Production Linked Incentive Scheme On Advanced Chemistry Cells (ACCs): Opportunity For Battery Manufacturers – Energy and Natural Resources

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Production Linked Incentive Scheme On Advanced Chemistry Cells (ACCs): Opportunity For Battery Manufacturers

The Government of India and the Department of Heavy Industries
& Public Enterprises have approved the Production Linked
Incentive (PLI) scheme for the ‘National Programme on Advance
Chemistry Cell (ACC) battery storage’. The PLI scheme aims to
build storage for ACCs to the manufacturing capacity of 50 GWh
(gigawatt hour) with a total financial outlay of USD 2.4 billion.
Eligible companies must invest a minimum of USD 30 million/GWh over
two years with a value-added localization minimum of 25%. The
incentive is expected to be rolled out over a tenure of five years,
with details for incentives and disbursement criteria to be
released in June 2021.

ACCs are a new advanced generation and category of
batteries/energy storage which can store electric energy in
electromechanical or chemical form and convert it back (as and when
required). A large boom in electric vehicles (EVs), solar energy,
power generation, and consumer electronics is expected in the
future, which are likely to utilize this set of ACCs for powering
these new products/services. India currently imports this
technology and depends heavily on foreign makers for demand.
However, with this new incentive, an import substitution of USD
2.67 billion is expected every year. Additionally, this is expected
to augment domestic value-addition of approximately 60%
localization over the scheme’s tenure.

Predominantly, this technology is critical for electric
vehicles. The Indian government has targeted a ratio of 30%
electric vehicles on the road by 2030, which will enhance demand
for ACCs. With the EV market expected to grow to USD 45 billion by
2025 from the current market of USD 5 billion, ACCs will be a
critical component to achieve this growth. The battery storage
market in India is also expected to grow to approximately USD 10
billion by 2025.

India is expected to reduce its carbon emissions and greenhouse
gas emissions in the future, and such a scheme is a step in the
right direction for the country to neutralize such emissions.
Moreover, the scheme is expected to provide an impetus to EV demand
in India, which will in turn fast-track the production for ACCs.
The scheme is expected to open for applications once the guidelines
are released in June 2021. Immense participation is anticipated,
not only from automobile Original Equipment Manufacturers (OEMs)
but also from electronics, power, and renewable energy players. The
scheme is expected to help India become a self-sufficient country
in providing storage and battery solutions to key developing
sectors.

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