Snapshot
Advanced Chemistry Cells (ACC) are the new generation of advanced storage technologies that can store electric energy.
There is a negligible investment in manufacturing and value addition of ACCs in India.
All the demand for the ACCs in India is currently being met through imports, particularly from China and Taiwan.
Thus, the union government has invited global bids to set up greenfield giga-scale ACC manufacturing units in India.
The sector can attract a direct investment of around Rs 45,000 crore and import substitution of around Rs 20,000 crore every year.
The union government has invited global bids to set up greenfield giga-scale Advanced Chemistry Cell (ACC) manufacturing units in India to make the country self-reliant in battery consuming sectors like consumer electronics, electric vehicles, advanced electricity grids, solar rooftop etc.
ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric power as and when required.
While several companies have already started investing in battery packs, though these facilities’ capacities are too small compared to global averages, there still is a negligible investment in manufacturing and value addition of ACCs in India.
According to the bid document accessed by News18, each bidder would have to commit to set-up an ACC manufacturing facility of a minimum five GWh capacity with Value-Addition of a minimum of 25 per cent within two years and a minimum of 60 per cent within five years.
The selected firm will establish the project with a minimum of Rs 250 crore per GWh, which will exclude the cost of land, the bid document says.
Either local or foreign or a consortium can execute the project of setting up ACC manufacturing units.
Reportedly, the government will facilitate an enabling ecosystem for the same, including signing tripartite agreements between a company, a Special Purpose Vehicle (SPV) of the Centre, and the state governments. The bids will be opened in January next year.
India’s Dependence On Imports
All the demand for the ACCs in India is currently being met through imports, particularly from China and Taiwan.
In 2019-20, India had imported Lithium-ion and Lithium (primary cells and batteries) worth Rs 8,818 crore and exported the same worth of just Rs 69 crore.
As per analytics consultant Global Data, the global demand for lithium is expected to double to 1,17,400 mt by 2024 from an estimated 47,300 mt in 2020. The increase in demand is due to the likely rise in electric vehicle battery production.
Thus import substitution in this sector is more significant than ever, and the Modi government has brought out a national programme to achieve it.
Rs 18,000 Crore Scheme To Propel Domestic ACC Manufacturing
In May 2021, the union government approved the Production Linked incentive Scheme (PLI) to manufacture Advanced Chemistry Cell (ACC) in the country.
The total outlay of the scheme is Rs 18,100 crore for five years. The PLI scheme ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ envisages achieving a manufacturing capacity of fifty (50) GigaWatt Hour (GWh) of ACC and five GWh of niche ACC.
ACC battery Storage manufacturers will be selected through a transparent, competitive bidding process. The manufacturing facility would have to be commissioned within two years. The incentive will be disbursed after that over five years.
The scheme proposes a production linked subsidy based on applicable subsidy per KWh and percentage of value addition achieved on actual sales made by the manufacturers who set up production units.
Vast Benefits If The Scheme Succeeds
Besides setting up a cumulative 50 GWh of ACC manufacturing facilities in India, the programme can attract a direct investment of around Rs 45,000 crore in ACC Battery storage manufacturing projects and import substitution of around Rs 20,000 crore every year.
Domestic manufacturing may decrease prices, create a manufacturing ecosystem in the sector, and facilitate demand creation for battery storage in India.
Also, the government estimates that the ACCs manufactured under the programme are expected to accelerate EV adoption. Thus, net savings of Indian Rs 2,00,000 crore to Rs 2,50,000 crore on oil import bill reduction is anticipated during this scheme.
Overall, the success of the PLI scheme on ACC can provide impetus to research and development to achieve higher specific energy density and cycles in ACC and promote newer and niche cell technologies.