The Indian government is preparing a new multibillion-dollar Battery subsidy scheme for companies making electricity grid batteries as part of its transition to clean energy.
The scheme aims to support India’s clean energy transition and reduce dependence on coal power.
The draft plan highlights the infeasibility of further expanding coal-based thermal generation. The proposed subsidy would be available from this year until 2030 to facilitate battery cell manufacturing.
Battery Subsidy Scheme Proposal
According to the Financial Times, the scheme aims to offer Rs 21,600 crore ($2.63 billion) from this year to 2030 for battery cell manufacturing capacity. The draft plan acknowledges the limitations of expanding coal-based thermal generation due to international opinion and environmental concerns.
The power ministry has not yet responded to requests for comment on the matter.
The draft proposal emphasizes the importance of domestic battery cell manufacturing in reducing India’s reliance on China for battery imports. The proposal document states that urgent steps are necessary to establish local manufacturing capacity for battery energy storage systems in India.
The subsidies would incentivize companies to set up manufacturing facilities for battery cells within the country. The Financial Times reported on the power ministry’s draft plan for the production-linked incentive subsidy scheme.
The government’s emphasis on domestic manufacturing aligns with its efforts to reduce reliance on China for battery imports. The Financial Times cited the power ministry’s proposal as the source of information about the subsidy scheme. According to the proposal document, establishing local manufacturing capacity for battery cells is crucial to India’s energy transition.
GST relaxation
The power ministry is considering recommending a reduction in the goods and services tax (GST) on grid-scale battery storage. The proposed reduction would lower the GST on grid-scale battery storage to 5%.
The GST on lithium-ion batteries used for utility or grid-scale power projects is 18%. For non-lithium ion batteries, the GST on grid-scale storage is 28%.
Reducing Reliance on China
Developing local battery cell manufacturing is essential to reduce India’s dependence on rival China for importing batteries.
Indian researchers are exploring alternative chemistries for battery storage to reduce reliance on lithium imports. China currently processes most of the world’s raw lithium into battery-grade chemicals.
R.K. Singh, the Union minister for power, advocates for increased storage system manufacturing in India. He emphasizes the need to address the high storage cost through capacity addition.
Implementing a production-linked incentive (PLI) scheme would support this objective.
The scheme would facilitate the expansion of storage system manufacturing capacity in the country. The aim is to reduce dependence on imports and promote self-sufficiency in battery technology.
What are Electricity Grid Batteries?
A battery storage power station utilizes a group of batteries to store electrical energy. Battery storage is the fastest responding dispatchable source of power on electric grids. It stabilizes grids and can transition from standby to full power in under a second.
These power stations can output at their full rated power for several hours. Battery storage is valuable for short-term peak power and ancillary services.
It provides operating reserve and frequency control to minimize the chance of power outages. Battery storage plants can be installed near existing power stations to reduce costs.
Currently, the largest battery storage power plants have less capacity than pumped storage power plants. The Bath County Pumped Storage Station can store 24GWh of electricity and dispatch 3GW.
Vistra Energy’s Moss Landing Energy Storage Facility can store 1.2GWh and dispatch 300MW. However, smaller grid batteries can be widely deployed across a grid for greater redundancy and capacity.
Renewable Energy Developments in India
With a population of 1.4 billion exposed to climate-related risks, sustainable development gains significance in India. India exemplifies this approach by integrating solar power into the mainstream energy supply.
In 2010, the National Solar Mission was launched, achieving the target of 20,000 MW of renewables ahead of schedule. The country has since committed to further expanding solar capacity and installations.
As of March, over 60,000 MW of solar capacity have been installed in India.
This demonstrates the successful integration of technology and sustainability in energy policy.
India’s energy sector has significantly transformed due to 28 central government policies. These policies have subsidized renewable energy and have a total outlay of Rs 11,529 crore.
The focus is on delivering services, mapping resources, and ensuring justice while considering climate impacts. India safeguards its population, economy, and environment by prioritizing sustainable development.
