Stay updated on the latest developments in Indian business and finance with our free newsletter.
Sign up now to receive the myFT Daily Digest email, which provides a comprehensive round-up of Indian business and finance news every morning.
India’s government is devising a new subsidy scheme worth billions of dollars to support companies involved in manufacturing electricity grid batteries, according to a proposal obtained by the Financial Times. This initiative aims to expedite the transition of this major coal-consuming country towards clean energy.
Prime Minister Narendra Modi has set an ambitious goal of achieving 500 gigawatts of renewable capacity by the end of the decade, as India, one of the world’s fastest-growing energy consumers, seeks to shift away from coal. Currently, coal accounts for approximately 75% of the country’s power generation.
Given that solar and wind power availability fluctuates throughout the day, batteries play a crucial role in storing renewable energy. The proposed production-linked incentive subsidy scheme would provide Rs216 billion ($2.6 billion) from this year until 2030 to support the establishment of manufacturing facilities capable of producing 50 gigawatt hours of battery cells in India. The plan, which has been submitted by India’s power ministry, is currently under discussion and subject to change. The ministry did not respond to a request for comment.
The domestic production of battery cells is vital for the Indian government, not only for the energy transition but also to reduce reliance on battery imports from China, its competitor. Under the plan, at least 90% of the value should be generated domestically through the sourcing of components locally instead of relying on imports.
The document states, “If India does not take immediate steps to establish local manufacturing capacity of battery energy storage systems (BESS), our energy transition goals would result in significant imports from China.”
While India has resisted pressure to phase out coal, officials believe that lowering the cost of battery storage is an essential alternative to constructing new coal-power plants.
The draft plan acknowledges that there is a limit to how much more coal power India can develop. It states that factors such as “international opinion” and “environmental concerns” make it infeasible to expand coal-based thermal generation beyond a certain point.
India has implemented several subsidy schemes to promote domestic manufacturing in strategic industries like solar modules and semiconductors, but most are still in their early stages.
Under an existing subsidy scheme for advanced chemistry cell battery storage, the planned production will mainly serve electric vehicles rather than the grid.
Raj Kumar Singh, India’s Minister of Power and Renewable Energy, expressed the need for additional subsidies to encourage battery manufacturing for the electricity grid. He stated, “Our requirement for storage is going to be massive,” and emphasized that India will continue to be the most attractive market for renewable energy, including storage.
In addition, the government is planning to provide approximately $500 million in financing to cover the “viability gap” for companies investing in the sector, as it remains highly risky, according to another official.
Jagabanta Ningthoujam, a principal at think-tank RMI’s India practice, stated that although the current cost of grid batteries is prohibitive, the market has significant growth potential. He emphasized the need for regulatory frameworks and market creation efforts to drive battery demand.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
