NITI Aayog, in collaboration with the Rocky Mountain Institute (RMI), recently published a report, which estimates India’s future demand for batteries under an ‘accelerated scenario’ and a ‘conservative scenario,’ to help support the increasing number of electric vehicles, significant grid storage requirement and contribute to the country’s energy security.
“PLI Program: Boosting Battery Manufacturing in India’s Growing Market”
The production-linked incentive (PLI) program introduced by the government is set to provide a significant boost to the battery manufacturing segment in India. The initiative aims to enhance the manufacturing capacity of batteries, particularly for electric vehicles (EVs), in the coming years.
The PLI program, known as the ‘National program on ACC battery storage,’ was launched by the Department of Heavy Industry last June. With a total incentive payout of ₹181 billion (~$2.47 billion) allocated for a duration of five years, the program aims to establish advanced automotive chemistry cell (ACC) manufacturing facilities for EVs.
The value of batteries in EVs is substantial, accounting for around 25-50% of the total cost. As the demand for lithium-ion batteries worldwide is projected to reach 2.8 TWh annually by 2030, with a significant portion dedicated to electric mobility, reducing battery costs and increasing energy densities will enhance the performance and cost competitiveness of EVs, making them a more appealing choice for consumers.
Additionally, there is a growing market for stationary energy storage systems (ESS). These systems offer various services to utilities, grid operators, and end-use customers, and the global ESS applications market is expected to reach $30 billion (~₹2.23 trillion) by 2030.
In India, the shift in battery sales has seen a major transition from consumer electronics to EVs, with 54% of global advanced battery sales serving the EV segment between 2015-2019. National and state-level initiatives such as FAME II and state EV policies are creating a conducive ecosystem for accelerated EV deployment. As a result, the annual demand for EV batteries in India is expected to exceed 135 GWh/year by 2030.
While India’s stationary storage market is still in its early stages, with around 85 MWh of projects commissioned or under construction, there is a robust pipeline of projects amounting to 4.6 GWh. The report projects that the cumulative capacity of stationary storage for grid support could reach 26 GW/104 GWh by 2030 in the conservative scenario, and expand up to nearly 65 GW/260 GWh in the accelerated scenario.
Overall, the report states that India’s battery market has tremendous potential, with the annual market for stationary and mobile batteries projected to surpass $15 billion (~₹1.12 trillion) by 2030 under the accelerated scenario. This market includes approximately $12 billion (~₹893.63 billion) from cells and $3 billion (~₹223.41 billion) from pack assembly and integration. To meet this demand, the accelerated scenario suggests the establishment of multiple gigafactories, starting with two gigafactories of 10 GWh annual production capacity in 2022, and expanding to five gigafactories by 2025 and 26 gigafactories by 2030.
Developing local manufacturing capabilities that leverage India’s factor costs and scale advantages will be crucial. It presents an opportunity for the rapidly growing technology sector to not only cater to domestic demand but also explore export possibilities. To achieve this, long-term policies that further stimulate battery demand in both mobile and stationary applications are essential.
In August, NITI Aayog and RMI released a report on reform efforts in the Indian power distribution sector, providing insights and best practices to enhance efficiency and profitability. These efforts align with the broader goals of fostering a sustainable and robust battery industry in India.