India Plans Rs 15,000 Crore PLI Scheme To Promote Setting Up Of Grid-Scale Battery Storage

The Central government is reportedly planning to introduce a Rs 15,000 crore production-linked incentive (PLI) scheme to promote grid-scale battery storage.

A draft of the scheme is expected to be made public within a month, Livemint reported citing people familiar with the matter.

The grid-scale battery storage or battery energy storage systems (BESSs) store renewable energy and release it during peak demand to stabilise the grid.

The PLI scheme is currently in works with an expected incentive amounting to Rs 10,000-15,000 crore, according to one of the two people familiar with the matter.

“We are trying to ensure that the specifications of this PLI scheme do not overlap with the ongoing scheme for advanced chemistry cells (ACC), as the key requirement of grid-scale battery storage is grid stability and the flow of power continues at a regular frequency, and the ramp rate is not as high compared to the ACC battery, largely used in e-mobility," one of the two people was quoted as saying in the Livemint report.

In a bid to reach its target of 500 GW of renewable energy capacity by 2030, the country needs to focus on storing renewable energy to maintain grid stability during peak demand.

Renewable sources like solar and wind are intermittent, making storage essential for uninterrupted power supply.

As a result, battery energy storage systems (BESS) will have a significant role to play in integrating renewable energy into the existing grid.

The proposed scheme is unlikely to specify a single technology for energy storage development, as numerous technologies and chemical formulations are being researched.

Hence, all currently available technologies such as lithium-ion, sodium-ion, and vanadium redox batteries and others will be eligible for the incentive if they are economically viable.

The draft PLI plan will be presented to the DPIIT after receiving feedback from stakeholders.

The power ministry expects that a new PLI scheme for battery storage will be notified by December or Q1 2024, given that approvals from the empowered group and cabinet will take around six months.

The scheme is expected to run for five years, similar to other PLI schemes.

Indian researchers are searching for alternative battery chemistries to decrease reliance on lithium imports, which are predominantly processed in China.

Union Power Minister R K Singh had on several occasions in the past emphasised the importance of enhancing storage system manufacturing in India due to the high cost of power storage.

He also said that implementation of a PLI scheme will support battery storage capacity addition.

Further, Union Finance Minister Nirmala Sitharaman has also revealed in the Union Budget 2023-24 that the government will provide funding assistance to the sector to maintain financial viability.

Sitharaman had announced that funding support will be provided to BESS, which has a 4,000 MWh capacity, through Viability Gap Funding (VGF) to move the economy towards sustainable development.

In the past year, policy decisions have strengthened the energy sector by introducing guidelines for procuring and utilising battery energy storage systems (BESS) for generation, transmission, distribution, and ancillary services.

Additionally, the power ministry mandated that power distribution companies must meet a 4 per cent energy storage obligation by FY30 in line with renewable-purchase obligations, further boosting the sector.

Battery storage capacity on 13 March was 39.12 MWh, according to the government.

The National Electricity Plan, which was notified recently, envisaged the need for 8,680 MW/34,720MWh of BESS in FY22-27, and projected a requirement of 38,564 MW/ 2,01,500 MWh for the next five years (FY28-32).