrastructure and cost-effective options of advance battery storage, both these (e-mobility & renewable energy) disruptions shall transform into an indispensable force. An event that is now well factored into future business strategies of the global markets. In alignment with Government's vision for "Atmanirbhar Bharat," or "Self-reliant India", Government of India had set-up the National Mission on Transformative Mobility and Battery Storage. The core objective of the Mission has been to obtain overarching cohesiveness in policy framework for promoting e-mobility and battery storage in the country. The mission, taking clue from these global developments and early market signals regarding the advanced battery manufacturing and that it represents one of the largest economic opportunities of the 21st century, proposed an integrated program to facilitate Advance Chemistry Cells (ACC) and battery storage manufacturing in the country. NITI Aayog, which is the nodal steering body for the mission, has already drafted the said program framework and the model bid documents have now been published on its website to initiate stakeholder’s consultation.
India in the past has missed multiple opportunities to tap the potential of “Make in India” in various sunrise industries, like manufacturing of solar panels, semi-conductors & accessories etc. These opportunities have been lost to other globally competitive industrial countries that have timely extended suitable incentives and provided requisite infrastructure for such industries to thrive. Same is the case of advance battery manufacturing, where various nations are extending various financial incentives for promoting the domestic industry.
The program lays down a composite framework to ensure optimal risk allocation to ensure bankability of projects and ensure ease of doing business for the potential investors in advance battery manufacturing in India. It enables the beneficiary firms to obtain Cash Subsidy as additional financial incentive on the basis of a transparent mechanism. The subsidy shall compensate them for various infrastructural deficiencies that exists compared to the global markets. Further, no specific technology is being focussed upon or being incentivised under the program and thus the incentives would be given solely on the basis of performance specifications and output.
India’s expected demand for advance batteries till 2030 is about 1100 GWh across different use cases. This would be ample to support the economies of scale and the target of 50 GWh capacity of advanced battery storage manufacturing in India, as proposed under the program, through commissioning of 4-5 Giga-scale factories by 2025.
It is extremely imperative to understand the opportunity cost incidental on our nation on account of foregoing robust domestic supply chain of advance cells and battery storage. Hence, taking this into consideration, the Program has laid emphasis on developing the overall domestic battery manufacturing ecosystem. Though this cannot be done overnight; it has to be achieved in a phased manner. For this reason, beneficiary firms would be given a grace period of five years from the appointment date to ensure adequate localization and implementation of the committed capacity. While the first few years may see the high-scale import of cell components, higher value capture translating into lower imports is expected in the years to follow.
Furthermore, in the current scenario, Indian vehicles run on imported oil & gas. As of FY’19, the country’s dependence on oil imports stood at 84%, a stark increase from the 77% in FY’14. As the nation progresses towards clean mobility, if there is not an adequate supply of domestic advance batteries, India will simply go from being an oil-dependent country to a cell-dependent one in the absence of such a program. In fact, according to Government data India imported INR 8500 crore worth of lithium-ion batteries in 2018-19 and about similar levels in 2019-20 that is six times higher than in 2014-15.
Hence, through a collaborative approach, along with support and participation of various State Governments, the proposed program on advance battery storage will ensure that India captures the economic opportunities at hand, while delivering societal and environmental benefits that will improve quality of life for our citizens. These benefits shall outweigh any short-term disruptions. A transition of this nature will enable the nation to save almost INR 2.0-3.0 lakh crore by avoiding oil imports and in addition almost INR 3.5 lakh crore of advance battery imports by 2030, enhancing our energy security and curtailing our import dependency and therefore making our nation truly ‘Atma-nirbhar’.
* Aman hans is Consultant (PPP) & Lead (Energy Storage Mission) in NITI Aayog. Views expressed are personal.