Regulatory policies will enable India to become a self-sustainable manufacturing unit  

Gaurav Chhabra, VP, Business Development (ESS), Lohum, in an interview with EPR Magazine.

Trends impacting the demand for energy storage systems in India 

India’s battery energy storage systems market is expected to grow at a CAGR of about 10 per cent by 2025. Factors such as fulfilling electricity requirement in the country during the peak hours of the day where battery energy storage systems serve as a backup will drive the India battery energy storage systems market. However, the high cost of investments in large scale projects may restrain the market to some extent. 

International treaties such as Paris Agreement, further India’s decarbonisation agenda transitioning towards a clean and carbon-free economy by integrating and increasing the share of renewable energy sources. These coupled with battery energy storage solutions along with a significant rise in the share of electric mobility are ways to decarbonise. 

Micro-grids enable local power generation for local loads; they comprise of various small power generating sources that makes it highly flexible and efficient for decentralisation of electricity. Some regions in India today generate electricity independently even if they aren’t connected to the distribution networks. Excess power in these micro-grids can be sold to the utility grid or stored in ESS battery system for later use. 

Energy storage for industrial, commercial and residential spaces 

With increasing use of appliances and technology in our everyday lives, the need for power is projected to increase in the coming years. We are already witnessing a shift in the residential use-case with inverter batteries being replaced with lithium-ion batteries, DG sets with Home ESS, and various schemes being launched by state energy development agencies to incentivise use of solar with battery storage. Environment protection agencies are also proactively helping residential colonies reduce their impact on pollution levels in cities like Delhi by banning the same during winters, these societies in turn are moving towards more sustainable sources of energy and power back-up. 

Apart from EVs which require energy storage in the form of lithium-ion batteries, gradually we will need energy storage in other areas in our daily lives. Similarly, energy storage will be required for industrial and commercial areas as well to ensure availability of energy at peak hours. This will increase the demand for lithium-ion batteries across all segments as they are the most efficient energy storage devices. According to rough estimates, the global lithium-ion battery market size is projected to grow from $41.1 billion in 2021 to $116.6 billion by 2030. The market is expected to grow at a CAGR of 12.3 per cent by 2030. 

Challenges in promoting energy storage systems in India 

Raw materials such as Li, Ni and Co required for manufacturing Li-ion batteries are geographically endemic to our country and therefore need to imported from countries where most of the mines have been already been bought by China. Sourcing of these raw materials is major hurdle in kick starting our own manufacturing capabilities.

Li-ion based Energy Storage Solutions tend to be capex oriented and non-standardised in their configuration which makes it difficult for businesses to holistically evaluate their pros and cons.

Governmental policies and regulatory support to deal with them 

To address the challenge associated with local battery manufacturing, in May 2021 the government of India approved a ₹18,100 crore (US$2.4 billion) production linked incentive (PLI) scheme for building 50GWh of advanced chemistry cell battery manufacturing in the country by 2027. The government has also been empathetic to our current cell manufacturing limitations and not increased duty on cells but increased the same on modules to promote local battery assembly while simultaneously working with potential cell OEMS to set up manufacturing units for Li-ion cells. 

Government has recently announced their plans for setting up around 4000-megawatt hour (MWh) of grid-scale battery storage system at regional load dispatch centres (RLDCs). Storage which will act as instant intervention mechanisms wherever and whenever there is any sharp fluctuation because of renewable. And part of that will be reserved as an ancillary to the grid controller, and part will made available to the developer. 

The good thing is that the government is pushing hard for lithium-ion battery manufacture in India and has given policy support through FAME 1 and FAME 2 policies apart from the recent PLI scheme for production of lithium-ion batteries in India, this will help us in a long way in meeting the demand that will arise in the very near future. 

Lohum’s offerings in this segment 

Lohum offers Energy Storage Solutions to support diverse applications including firming renewable production, stabilising the electrical grid, Genset mitigation, micro-grid/mini-grid application, Data Centre/UPS application, Cold Storage application. 

Lohum offers ESS solution to make any power grid more reliable and more flexible, which can be achieved through time shifting, load levelling, smoothing wind/ solar output and regulating the frequency etc. 

Lohum storage technology relies on long-cycle life and excellent LiFePO4 lithium battery technology, advanced battery pack technology and intelligent battery management system technology which can offer a wide variety of solutions from largescale energy storage system solution (MW ESS) to home energy storage system solution (HESS, tens of kilowatts) Lohum offers solutions for 48VDC to 1000VDC.

Increasing domestic manufacturing and localise energy storage systems

The government has extended the FAME-II scheme for lithium-ion battery and energy storage systems manufacture in India by two more years to enable a smooth transition to EVs and set up an efficient energy storage ecosystem in India. At the same time the recently announced Production Linked Incentive (PLI) scheme will help domestic manufacturers get into the manufacturing game. 

At present we are only assembling lithium-ion cells into batteries. Because of the policy push very soon India will see its own capability in cell manufacture. With large corporate coming into this area in recent times, this will become a reality sooner than expected. Draft policy on recycling of LIB under discussion for extracting raw material within India will also help us close the loop and move towards a circular self-sustaining manufacturing cycle reducing our dependence on China.

Demand for solar and li-Ion batteries in the coming years 

In order to support the ambitious goal of achieving 450GW of renewable energy target by 2030, it is important that it is duly supported by Energy Storage Solution with solar infrastructure becoming more affordable, demand in this area is expected to more than double by 2030. 

State nodal agencies are also taking on sustainable electrification challenges head on by launching schemes/incentives and subsidies to accelerate the adoption of solar power plants and li-ion batteries. Schemes such as Solar SaubhagyaYojana for installing solar street light and solar lanterns with Li-ion batteries are lighting up remote villages and roadways with clean energy. Solar Kusum Yojana for installation of off-grid solar pumps has also popularised using renewable energy among our nation’s farmers. 

As far as lithium-ion batteries are concerned, with the government target to convert 40 percent of all vehicles to electric vehicles by 2030, there will be a significant increase in the demand for lithium-ion batteries in the next few years. At present there is a steady demand for these batteries because of the increasing number of two and three wheelers on Indian roads.