Opening up New Vistas

Upcoming NESM could be a transformative step for the industry

By Dr Rahul Walawalkar, President and MD, Customized Energy Solutions (India)

Recently, at the inauguration of the 2nd Global RE-Invest Meet and Expo, Prime Minister Narendra Modi announced that “India has embarked on the National Energy Storage Mission (NESM) with a focus on boosting indigenous manufacturing of energy storage”. This announcement is a result of the work done over the past five years by the India Energy Storage Alliance with various state agencies, as well as central government departments including the Ministry of New and Renewable Energy (MNRE), the Ministry of Power, and NITI Aayog on different aspects of the energy storage policy. Since energy storage can serve both as a generation source as well as load, it needs careful consideration to adapt the existing policy frameworks or develop new frameworks. The MNRE constituted the expert committee in February 2018 to draft the NESM to provide the policy framework necessary for the industry. NESM, modelled on learnings from the National Solar Mission, provides a policy framework covering four key areas:

  • Energy storage for large-scale renewable energy at the transmission level
  • On-site energy storage integration at the distribution level
  • Rural microgrids and energy access
  • Storage component in electric vehicle (EV) plans.

In March 2018, R. K. Singh, minister for power and new and renewable energy, chaired a meeting with battery-based energy storage system manufacturers to discuss the setting up of manufacturing units in India. The India Energy Storage Alliance (IESA) was a part of this discussion. The meeting not only focused on the government’s push for EVs and the expected surge in EVs in the coming years, but also on future tenders that cover hybrid solar and wind projects to be coupled with energy storage.

Under the proposed NESM, the government would soon release a policy with a focus on Make in India and it is planning to take all possible measures to incentivise advanced energy storage manufacturing in India. NESM also addresses issues related to the availability of raw materials for manufacturing, and the government has already started discussions with resource-rich countries such as Bolivia and Australia.

175 GW renewables target and the role of energy storage

The government’s focus on renewables has led to a significant increase in the share of renewables in the country’s energy mix. India’s installed renewable energy capacity has crossed 72 GW and accounts for over 20 per cent of the total installed power capacity. The government has come up with an ambitious plan to deliver 175 GW of renewables by 2022 and provide 24×7 power for all by 2019 by creating an efficient, resilient and financially sustainable power sector. Furthermore, in COP21 India committed to generate 40 per cent of power from clean energy sources by 2032. This objective and clean energy access have become the centre of all plans around economic development and environment.

The increasing deployment and uptake of renewable energy and its use requires technical and commercial solutions and a variety of policy decisions around minimising the impact of intermittency and enabling the grid integration of renewable energy. The falling costs and rising efficiencies of supporting technologies such as energy storage are already making renewable power generation competitive to conventional thermal power generation. Such technological advancements and cost reduction in both renewable energy and energy storage options will facilitate the exploitation of abundant renewable resources.

Energy storage technologies can provide an array of services to the modern grid such as peak load management, grid balancing and renewable energy integration. Historically, storage systems such as pumped-hydro were deployed for energy arbitrage. However, at present, emerging distributed energy storage technologies are being used in many other areas such as grid balancing and renewable energy integration, in addition to energy arbitrage.

Globally, renewable energy plus energy storage is being increasingly seen as an alternative to building peaking power plants. Energy storage integrated with renewable energy generates a smooth and firm output that is controllable, which subsequently optimises transmission investments. A key application of energy storage in transmission is to defer investments in new projects required to reduce renewable energy curtailment.

Making India a global manufacturing hub for energy storage and EVs

IESA estimats the market for energy storage to grow to over 300 GWh during 2018-25. India is expected to attract an investment of over $3 billion over the next three years to build two to four gigafactories for advanced lithium-ion (Li-ion) batteries. Already, over 1 GWh of annual assembling capacity is being set up for converting imported Li-ion cells into battery modules by various Indian and global companies in India. This includes IESA member companies like EXICOM, ACME, Coslight, Delta, Future Hitech Battery, Vision Mechatronics and many others. Opportunities include manufacturing, assembling and energy storage project development, equipment supply, research and development (R&D) of technology enhancement and much more.

India’s energy storage market is currently dominated by lead acid batteries with annual sales of over $6 billion. In the past two to three years, the country has also witnessed the deployment of over 1.5 GWh of Li-ion batteries for distributed and transportation applications. Most of the batteries currently consumed in India come from China, Korea, the US, Japan and Europe. China has 80 GWh of manufacturing capacity, the US has around 40 GWh and Europe has 30 GWh. In the consumer electronics space, importing and assembling has been feasible so far for India and if tax benefits are provided by the government, indigenous manufacturing can pick up.

Due to global competition and economies of scale, it is recommended that the minimum capacity for a Li-ion cell manufacturing unit should be 1 GWh production per year. As per estimates, such a unit would require an investment of up to $300 million. Looking at the potential, India has to create a 10 GWh capacity by 2020. To this end, India is likely to attract investments of $3 billion within the next three to four years. And as this happens, the development of ancillary modules, containers, transformers and inverters will need an equal amount of investment, taking the total potential to $6 billion.

While various Indian companies have already entered cell-to-pack assembling, there is a huge opportunity for domestic Li-ion cell manufacturing. Recently, the Raasi Group has obtained the Li-ion cell licence from the Central Electro Chemical Research Institute to manufacture Li-ion batteries in India. Last year, Maruti Suzuki India Limited, in collaboration with Toshiba and Denso, also announced its plans to set up a Li-ion battery production facility purely dedicated to automobiles. The plant is expected to be up and running by 2020, and will be constructed in a supplier park close to the carmaker’s production facility in Hansalpur, Gujarat.

Earlier this year, more than 137 companies showed their interest to licence the Indian Space Research Organisation’s (ISRO) Li-ion technology to manufacture batteries in India. More than 110 new start-ups and large companies attended the pre-bid conference at the Vikram Sarabhai Space Centre in Kerala and ISRO has shortlisted 14 companies for further negotiations. Meanwhile, Munoth Industries Limited has announced an investment of Rs 7.99 billion to set up a Li-ion cell production project in Andhra Pradesh, which will allow the smartphone industry to build its own battery components instead of relying on imports. The first phase will see an investment of Rs 1.65 billion in the production of Li-ion cells with a total storage capacity of 200,000 Ah per day. The first phase of the project will commence operations by March 2019, with the second and third phases starting by 2022.

Exide Industries Limited, an Indian lead acid storage battery manufacturer, and Leclanche, a global energy storage solutions provider, have formed a joint venture (JV) to build Li-ion batteries and provide energy storage systems for India’s EV market and grid-based applications. The JV will focus on e-transport, stationary energy storage systems, and specialty storage markets. The industry hopes that this big announcement will soon translate into reality. Apart from these announcements, various Indian conglomerates are now evaluating the advanced energy storage business to enter as manufacturers, component suppliers or assemblers.

There is some discussion happening in the industry on raw material availability. The government should take an active step towards signing bilateral agreements with lithium and cobalt rich countries like Bolivia, Chile, Argentina, Congo, Canada and Australia, and fostering the R&D and exploration of raw material mines in India. Apart from Li-ion technology, India can explore thermal storage, fuel cells, flow batteries, sodium based batteries, zinc-air, aluminium-air and other emerging technologies.


Advanced energy storage technologies can play an important role in renewable integration, energy access, electric mobility and the government’s Smart Cities initiatives. We are at a critical stage in building a manufacturing ecosystem for advanced energy storage technologies in India. Globally, over 200 GWh of advanced energy storage manufacturing capacity has already been built, while another 200 GWh of capacity will be built within the next three to five years. China, South Korea and the US are leading the manufacturing race right now, but a number of European countries have also stepped up efforts to build their manufacturing capacity. The Indian industry is anticipating that NESM, once it is in place, will act as a ready reckoner and transform the industry, the same way that the National Solar Mission did for the solar industry in India. The key difference is that this time we need to focus on manufacturing from the start and not just on assembling for initial years while other countries take the lead in advanced energy storage manufacturing. IESA believes that India should aim to build at least 10 GWh of annual production capacity by 2020 and 50 GWh by 2025 to remain relevant in the global race.


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