Budget Lays Down Path for Faster Adoption of Energy Storage and E-Mobility in India: IESA

Industry body India Energy Storage Alliance (IESA) has welcomed the progressive budget announced by Finance Minister Nirmala Sitharaman and said that it has addressed many key requests from the industry and has also laid down a path for faster adoption of energy storage and e-mobility in India.

It further added that it will work with the Ministry of Finance (MoF) and other relevant ministries to provide inputs for the timely implementation of various initiatives mentioned in the budget.

In line with this, Dr. Rahul Walawalkar, President of IESA has provided his detailed sector-wise analysis on every section of the renewable energy budget.

On the energy storage sector, Dr. Walawalkar said that infrastructure status for the energy storage sector will address the biggest concerns of the industry related to ease of financing.

IESA believes that over the past decade the energy storage technologies have made tremendous advancements in improving the performance and reducing capital cost, so availability of financing was identified as the key hurdle for rapid adoption.

IESA had requested MoF to extend infrastructure status to storage projects vide budget recommendations to the Ministry. We are glad our submission was considered positively, providing the Infrastructure Status to the Energy Storage projects (covering both manufacturing and deployment). As the Harmonised Master List of Infrastructure sub-sectors already includes Electricity Generation and Electricity Transmission, the inclusion of Energy Storage will help cover all the important segments of energy under the Infrastructure Status.

On the Manufacturing and Supply chain sector, Dr. Rahul said that PLI’s are receiving great response from the industry and ACC Battery PLI has received 130 GWh of annual production capacity bids for 50 GWh allocated capacity. So, IESA has welcomed the increase in allocation for solar PLI and we do expect MoF to consider increasing allocation for ACC PLI in the coming months to ensure India can keep up with the global increase in advanced cell manufacturing.

He further added that the push by MoF supporting a circular economy with action plans for electronic waste and end-of-life vehicles is a welcome step. It will support the domestic battery cell manufacturing program by providing recycled battery raw materials. IESA is working with the government on developing a circular economy to support ACC battery manufacturing to achieve greater than 60% domestic value addition.

Also, the recognition given to reforms on customs and duty rates in easing out supply-side constraints relating to raw materials is welcoming. This will enhance ease of doing business and act as an enabler to other policy initiatives including PLIs on ACC. Recently IESA launched an initiative on India Battery Supply Chain Council (IBSCC) as a common platform for all relevant stakeholders to work on the complete development of the battery supply chain needed to support upcoming giga factories in India, Dr. Rahul commented.

Moreover, the extension of the last date for commencement of manufacturing or production under concessional tax regime of 15 per cent for newly incorporated domestic manufacturing companies from 31st March 2023 to 31st March 2024 will help the new investments expected in the next 2 years for PLIs related to ACC Battery and e-mobility sectors as well as related components manufacturing in the supply chain, he further added.

With various PLIs for ACC batteries, solar PV, EV and other components, we expect these manufacturing facilities to not just support domestic demand but also help India become an export hub. The allocation is 1 lakh crore to assist the states for infrastructure will enable faster growth in this regard and help the sector, Dr. Walawalkar commented.

Besides, the promotion of sunrise opportunities in green energy and clean mobility sectors in the budget announcement will play an immense role in assisting sustainable development initiatives by the industries and enhancing competition among them and promoting employment opportunities for youth.

On the Start-ups and skilling announcement in the budget, Dr. Rahul said that IESA has acknowledged the recognition given to startups in the budget announcements, which will turn out to be a wealth-creating opportunity for entrepreneurs, companies, and the nation, by playing a key role for sustainable development and job opportunities for youth in the country. We are already working with various startups in the e-mobility and energy storage space to promote startup culture in the country.

He also mentioned that IESA is working on creating awareness about emerging mobility technologies such as drones and urban air mobility in India. It’s rejoicing to note that the Finance Ministry has identified this as a growth area and promoting startups to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS).

Attention to the dynamic skilling needs of the industries and digital ecosystem is welcoming. IESA Academy is actively addressing the need for training and skill development in the energy storage and e-mobility sector, with the support of industry bodies, top research universities, training institutes, and government agencies.

On Ease of doing business, Dr. Rahul commented that the expansions of single window portal ‘PARIVESH’ for all green clearances will fast-track green and clean technology projects in the coming years. 

On e-Mobility, he added that a focussed Battery swapping policy will give a boost to the BaaS model and EV ecosystem in general. We firmly believe in increasing the incentives towards charging infrastructure and Battery Swapping. Right now, 1,000 crore were allotted only towards charging infra.

Battery Swapping needs to be focussed on with the increase in EV demand and believe this policy support battery swapping in those directions. IESA will work with the MOF and concerned ministries to provide comprehensive inputs for the battery swapping policy framework proposed in the budget.

Besides, ‘PM GatiShakti’ is a transformative initiative around road infrastructure and related economic and social roles of such infrastructures. We believe this will promote the establishment of EV charging and swapping networks around highway infrastructure across the country and ease out logistics and transportation costs. IESA will work with appropriate ministries for ensuring holistic e-mobility planning is incorporated as part of the new approach towards infrastructure, he added.

IESA has recommended a reduction in GST rates for EV batteries to 5 percent, which is a miss in the budget. In order to ensure affordability and smooth transition towards EVs from ICEs, we suggest MoF reconsider the GST rates once again, he said.

Moreover, one hundred ‘PM GatiShakti’ cargo terminals for multimodal logistics put the impetus on the need to develop EV infrastructure for cargo transportation as well.

On the Microgrids sector, the provision of clean energy for two lakhs ‘Saksham Anganwadi’ is a welcoming step. This can strengthen the application of grid-connected microgrids that can boost local-income generation. IESA is already working through MICRO (Microgrid Initiative for Campus and Rural Opportunities) initiatives supporting agro-processing businesses with microgrids. These policy initiatives can boost such agro-businesses in remote areas, said Dr. Rahul Walawalkar.

However, the Green Hydrogen sector is missing in the budget, he said. IESA’s budget suggestion for a special fund for the green hydrogen project and requirement of Hydrogen Electrolyser PLI support is missing in the budget.