As another hot summer approaches, India’s power demand will again hit unprecedented peaks, and the power grid could be pushed beyond its limits. Renewable energy (RE) can allow for meeting this rising demand sustainably. And energy storage technologies, like batteries, will play a critical role here.

From providing the flexibility to use RE as needed, especially during power crunches, to driving the electric vehicle transition, batteries are crucial for a greener future. Given their performance and diverse applications, lithium-ion-based batteries shall continue to be the dominant technology.

India currently depends heavily on imports with 84 per cent of battery imports coming from China and Hong Kong. A recent Council on Energy, Environment and Water (CEEW) study suggests that India’s total energy storage demand from grid and mobility sectors could be 903 GWh until 2030. The current government PLI scheme is aimed at supporting 50 GWh of annual domestic battery manufacturing, and the study estimates that this would entail a capital expenditure of $4.5 billion to set up.

Three strategic areas

There are three three strategic areas to scale the domestic battery industry.

First, create a conducive energy storage ecosystem. The development of an energy storage ecosystem is necessary for India to establish domestic manufacturing and the Centre and the States have a role to play here.

Additionally, there must be rethink on customs duties and taxes on components and raw materials. While the government should prioritise the strategic sourcing of essential minerals, increasing focus on battery recycling will reduce the need for new materials.

Second, innovate to bring down battery manufacturing costs. Though prices of lithium-ion batteries, particularly battery cells fell steadily between 2013 and 2021, they have been rising in 2022.

Companies must renew their focus on research to to achieve battery prices that are globally competitive. Manufacturing processes, in particular during electrode production and cell finishing, can be made more efficient. The energy used during manufacturing can also be brought down through the development of scalable dry-coated electrodes.

Third, expand the focus to battery cell component manufacturing. The cumulative demand of active materials from the domestic manufacturing sector for lithium-ion-based batteries could lie between 969 and 1,452 kilotonnes between 2022 and 2030.

Additionally, the industry would require other components such as separators, electrolytes and metallic current-collecting foils. Between 22 and 61 per cent of the value add in the supply chain of lithium-ion battery cell manufacturing comes from upstream activities like mineral processing and cell component manufacturing. Building out India’s battery component manufacturing capacity would enable much greater domestic value add. This would provide a steady supply of intermediate materials to the battery manufacturing industry. With the recently discovered lithium resources in Jammu and Kashmir, there is a potential for the domestic value add to be expanded further. But this would depend on the results of additional exploration to determine if these resources are viable and exploitable.

Batteries are a critical infrastructure to integrate more renewables into the grid and mitigate energy crises. Developing a battery ecosystem will require collective efforts by policymakers, industry, research institutions, and between central and state governments. A strong political will shall also nudge companies to build deeper supply chains and make Indian products globally competitive.

Tyagi is a Programme Associate and Warrior is a Research Analyst at the Council on Energy, Environment and Water (CEEW)