The government is working on a production-linked incentive (PLI) scheme worth as much as Rs15,000 crore to encourage the setting up of grid-scale battery storage, with the draft of the scheme expected to be released within a month, two people familiar with the development said.
Grid-scale battery storage systems or battery energy storage systems (BESS) can store renewable energy and release it at times of high demand to maintain grid stability.
“The scheme is in the works. The incentive may be in the range of Rs10,000-15,000 crore,” one of the two people said. “We are trying to ensure that the specifications of this PLI scheme do not overlap with the ongoing scheme for advanced chemistry cells (ACC), as the key requirement of grid-scale battery storage is grid stability and the flow of power continues at a regular frequency, and the ramp rate is not as high compared to the ACC battery, largely used in e-mobility.”
As the country aims to achieve the ambitious target of 500 gigawatts (GW) of renewable energy capacity by 2030, storing renewable energy has become crucial for stabilizing the grid and ensuring power supply during peak demand when energy from renewable sources such as solar and wind is unavailable because of its intermittent nature. Therefore, BESS will play a pivotal role in integrating renewable energy into the grid.
The proposed scheme may not specify a particular technology for the development of these energy storage systems as research and development on several technologies and chemistries is underway, thereby making all the available technologies ranging from lithium-ion batteries to sodium-ion batteries to vanadium redox batteries, eligible for the incentive if they are economically viable, the second person said.
Queries sent to the spokespeople for the ministries of power, new and renewable energy, and finance remained unanswered.
After taking inputs from stakeholders on the draft PLI plan, it would be placed before the department for promotion of industry and internal trade (DPIIT) and then taken to an empowered group of secretaries as the PLI scheme would overlap with the work of other ministries, the person said.
As the process of getting approval from the empowered group, followed by cabinet, would take about six months, the power ministry expects a new PLI for battery storage may be notified around December or in the first quarter of 2024. It would then run for five years, like other PLI schemes.
Indian researchers are exploring several new chemistries for battery storage to reduce dependence on imports of lithium, the predominant mineral used in batteries today. Most of the raw lithium in the world is now processed into battery-grade chemicals in China.
R.K. Singh, the Union minister for power, new and renewable energy, said on several occasions that given the current high cost of storage, there is a need to boost the manufacturing of storage systems in the country, and a PLI scheme would support the capacity addition.
Finance minister Nirmala Sitharaman announced funding support for the sector to ensure financial viability in the Union Budget 2023-24. “To steer the economy on the sustainable development path, BESS with a capacity of 4,000 MWh (megawatt hour) will be supported with viability gap funding (VGF),” it said.
The second person cited above said the VGF would meet the immediate requirement of storage systems in India, and the scheme is meant to boost domestic manufacturing and ensure long-term supplies.
Policy decisions over the past year have bolstered the sector. Last year, the power ministry issued guidelines for procuring and utilizing BESS as part of generation, transmission, and distribution assets, along with ancillary services. It notified energy storage obligations of 4% of the total electricity consumption by FY30 for power discoms in line with the renewable-purchase obligations.
According to the government, the battery energy storage capacity was 39.12 MWh on 13 March.
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