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Budget needs to maximise on lithium-ion battery manufacturing: Report
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SME Times News Bureau | 29 Jan, 2022
Soaring requirement for electric vehicles as well as energy storage
applications in India are necessary drivers for the government of India
to commit to serious investment in lithium-ion battery manufacturing in
Budget 2022-23, finds a new report from JMK Research and the Institute
for Energy Economics and Financial Analysis (IEEFA).
India's
transition to a future powered by clean, affordable, and reliable
renewable energy is underway, yet critical battery storage is still an
expensive imported technology.
Report co-author Vibhuti Garg told
IANS battery storage can help India transition by storing excess
renewable energy when it is not needed and then discharging it when it
is.
"In addition, batteries can also provide essential grid services," says Vibhuti.
"In
Budget 2022-23, the government must offer essential funding for
domestic manufacturing of lithium-ion batteries (LiB) as well as, for
instance, offering duty rebates in sourcing the raw materials for LiB
manufacturing."
India is expected to be the world's largest
automotive market by 2026. The report finds automotive applications will
account for 90 per cent of LiB demand, with annual capacity growing
nearly 50-fold -- from 2.3 gigawatt hours (GWh) in financial year (FY)
2021 to 104GWh by FY 2030.
The growth for non-automotive
applications is almost as spectacular, from 0.3GWh to 12GWh in the same
period, applied to telecom towers, data centres, grid-scale renewable
energy integration, and rooftop solar, as well as newer areas, including
material handling and power tools.
The second phase of the
Faster Adoption and Manufacturing of Hybrid and EV scheme (FAME-II),
which aims to increase adoption of EVs and specifically electric two-
and three-wheelers, is driving battery localization requirements and the
setting up of battery assembly plants in India.
The PLI Advanced Chemistry Cell (ACC) scheme is a step towards local cell manufacturing.
Furthermore,
the government's renewable energy targets will make stationary storage a
significant contributor to this growth, says co-author of the report,
Jyoti Gulia.
"Adding 450 gigawatts of renewables by 2030 will
need 136 gigawatt hours of battery storage. India is poised to become a
key LiB consumer," she says.
The report also highlights the
challenges for battery pack and cell manufacturing in India, primarily
the reliance on imports for key raw materials, the lack of safety
standards in place, and the dearth of local technological know-how.
"End-use
customers are wary of the quality of local assemblers' packs, battery
management systems (BMS), and the associated safety issues. There are
lucrative opportunities, but current and potential players must be
prepared for massive investments and low profit margins," says
co-author, Neha Gupta.
LiB technology has superseded lead-acid
batteries in mobile and stationary applications alike, its growth
encouraged in part by government of India support allowing 100 per cent
foreign direct investment (FDI) and mandating domestic manufacture of
battery packs.
The government further boosted manufacturing via
the Production-Linked Incentive (PLI) scheme, as part of which,
investments of over Rs 450,000 m ($6,120 m) for 50GWh of capacity is
planned.
India has huge cost opportunities in terms of cheap
labour and power. Cell manufacturing costs in India, as of 2020, were
the lowest ($92.8/kWh) when compared with the US, European nations, and
even China ($98.2/kWh) and South Korea ($98.1/kWh).
Because of
the lack of availability of key minerals and metals in India, the report
also suggests battery recycling as a solution to meet surging LiB
demand, recovering 80-90 per cent of lithium, cobalt, nickel, manganese
and graphite and putting India on the path to a circular economy.
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