In an exclusive interview with Energy Storage Pro, Mr. Dev Ashish Aneja – Assistant Vice President, Strategy & Policy (Automotive & Electric Vehicles), Invest India speaks about the effects of the pandemic on the storage sector, latest technological innovations happening in the sector, how battery storage can propel green energy transition for India and help achieve the ambitious RE target and the future of the storage sector in the coming years.
What has been the effect of Covid on the storage sector in India and globally?
As with so many other industries, this pandemic did temporarily slow down the storage sector globally & in India. China controls the vast majority of the supply chains. Going by the actual 2020 numbers for battery capacity alone, China accounts for over 77% of the total global capacity and has access to most of the global supplies for raw materials. Also, China was the epicentre of this pandemic in its early days. Thus, supply chain disruptions were bound to happen. Energy storage system manufacturers across the world in the US, Germany, Australia & India were adversely impacted by the shutdown of operations in China. India imported USD one billion worth of lithium ion batteries for its storage needs last year alone and almost all of this came from China. Also, there was a temporary slowdown in the demand of end products which consume these energy storage batteries. Among all the applications of energy storage, by far the largest one is electric vehicles which consume over half of these batteries. There was a slowdown in this segment as well.
However, governments across the world were quick in offering extensive demand side incentives and other forms of regulatory push to stabilise this e-mobility segment which definitely worked to quite an extent. On the demand for residential storage systems, we did witness a slowdown due to economic uncertainties and reduction in wages around the world.
Despite all this, if we go by the actual numbers, battery capacity worldwide has grown to three times in the past 24 months from 175 GwH in 2018 to 525 GwH in 2020. In the past few months, we at Invest India have started seeing active interest from global investors in the Indian storage industry, especially with the PLI schemes coming up wherein USD 2.5 Bn (INR 18,000 Cr) is allocated to the manufacturing of advanced cell chemistries.
In your view can battery storage propel green energy transition for India and help achieve the ambitious RE target?
The Government of India has been setting extremely aggressive targets from the perspective of renewable energy installation. The biggest bottleneck in India’s cleantech story has always been storage and that’s where the upcoming ACC programme is targeted towards. Domestic battery storage capacities in India in the coming years, with a significant level of local value addition, are going to push India more towards renewable energy. Even by a conservative estimate, India should be about a 150 GwH market by 2030 and the second largest consumer segment of this market is going to be the stationary applications, after of course electric vehicles.
What are some of the technological innovations happening in the energy storage sector currently in India?
There are a number of start-ups in the country making headway into research and development of battery technology and supporting domains. We have been seeing phenomenal action happening on the battery chemistry, software, battery management systems and also on the recycling side. There are Indian players working on new chemistries which are high on elements, abundant in India thus taking us on a path of self reliant India. Couple of these players are in active discussions with customers across segments and their products are being tested for Indian market conditions. There are other players in India working on patented technologies that offer higher energy densities and longer cycle life and also allow 0-100% charging in 15 min. Indian start ups in the recycling space have already started to perform full-stack recycling of used Li-ion batteries and are extracting materials such as Cobalt, Graphite, Manganese sulphate and nickel sulphate, which can be further used to produce new Li-ion cells.
What are some of the present trends and expected future trends in the energy storage sector in India?
With the rapid progress of research & development in this area, prices of battery cells have fallen from USD 1000 per kwh to a little over USD 100 in the past decade. This consistent fall in battery prices is a major boost to the sector thus, contributing to the commercial feasibility of storage. From an application perspective, we as a country have made a lot of moves in the right direction in the past eighteen months. Several regulations related to supply & demand incentives for e-mobility, changing building bylaws, democratization of charging, delinking of batteries for 2W / 3W and so on so forth. The growth in the Indian EV market is expected to have a significant & a direct impact on the growth of the energy storage market in the country.
Further, Bloomberg New Energy Finance expects ESS to attract $662bn of investments by 2040 globally and India will be one of the main recipients of global ESS investment.
The penetration of lithium-ion batteries is projected to increase rapidly from 4 per cent in 2019 to 45 per cent in 2027 primarily due to the decreasing prices of lithium-ion battery systems. The share of other battery technologies, although still small, could also increase from less than one per cent in 2019 to five per cent in 2027. Solid-state batteries are an emerging trend for next-generation traction batteries, as they offer high performance and safety at low cost.
Lastly, please tell us how do you think the sector will shape up once the Covid situation normalises? Where can we see the sector in the next 5 years?
There are two primary ways in which countries worldwide are building their energy storage capabilities. First is the top down approach which starts with heavy investments in R&D before actually the technology commercialization happens. Second approach, which is mostly the approach that India is adopting, is the bottom up approach. Given that we have a limited experience in developing new age battery technologies, we need to bring in policies to foster an ecosystem that promotes mass scale manufacturing of these batteries. I see the sector growing by leaps and bounds in India. We are staring at a massive cumulative market of 500-750 GwH / Year by 2030. Most of this demand is going to come from E-Mobility especially from the commercial 2W/3W segment. One of the major drivers for this growth, especially in the pandemic days, has been the e-commerce / grocery delivery segment. These are the companies which have committed to go green, they understand the economics of EV’s and they have their first mile & last mile delivery needs.
Additionally, from an incentive stand point, Central Govt has recently floated the draft PLI scheme for Advanced Chemistry Cells. This is going to be a game changer. This programme is offering a massive subsidy of up-to 20% of the sale price. As of now, bid documents are in public domain, industry consultations are already happening and we have the financial approvals for over INR 18k Cr, in the first tranche. The best thing is that the ACC programme is technology agnostic which means any technology & any chemistry which can perform efficiently in terms of energy density & cycle life is eligible to avail these incentives. As of now, over fifteen chemistries available worldwide will be able to deliver the performance parameters needed to avail the ACC incentives. Additionally, States are aggressively launching their dedicated EV policies offering supply as well as demand side incentives.