Overview And Analysis Of PLI Scheme On Advanced Chemistry Cell Battery Storage

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By Deepak Kumar Thakur, Partner and Puspak Chamariya, Associate,  L&L Partners  

Following a recent boost to Hydrogen based fuel-cell technology, the Department of Heavy Industry,  Ministry of Heavy Industries and Public Enterprises, Government of India, proposed the National  Programme on Advanced Chemistry Cell Battery Storage (“Programme”). The Programme has  attracted a lot of interest from the battery manufacturers since its approval on May 12, 2021.  

As a part of the Production Linked Incentive Scheme (“PLI”), the Programme aims to incentivise the  entities who are engaged in the manufacturing and sales of Advance Chemistry Cell (“ACC”) Battery.  In an otherwise void market, which has been totally dependent on expensive imports until now, a self reliant Indian manufacturing market for ACC batteries can prove a boost to India’s clean energy plans.  

ACC’s advanced technology allows for storage of electricity in either electrochemical or chemical form,  which can be used as electric energy as and when required. The focus on ACC based batteries is a  definite sign of aggressive push towards functional Electric Vehicle, while also catering to consumer  electronics. The growth prospects, as envisaged by the Indian Government, for this battery market is  immense, and percolates to large industries like railways and shipping as well.  

India’s energy market has constantly seen a dire need for energy storage, as a chunk of renewable  energy is wasted if not consumed on a daily basis. India’s new venture into Hydrogen based energy  economy also seeks a need for energy storage, for consistent and protracted growth, and most  importantly grid stability. 

The Programme aims to involve companies to set up a total of 50 GWh manufacturing capacity with  an anticipated investment of INR 45,000 Crore, wherein, each manufacturer would be committed to  a minimum setup of 5 GWh, with a 60% value addition over the next 5 years. While the rider of  financial investment of at least INR 225 Crore per GWh is a steep ask, the implied growth prospects  within the policy, intending to assure economies of scale in the long run, is a benefit that will keep the  incentivized public-private model entrants interested. All incentives, promised to be paid over a 5- year period, after the commissioning of the plants in 2 years from allocation, shall be linked to  performance on the basis of sales, energy production and efficiency, battery life cycle, etc.  

The PLI could be the metaphorical stick that assures globally competitive products from all  manufacturers, whilst also ensuring longevity of policy considering the hard-shift towards  environmentally sustainable methods of energy storage, with staggered and protracted growth in  capacity, to match the staggered growth in demands. While India’s policy towards renewable energy  has blown hot and cold with unmatched ambition and implementation, this Scheme visibly  encapsulates within itself a long-term plan.  

As a policy with multi-faceted gains to various visions for the future, the ample thought and foresight  behind the Programme by the Government of India is indicative of serious moves in the right direction  in a sustainable energy economy. The underlying environmental benefits of reducing greenhouse gas  emissions and energy conservation aside, this Scheme is spirited with Atma Nirbhar Bharat and Make  in India campaigns, while also reducing heavy import costs and reclaiming local manufacturing, with  global standards. As electric vehicles and electronic consumables start to trend worldwide, India’s  catch-up acts are not just competitive, but also commendable, if implemented right.

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