Interview: India Needs to Strengthen the Battery Energy Storage Manufacturing Sector

India’s renewable energy sector needs a strong backbone in the form of a robust energy storage industry in order to sustain its growth trajectory, according to Naveen Sharma, vice president of energy storage provider Exicom.

The executive noted that energy storage has numerous potential applications in India, including aiding in renewables integration, providing grid support services, supporting C&I segment and creation of big role in facilitation of early adoption of electric vehicles.

However, Sharma insisted that India’s current position in the battery manufacturing sector could hinder its plans to add more renewable energy. The solution, he said, is for the country to create a strategy to transform itself into a global hub for energy storage solutions.

As the country waits for an energy storage solution in the foreseeable future, it is important for all stakeholders to come together and enable a full and transparent ecosystem and policy guidelines so that indigenous manufacturers have clear access to the market, said Sharma.

In a recent conversation with Mercom, Sharma shared his thoughts and concerns about the future of India’s energy storage industry. Here are excerpts from that interview:

When do you think India’s energy storage market will emerge from its nascent stage?

Energy storage is becoming a major player in the global energy market and will continue to grow for the foreseeable future. We expect 2018 to be a breakthrough year for energy storage in India with demand largely driven by the telecom sector, grid applications, and electric vehicles. The government is already putting its weight behind early adoption of electric vehicles, and these are set to increase demand for energy storage technologies, especially lithium-ion batteries.

What strategy should companies use to expand in this sector?

Companies should expand by broadening their manufacturing capacity as well as by utilizing investments to work with other global players on research and development that considers local needs. This will improve the quality of the Indian supplier base and make it more competitive, thus improving the sector ecosystem. Companies should champion the use of lithium-ion battery technology across various sectors so that deployment increases, thereby fostering competitive pricing. They must also work to encourage adoption by building user confidence.

Energy storage has many potential applications in India, including support for renewable integration, diesel optimization, electric vehicles and grid support services.

As technology costs decline and battery deployments proliferate, existing niche markets will expand, opening new markets and value-streams for storage. To become a world-class manufacturing destination, India needs to have technology, quality, and scale. This is the right time for investment and building skilled manpower.

Do you think energy storage will be big in the country?

Yes, of course. As you see, there is a clear shift underway in global trends as countries promote the adoption of renewable energy. With COP21 commitments from countries to reduce carbon emissions (made at the 2015 Paris Climate Congress), the use of coal-based power applications is declining globally. With the ambitious target of installing 175 GW of renewable energy by 2022, energy storage technologies have strategic importance for India’s energy security and clean energy future.

Why do you think SECI recently cancelled a few battery energy storage tenders?

We believe government is taking concrete steps in formulation of policies towards ESS and trying to push the sector. In the meanwhile, as an industry measure, all players are deliberating the cancellation of the energy storage tenders that were issued by the Solar Energy Corporation of India (SECI) and the National Thermal Power Corporation (NTPC) through our industry body, the India Energy Storage Alliance (IESA). IESA has been in touch with the government to discuss the matter.

What do you think the government should do to extend more support to this segment?

We strongly believe that government is going in the right direction on supporting the segment. However, there are various communication gaps on the policy front that are creating an atmosphere of uncertainty for the investment community. Incentivizing indigenous manufacturers by means of import subsidies, providing clear market access and guiding them with a solid way forward with the help of transparent policy guidelines will give a big boost to the sector. Government should also give preference to Indian companies with a local manufacturing base alongside the weightage on local deployments and local R&D. Besides, the Goods and Services tax (GST) on batteries must be taken in the same way as solar. Import subsidies in importing raw material and creating manufacturing facility should be provided.

Our country needs to set up mid and large-scale, lithium-ion battery manufacturing capacity and reduce the cost of lithium-ion batteries used in such storage applications. We should strive and become an export hub for lithium-ion battery production.

India is already a leading manufacturer of the lead-acid batteries that are used for both automotive and stationary applications. With energy storage demand expected to reach 70 GW by 2022, it is expected that India will also become one of the largest markets for advanced energy storage technologies in the next decade.

The government also has played a significant role in setting standards and regulations for charging infrastructure and providing incentives for electric vehicles. The government should also encourage research and development, localization, and training to improve energy access to developing charging infrastructure. Policy interventions, including mandates and incentives that promote investments in developing local EV targets, will also be needed.

There is also a need to scale up the rollout target by focusing on shorter and pre-defined routes as well as by providing charging stations at multiple locations which would further enable the cost of storage to drop.

Will there be any new tender announcements for storage in 2018?

Yes, we believe that 2018 will be a very significant year for storage and will see many successful announcements, tenders and collaborations.

What are your products for the Indian market?

Given our expertise for last 22 years in AC-DC conversion, drives and controllers, we are ready for the market with our extensive product portfolio which includes li-Ion battery solutions for DC telecom, energy storage solutions (from kW to MW scale), battery management systems (BMS/CBMS). Li-ion batteries, and charging infrastructure solutions for EV applications including two wheelers, three wheelers, passenger cars, and commercial transportation.

What is your market strategy for India?

We want to capitalize our current market leadership position of deployment and experience in deployment for approximately 5 years in the said sector.

We continue to grow as the size of the industry grows. However, as an early entrant and market leader, we already have an advantage over the competition due to our experience and our mass deployment of technologies.

We already have announced our target to deploy 1 GWh of energy storage solutions across different applications by the financial year 2018-19.

Where do you see India’s storage market in the next five years?

The Indian energy storage market looks promising with opportunities for both stationary and EV applications, particularly with the government’s push towards EV segment. With supporting policies and investments at the right time, it is very likely that India will become one of the leading markets and a manufacturing hub for energy technologies, not just for domestic production but for various export markets as well.