Cabinet approves ₹18,100 crore PLI scheme for battery storage manufacturing

The Union Cabinet on Wednesday approved the proposal of Department of Heavy Industry for implementation of Production Linked Incentive (PLI) Scheme 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage' for achieving manufacturing capacity of 50 Giga Watt Hour (GWh) of ACC and 5 GWh of "niche" ACC with an outlay of ₹18,100 crore.

Briefing reporters on the cabinet decisions, Information and Broadcasting Minister Prakash Javadekar said that the decision will lead to direct investment of around Rs.45,000 crore in ACC Battery storage manufacturing projects.

He said it will facilitate demand creation for battery storage in India, boost Make In lndia with greater emphasis on domestic value-capture and reduction in import dependence.

An official release said ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

The consumer electronics, electric vehicles, advanced electricity grids, solar rooftops which are major battery consuming sectors are expected to achieve robust growth in the coming years. It is expected that the dominant battery technologies will control some of the world's largest growth sectors.

While several companies have already started investing in battery packs, though the capacities of these facilities are too small when compared to global averages, there still is negligible investment in manufacturing, along with value addition, of ACCs in India.

The release said that all the demand of the ACCs is currently being met through imports in India.

"The National Programme on Advanced Chemistry Cell (ACC) Battery Storage will reduce import dependence. It will also support the Atmanirbhar Bharat initiative. ACC battery Storage manufacturers will be selected through a transparent competitive bidding process. The manufacturing facility would have to be commissioned within a period of two years. The incentive will be disbursed thereafter over a period of five years," the release said.

It said the incentive amount will increase with increased specific energy density and cycles and increased local value addition. Each selected ACC battery storage manufacturer would have to commit to set-up an ACC manufacturing facility of minimum five GWh capacity and ensure a minimum 60 per cent domestic value addition at the project level within five years.

The beneficiary firms have to achieve a domestic value addition of at least 25 per cent and incur the mandatory investment of ₹225 crore/GWh within two years (at the mother unit level) and raise it to 60 per cent domestic value addition within five years, either at mother unit in-case of an integrated unit, or at the project level, in-case of "hub and spoke" structure.

The release said that the scheme would lead to net savings of ₹2,00,000 crore to ₹2,50,000 crore on account of oil import bill reduction as ACCs manufactured under the programme are expected to accelerate electric vehicle adoption.

"The manufacturing of ACCs will facilitate demand for EVs, which are proven to be significantly less polluting. As India pursues an ambitious renewable energy agenda, the ACC programme will be a key contributing factor to reduce India's Green House Gas (GHG) emissions which will be in line with India's commitment to combat climate change," the release said.

It said the scheme will lead to import substitution of around Rs.20,000 crore every year, impetus to Research & Development to achieve higher specific energy density and cycles in ACC and promote newer and niche cell technologies.