According to a proposal seen by the Financial Times, the Indian government is putting together a brand-new, multibillion-dollar battery subsidy programme for businesses that produce electricity grid batteries as they work to speed up the country’s switch to sustainable energy.
In an effort to wean India, one of the world’s fastest-growing energy consumers, off of coal, Prime Minister Narendra Modi has set an ambitious goal to construct 500 gigawatts of renewable power by the end of the decade. Currently, nearly three-quarters of the nation’s electricity is produced by fossil fuels.
Batteries are necessary for storing renewable energy because, unlike the regular power supply produced by coal plants, solar and wind energy availability varies throughout the day.
The initial proposal for a production-linked incentive subsidy plan would give businesses Rs216 billion ($2.6 billion) from this year through 2030 in exchange for setting up a battery cell manufacturing facility in India with a capacity of 50-gigawatt hours. The power ministry of India submitted a plan, which is being discussed and could be altered. Requests for comment from the ministry were not entertained.
For the Indian government, increasing indigenous battery cell production is crucial for the energy transition as well as lowering reliance on battery imports from China, a competing nation. Under the strategy, at least 90% of the value must be produced domestically, such as by importing fewer components and obtaining them locally.
The necessity of our energy transition will necessitate significant imports from China if India does not take quick action to establish local manufacturing capacity for BESS (battery energy storage systems), according to the study.
Although officials claim that lowering the cost of battery storage is a crucial option for constructing new coal-powered plants, India has defied efforts to phase out coal.
India has implemented a number of subsidy programmes to increase domestic manufacturing in key sectors like semiconductors and solar panels. The majority are still in their infancy.
The grid will not be the primary recipient of planned manufacturing under an existing subsidy programme for advanced chemical cell batteries.
Therefore, more incentives are required to promote the production of batteries for the electricity grid, according to Raj Kumar Singh, India’s minister of power and renewable energy, who spoke to the Financial Times last month.
He continued, “We’ll continue to be the most attractive market in the world for renewable energy, including storage. Our requirement for storage is going to be enormous.”
An additional official stated that, given the industry’s continued high risk, the government also plans to provide $500 million in funding to bridge the “viability gap” for businesses making investments in the area.
