Minimum capacity may be cut for battery storage PLI

The government is considering lowering the minimum capacity threshold for bids under a fresh round of the production-linked incentive (PLI) scheme for advanced chemistry cells (ACC) that are used for battery storage and are key to the electric vehicle ecosystem.

The government is looking to allocate 20 GWh (gigawatt hour) capacity to new participants in the scheme, and held consultations last week with a diverse set of firms that included Panasonic, Minda Corp, Ather Energy, Maruti Suzuki India Ltd, Tata Motors’ Agratas, NTPC and M&M.

However, the decision is under consideration and will involve a considered view of what the industry wants, as multiple points of view emerge as part of stakeholder discussions, a person with direct knowledge of the matter told Mint.

“Some participants have asked for minimum capacity as low as 1GWh or 3GWh, instead of the 5GWh minimum limit we have currently. We can consider bringing down this requirement a little. However, the other view -- by larger players -- is that a minimum capacity of 10GWh or 20GWh is necessary to leverage economies of scale and get downstream ecosystem players to invest in manufacturing as well,” a government official said on the condition of anonymity.

In the earlier iteration of the PLI scheme for battery storage, the government had only managed to allocate incentives for 25GWh of the 50GWh capacity it had set out to incentivize among three participants -- Ola Electric, Reliance New Energy and Rajesh Exports.

It is likely that the incentives for GWh capacity awarded to Rajesh Exports may be placed back in the re-bidding pool.

While players such as Mahindra & Mahindra are said to have asked for a larger minimum capacity threshold, many others including auto components firm Minda Corp are seeking a lower requirement.

The ministry of heavy industries, which administers the scheme, will be issuing a fresh tender for applications for the ₹18,000-crore ACC project next month.

The three existing bidders under the scheme have pledged a cumulative investment of ₹27,000 crore. The government will also offer additional incentives for a 10GWh capacity project using new battery technologies such as solid state, zinc-based, and iron-air batteries. The process for this will start in September, said heavy industries secretary Kamran Rizvi on the sidelines of a G20 energy transition working group meeting in Goa in July.

This round of the ACC PLI scheme is set to woo large global lithium-ion battery manufacturers such as Panasonic, Samsung, and LG Chem, which had not participated in the first round.

India is highly dependent on Chinese, South Korean, German and Japanese manufacturers of lithium-ion cells for its electric vehicles, as there are no existing facilities in the country.