Greenko to invest around $1 billion in new battery storage business

These funds will be deployed towards developing the Hyderabad-based firm’s lithium ion battery technology, manufacturing and application plan, and comes in the backdrop of single-largest foreign clean energy investment in India by Japan’s ORIX Corp. for $980 million in Greenko for 17% stake.

Sovereign funds GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority (ADIA) backed Greenko’s pivot towards battery storage comes, as India readies its proposed ₹18,000 crore production-linked incentive package for battery storage manufacturing, Mint reported earlier. India also plans to issue tenders for setting up Tesla-style giga factories for cell and battery manufacturing.

With China dominating the lithium-ion cell manufacturing, India wants to avoid repeating what happened with solar equipment manufacturing, wherein China leveraged its first-mover advantage to capture the market. The value chain comprises raw material processing, and manufacturing of separators, cathodes, electrolyte, anode, cell and finally the battery storage packs.

This assumes 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 situation large grid scale battery storages can help maintain spinning reserves that can support round the clock electricity demand.

“Greenko has successfully made the transition into clean technology and solutions platform from pure play energy supply through planned investments in global battery and deep tech companies with intellectual property and indigenisation of technology and manufacturing of Li-on batteries for grid and mobility needs of India," said the person cited above requesting anonymity.

Greenko is reportedly in talks with Japan’s NEC Corporation to acquire Massachusetts-headquartered NEC Energy Solutions, that holds the intellectual property rights for megawatt-scale lithium ion batteries.

Queries emailed to a Greenko spokesperson on Sunday morning wasn’t immediately answered.

India plans to impose tariffs on imports of lithium-ion cells for as long as a decade and offer other incentives such as 100% tax deduction of capital expenditure in the first year of operation under Section 35 AD, concessional financing options by giving companies deemed infrastructure status and waiver of minimum alternative tax.

Globally, lithium-ion cell manufacturing is dominated by China, followed by US, Thailand, Germany, Sweden and South Korea. Tensions along the India-China border have prompted India to expedite domestic manufacturing to check Chinese imports.

India plans to issue expression of interests to shortlist around five companies for setting up Tesla-style gigafactories for cell and battery manufacturing—each having a 5-to-10 gigawatt hours (GWh) capacity. To put this in perspective, each GWh of battery capacity is sufficient to power a million homes and around 30,000 electric cars. Mint reported about the proposed manufacturing plan on 26 July last year.

Greenko is building power storage projects with total capacity of 7.2 GW across six states in India as part of its plan to provide on-demand power from wind and solar projects, and is also partnering with state run NTPC Ltd to develop ‘round-the-clock’ power supply.

“Greenko is focused on building integrated renewable energy projects (IREP), business which supplies electricity from renewable sources that is not affected by the weather at costs equivalent to thermal power stations and similar facilities," ORIX Corp. said in a statement on Friday.

GIC Holdings and ADIA, which invested $2.2 billion so far in Greenko, will own 56% and 14%, respectively, once the deal is completed. While Orix will hold 17%, Greenko’s founders Mahesh Kolli and Anil Kumar Chalamalasetty will jointly hold around 13%. The deal is expected to be completed by the end of 2020.

Commenting upon the deal, Niti Aayog’ chief executive officer Amitabh Kant in a tweet on Friday said, “tremendous boost for Renewables 3.0 investments in Energy Storage & clean energy tech under PMs Atmanirbhar vision."

India does not have enough lithium reserves. Chinese state firms have secured lithium mine concessions in countries such as Bolivia, Argentina and Chile, which form the so-called lithium triangle. India is trying to secure supplies.