India should offer incentives to encourage local manufacturing of critical battery components, says CEA | Mint

New Delhi: The Central Electricity Authority (CEA) has recommended offering incentives to encourage the local manufacture of critical battery components including battery management systems, liquid cooling systems and battery energy storage system (BESS) containers to help meet growing power demand and maintain grid stability.

In a recent report based on a workshop of key stakeholders, the CEA has also suggested setting up a national testing and certification lab for BESS to ensure compliance with standards and enhance the credibility of domestic systems.

The workshop on renewable energy integration through energy storage systems, held in New Delhi in May, was attended by representatives of the ministry of new and renewable energy, public sector undertakings, power distribution companies, renewable energy developers and manufacturers of energy storage systems.

“Provide targeted incentives for local production of critical components such as BMS, fire protection, liquid cooling systems, and BESS containers,” the CEA recommended.

The CEA is set to come up with regulations on the standards for the construction, connectivity and safety of BESS. It noted that BESS significantly improves system performance by enabling higher renewable energy integration, reducing coal dependency, minimising short-term market reliance, and generating potential substantial savings over 10 years when both generation and transmission are optimised.

In 2023, the Centre started a ₹3,760 crore scheme to help manufacture utility or large-scale batteries for power storage and catering to the grid. However, no scheme has been drawn up for battery components, for which India is still largely dependent on China.

A decline in battery prices over the past few years has led to enhanced adoption of battery energy systems in the country. The CEA has mandated a minimum two-hour storage facility for all new grid-connected solar power projects in the country.

The report noted that the tariff for ‘solar+BESS’ projects decreased to ₹3.09 per unit in September 2024 from ₹6.99 per unit in August 2018.

Battery-integrated projects

Citing a “successful” battery-integrated solar power project at Kavaratti Island in Lakshadweep, the CEA called for the expansion of solar+BESS projects to other islands and to replicate similar hybrid systems. It noted that the project, which generates 2.08 million units annually, has reduced reliance on diesel-based power and supports peak load management and grid stabilisation.

“This has led to improved energy reliability, substantial diesel savings, and more than double the output of the previous 700 kW plant,” it said.

Solar and wind are intermittent sources of renewable energy and India is targeting 500 GW of non-fossil capacity by 2030. Storage systems including BESS and pump storage plants (PSP) are expected to play a key role in stabilising power supply and the grid.

According to the India Energy Storage Alliance, an industry grouping, the country’s energy storage sector is likely to attract ₹4.79 trillion investment by 2032. The CEA estimates a project requirement of 411.4 GWh (175.18 GWh from PSP and 236.22 GWh from BESS) of energy storage systems by FY32.