The government is likely to reserve half of the 20 GWh (gigawatt hours) cell manufacturing capacity under the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage systems for the general grid, a senior official said Wednesday.
Battery energy storage systems enable energy from renewables like solar and wind – which is unstable and its output fluctuates – to be stored and released when the power is needed the most.
The cells used in battery storage for the grid are different from those used in mobility and devices. The batteries needed for the grid tend to be less dense because they have to sit at one place, unlike those used in electric vehicles.
The plan to extend PLI to cells for grid energy fits well with the government’s decision in September to start a scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS).
The scheme envisages development of 4,000 MWh of BESS projects by 2030-31, with a financial support of up to 40% of the capital cost as budgetary support in the form of VGF.
“Because 10GWh of the 20GWh capacity for which bids have to be called it will need some changes to be made in the PLI for ACC. The time required for the changes would push the calling of bids to January,” the official who did not wish to be named said.
The Ministry of New and Renewable Energy would provide the specifications for cell manufacturing for grid energy storage.
According to the government’s estimates 70% of the rechargeable battery usage would be in the electric mobility space, 25% in grid storage and 5% in personal devices.
The government approved the PLI Scheme ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ for achieving manufacturing capacity of 50 GWh of ACC for enhancing India’s Manufacturing Capabilities with a budgetary outlay of Rs 18,100 crore in May 2021.
In March 2022 after a bidding process it selected 4 companies for incentives including Reliance New Energy Solar Limited; Ola Electric Mobility Private Limited; Hyundai Global Motors Company Limited and Rajesh Exports Limited.
By August 2022, Hyundai pulled out of the scheme when Hyundai of Korea clarified that it had nothing to do with Hyundai Global.
In the first round of bids Ola, Hyundai Global were awarded capacity of 20 GWh, and Rajesh Exports and Reliance were awarded 5 GWh. With the pull out of Hyundai 20 GWh was again made available for bidding.
The Ministry of Heavy Industries has already carried out stakeholder’s consultations.
Under the PLI, the selected beneficiary firm has to ensure achieving a domestic value addition of at-least 25% and raise it to 60% within 5 years while also making the mandatory investment of Rupee 225 crore /GWh for committed capacity within 2 Years.
The scheme has an initial 2 years of Gestation Period from January of this year and 5 year post gestation period from 2025 to 2029 is the Performance period.
ACC PLI scheme is expected to accelerate EV adoption and hence translate into net savings of Rs 2,00,000 crore to Rs 2,50,000 crore on account of oil import bill during the period of this Programme and increase the share of renewable energy at the national grid level.