How investment focus is shifting to mega clusters for integrated battery manufacture to serve the growing renewable and EV sector
India’s battery sector is in for a major transformation. The demand surge coming for energy storage in the renewable energy (RE) sector and advanced batteries in the electric mobility segment is necessitating the setting up of Gigafactories to maximise production.
Simply put, a Gigafactory is a gigantic battery-production facility that brings multiple companies and component makers together to scale up for cheaper manufacturing. The word was first coined by Tesla’s CEO, Elon Musk in 2013.
The country, with its focus on RE, is fast realising the need to set up mega battery manufacturing clusters. Union Power Minister RK Singh’s recent hints that the Centre is planning to float tenders for 4000 MWh (4 GWh) battery storage and ancillary power generation is indicative of the shape of things to come. In fact, with India at the cusp of a technology transition, the focus of investments in Gigafactories is a given.
Says Dr Rahul Walawalkar, President, India Energy Storage Alliance (IESA): “Our engagement with the development of the National Energy Storage Mission in 2019, and with NITI Aayog for integration of National Energy Storage Mission with National Mission on Transformative Mobility & Battery Storage, has resulted in creation of the Advanced Chemistry Cell (ACC) Battery Manufacturing production linked incentive (PLI) of ₹18,100 crore with a target of 50 GWh ACC manufacturing by 2027-28. In addition, there are incentives for five GWh niche ACC battery technologies.”
According to him, IESA has been working on removing barriers for all forms of energy storage technologies. In 2016, IESA launched the Beyond Batteries initiative to support other forms of energy storage including gravity-based storage, thermal storage, and green hydrogen technologies.
Over the last three years, the Ministry of New and Renewable Energy (MNRE) and Central Electricity Regulatory Commission (CERC) have enabled regulations to develop hybrid renewable energy and storage projects. The Solar Energy Corporation of India Ltd. (SECI), on its part, has already conducted two large bids that are anticipated to result in GWh scale deployment of storage technologies in the next 12 to 18 months. Many more such projects are expected to be announced in the next 12 months.
The new PLI scheme for ACC Batteries allows all forms of electrochemical technologies that meet the criteria. The programme starts with technologies that have at least 50 watt-hours per kg as energy density (measure of energy a battery contains in proportion to its weight) and goes up to technologies that have 350 watt-hours per kg or more.
Apart from mandatory investment, each selected ACC battery manufacturer would have to commit to setting-up a manufacturing facility of minimum 5 GWh capacity and a minimum of 60 per cent domestic value addition at the project level within five years.
ACC battery cells are going to be the engine for industries for the next 15 years. These technologies are useful for renewable integration, power backup, diesel minimisation, electric vehicles — not just on roads but for drones, electric planes, marine applications — and consumer electronics devices such as cell phones.
With the approval of the PLI scheme many majors are eyeing the Indian market. Recently, Mukesh Ambani indicated that Reliance Industries would be investing about ₹75,000 crore in new energy, including setting up four Gigafactories in Gujarat. Amara Raja and Nexcharge too are considering setting up Gigafactories.
Some others planning cell manufacturing plants in India include Exicom Tele-Systems, Samsung SDI, Panasonic Corporation, Tata Chemicals, and TDSG.
In March, Indian Oil Corporation (IOC) and Phinergy of Israel, specialising in hybrid lithium-ion and aluminium-air/zinc-air battery systems, have tied up to form IOC Phinergy. And EV conglomerates like Ola Electric, Ather, Ampere Electric and Mahindra have also announced their plans to set up Electric Vehicle manufacturing units.
“At present, the lithium-ion battery price for renewable scale projects is between $350 and $400/kWh. However, with the investment progress made by global companies for Giga scale battery cell manufacturing, we expect prices to fall significantly in the next 2-4 years. Under the PLI Scheme for ACC Battery Manufacturing, indigenous manufacturing of first cells production is likely within two to three years. Some Indian manufacturers are aiming to achieve lithium-ion battery cell level prices of $100/kWh,” says Walawalkar.
Ankur Agarwal, Associate Director, India Ratings and Research puts it in perspective. “As per the energy storage system roadmap formulated by Niti Aayog, India will require about 529 GWh of battery storage system between 2022-27. Of this, nearly 40 per cent will be required by electrical vehicles and the rest for grid support, telecom towers, data centres, and other applications. This storage requirement is expected to go up manifold to 1710 GWh between 2027 and 2032 at a CAGR of 26-27 per cent per annum,” he says.
With such storage requirement, Gigafactories are likely to be the buzzword for decades to come, and of course the focus of much investment.