Research shows India's battery market will exceed $15 billion by 2030

The National Research Institute of India (NITI Aayog) and the Rocky Mountain Institute (RMI) of the United States recently released a joint research report estimating the future demand for battery products in India under the "Accelerated Scenario" and "Conservative Scenario" to Help meet the growing number of electric vehicles, critical grid energy storage needs, and contribute to India's energy security.

India's influence in the manufacture of advanced battery technology is now negligible. However, the country has huge potential for large-scale battery manufacturing. According to the report, India's battery market could exceed $15 billion (approximately Rs 1.12 trillion) by 2030, and by 2030, India's battery demand is expected to rise to 260GWh in an "accelerated scenario".

April 02, 2022

PLI plans to boost battery manufacturing

The Production Linked Incentive (PLI) scheme announced by the Indian government is one such initiative that will provide much-needed incentives to increase battery manufacturing capacity in the coming years.

In June last year, India’s Ministry of Heavy Industry issued a circular for the “National Plan for Advanced Chemical Battery (ACC) Energy Storage” under the Production Linked Incentive (PLI) scheme to build Advanced Chemical Battery (ACC) batteries for electric vehicles (EVs). manufacturing facility. The department has allocated a total of 181 billion rupees (about 2.47 billion U.S. dollars) as the total incentive payout of the program for five years.

10 companies including Reliance New Energy Solar, Hyundai Global Motors, Ola Electric Mobility, Lucas-TVS, Mahindra & Mahindra, Amara Raja Battery, Exide Industries, Rajesh Exports, Larsen & Toubro and Power of India Bids submitted.

The report states that Indian state governments will play a major role in the success of the Production Linked Incentive (PLI) scheme. Putting them through a state-scale challenge as part of the program provides a more significant incentive for building battery manufacturing facilities.

With the global energy storage market expected to exceed $150 billion annually by 2030, India’s incentives to expand the energy storage market are clear. According to the report, India is well positioned to capture a significant share of the growing global battery energy storage market, which could account for 13% of global battery demand by 2030.

The value of batteries in electric vehicles

According to research by RMI and analysis by Bloomberg New Energy Finance, global demand for lithium-ion batteries is expected to reach 2.8TW per year by 2030. Most of this will meet electric vehicle demand.

Batteries account for nearly 25% to 50% of the cost of electric vehicles, and batteries are the most critical component of electric vehicles. As costs fall and specific energy density continues to increase, EVs will continue to improve in performance and cost competitiveness and will soon become a more attractive option for customers.

The development of stationary energy storage industry

Stationary battery storage systems can provide up to 17 different services to stakeholders at all levels of the power system, including utilities, grid operators and end users. The global battery energy storage market is also expected to reach $30 billion (approximately 2.23 trillion rupees) by 2030.

The report pointed out that in the past five years, the majority of global battery sales have shifted from consumer electronics to electric vehicles, and 54% of global advanced battery sales from 2015 to 2019 met the needs of the electric vehicle market.

Several national and state-level initiatives, such as the Rapid Utilization and Manufacturing in India (FAME-II) and state-level electric vehicle policies, will create an ecosystem to accelerate the deployment of electric vehicles, hoping to catalyze the market's growing maturity, the report noted. The success of the revised FAMEII programme has led to increasing EV penetration, with India’s annual demand for EV batteries projected to exceed 135GWh/year by 2030.

According to the Accelerated Scenario, by 2030, the segment penetration of electric vehicles in new vehicle sales will reach 30% for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two- and three-wheelers. In the "conservative scenario", the weighted average penetration of EVs in new sales across all vehicle segments is expected to be 35% in 2030.

Development of stationary energy storage systems

While the total storage capacity of battery storage projects commissioned or under construction to date is only around 85MWh, India already has a pipeline of 4.6GWh projects, indicating strong momentum in the sector.

The report predicts that the cumulative capacity of stationary energy storage systems for grid support could reach 26GW/104GWh under the "Conservative Scenario" and expand to nearly 65GW/260GWh by 2030 under the "Accelerated Scenario".

Indian Battery Market Outlook

The report states that by 2030, India's stationary energy storage system and electric vehicle battery market size may exceed $15 billion (about 1.12 trillion rupees), of which nearly 12 billion (about 893.63 billion rupees) comes from batteries, 3 billion The US dollar (approximately Rs 22,341 crore) comes from the assembly and integration of the battery. In a more conservative scenario, its annual market size would reach $6 billion (approximately Rs 44,682 crore).

In addition, the report states that under the "accelerated scenario", India can meet domestic battery demand in 2022 through two gigafactories that are said to have an annual capacity of 10GWh.

Under the Accelerated Scenario, India will need to operate five gigafactories in 2025 and 26 gigafactories by 2030. In the "conservative scenario", India will need to operate three gigafactories by 2025 and 10 gigafactories by 2030.

The report highlights the need to develop local manufacturing, taking advantage of India's factor cost and scale advantages, while providing export opportunities for the fast-growing technology sector. But such plans must be complemented by long-term policies to further stimulate demand for batteries in mobile and stationary applications.

Last August, the National Research Institute of India (NITI Aayog), jointly with RMI Corporation, released a report reviewing reforms and efforts in the power distribution industry in India. The report analyzes lessons learned and best practices from Indian and global experience to inform state governments that are considering further reforms to put their power distribution industry on track to improve efficiency and profitability.

Earlier, a survey report also mentioned that India's transition to electric vehicles will require a cumulative investment of $266 billion (approximately 19.7 trillion rupees) in electric vehicles, charging infrastructure and batteries over the next decade.

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