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Battery manufacturers get ₹18,100 crore output sops – Mint

India on Wednesday approved a 18,100 crore production-linked incentive (PLI) scheme for building Tesla-style giga factories to manufacture batteries.

The proposal, approved by the Union cabinet chaired by Prime Minister Narendra Modi, comes as the country accelerates steps to switch to electric vehicles to curb rampant pollution in its major cities and cut reliance on costly oil imports.

The plan is to set up 50 giga watt hour (GWh) manufacturing capacity for advance chemistry cell batteries by attracting investments totaling 45,000 crore, according to the government. One GWh (1,000-megawatt hour) of battery capacity is sufficient to power 1 million homes for an hour and around 30,000 electric cars. Mint reported on 11 September about the 18,000 crore package being in the works for battery storage manufacturing.

The scheme titled the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, under the department of heavy industry, may boost India’s green energy credentials. It is among the PLI schemes worth 1.97 trillion announced by the government last year for 13 sectors. The goal is to create global manufacturing champions in the country and attract firms exploring a China-plus-one strategy for production.

“Each selected ACC battery storage manufacturer would have to commit to set up an ACC manufacturing facility of minimum 5GWh capacity and ensure a minimum 60% domestic value addition at the project level within five years,” the government said in a statement.

The incentive will be paid out on the basis of sales, energy efficiency, battery life cycle, and localization levels.

“The beneficiary firms have to achieve a domestic value addition of at least 25% and make the mandatory investment of 225 crore /GWh within 2 years (at the mother unit level) and raise it to 60% domestic value addition within 5 years,” the government said.

Such battery storages will cater not only to electric vehicles but also to the consumer electronics industry and electricity grids. This gains importance given India’s ambitious clean energy targets and the intermittent nature of electricity from clean energy sources such as solar and wind. In such a scenario, storage holds the key for providing on-demand electricity from wind and solar projects. “All the demand of the ACCs is being met through imports in India. The National Programme on 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 government said.

A manufacturing facility has to be commissioned within two years and the incentive will be disbursed thereafter over five years, the statement added.

According to the government, the scheme will help in net savings of 2 trillion to 2.5 trillion during the programme period by reducing the oil import bill, given the proposed shift to electric vehicles. India is the world’s third-largest oil consumer and is particularly vulnerable to global fluctuations in energy prices.

The government also aims to extend the PLI scheme for manufacturing electrolyzers, which are used for producing green hydrogen, as reported by Mint earlier. Green hydrogen gas is produced by splitting water into hydrogen and oxygen using an electrolyzer, that may be powered by electricity generated from renewable energy sources such as wind and solar.

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