Jay Patel
The government approved a Rs 1.45-trillion package by extending the production-linked
incentive (PLI) scheme to 10 more sectors on . The government hopes that the PLI
schemes would provide 200,000-300,000 direct employment over five years. This hope has
been segmented in 10 sectors in Make In India 3.0. Let’s have a close look at the current
activities of 2 important energy sector related industries.
- Advanced Chemistry Cell
Implementing Department: NITI Aayog and Department of Heavy Industries
Advance Chemistry Cells (ACCs) are the new-generation advanced storage technologies
that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required. They are sometimes referred to as fuel cells or lithium-ion batteries.
Globally, manufacturers like Tesla are investing in these new generation technologies on a commercial scale to cater to the expected boom in battery demand through 2030. The move is part of an effort to push the use of Electronic Vehicles (referred as EV hereafter) for which high battery cost is a big hurdle. The batteries, currently being imported, account for more than half the cost of an EV, and local manufacturing could help bring this down.
Policymakers in India have been actively pushing EV adoption during the recent years. The government think-tank NITI Aayog has specified that faster adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) and other policies supporting electric mobility are expected to push EV sales penetration to 30% for private cars, 70% for commercial cars, 40% for buses, 80% for two-wheelers (2Ws) and three wheelers (3Ws) by 2030. In January 2020, The finance ministry has already shown a green flag to the Aayog’s proposal to offer Rs 700 crore a year in subsidies to battery makers, starting in 2022.
Niti Aayog has now invited bids to set up manufacturing facilities under the Public Private Partnership model. Gigafactories, with a total capacity of 50 Gigawatt hours (GWh), over 10 years are supposed to be planted. The government is eyeing a minimum factory size of 5 GWh, which means a maximum of 10 players would be allowed through a competitive bidding process to set up shop in India. Typically, a gigafactory with 10 GWh capacity requires an investment of $1 billion.
Challenges: EVs should be built on local raw materials. China controls all lithium mines the production cost is likely to rise.To overcome this, fuel technology should be encouraged like hydrogen, methane, microbial fuel cell. This also requires more inputs in R&D. Since expected players in this scheme is around 10, world class R&D should be top priority of administration.
Setting up of adequate charging infrastructure is key to encourage users to consider EVs.
Most EV sales take place in lighter mobility categories, creating demand for charging
infrastructure at homes/ residences, parking lots, workplaces or commercial
establishments. The state-level EV policies should focus on promoting these models of
charging infrastructure.
As more EVs enter the market, there is a need to formulate clear policies on sustainable
end-of-life and disposal practices for the industry. The end life of batteries impacts
sustainability and the value chain of materials. One of the potential solutions is recycling.
That should be the next salient task for administration.
Expected Investment : INR 18100crs
Solar Photovoltaic Modules
Implementing Department : Ministry of New and Renewable Energy
Solar Photovoltaic Modules or commonly known as Solar panel is the key focus of implementing agencies this time. According to the government, large-scale solar PV imports pose risks to supply-chain resilience and raise strategic security challenges, considering the value chain’s hackable nature.
It is added that a focused PLI plan for solar PV modules would incentivize domestic and global players to build large-scale solar PV capacity in India and help the country leapfrog in capturing the global value chains for solar PV manufacturing.
India currently has approximately 15.5 GW of solar module manufacturing capacity and around 3.3 GW of solar cell manufacturing capacity (as of June 2020). But looking at the increased awareness and incentives to install rooftop solar photovoltaic modules there would be demand of higher manufacturing capacity.
Another key reason for increased demand is that the government has imposed safeguard duty on solar cells for one more year till July 2021 to protect domestic manufacturers and discourage cheap imports from countries like China. The duties were put in place on July 30, 2018. As a consequence, the import volume came down to 8,010 MW in 2018-19.
Also In early March 2019, The Ministry of New and Renewable Energy had launched the much-awaited 12,000 MW (12GW) PSU scheme. The scheme envisages majority government-owned entities to set up projects using domestically procured cells and modules for consumption of power in-house or sale to other government entities.
Currently there are approximately 130 large and medium scale manufacturers of Solar PV. All of them produce polycrystalline Solar Modules which are less efficient than monocrystalline solar modules.
Challenges : Some of the leading Chinese solar PV module manufacturers, which remain the undisputed global leaders of the solar modules and cells industry, have a new prestige product. Breaking the 500 W barrier for solar module output from a single panel.(It is 40 percent higher (on average) as compared to current mainstream products installed in utility-scale solar projects in India).
While Indian Manufacturers are stuck in the polycrystalline era, The generational shift from polycrystalline modules to Mono and Mono PERC modules is almost complete in comparable markets. It’s important to note that The higher efficiency of Mono Modules comes at a cost that is close to 10 percent extra, which can increase total project costs by up to 6 percent.
The “Make in India” initiative and the subsequent government order to include mandatory provision for domestic content in projects has locked developers in multiple battles, involving compensation for the higher cost of imports for PPA’s signed before the SGD came in, to an inability to explore better quality and efficiency.
Expected Investment: INR 4500crs
Bottomline : One can conclude that for both of the sectors the next two years are going to be decisive and will bring unprecedented growth in Indian market. The supporting policy and financial boost for both sectors is fine drawn and challenges are unique to both but the common parameter would be higher effort in bringing new Technology to production. That investment would make sure to get desired results for next decade which our country is lagging behind.
- Contributor of this article is Data Enthusiastic working in Drug Discovery and
Research Industry who keep close watch on development of Economics and political
stories
