Government Must Incentivise Local Battery Component Manufacturing, Says CEA

The Central Electricity Authority (CEA) has urged the Indian government to introduce targeted incentives for the domestic manufacturing of critical battery components.

These include battery management systems (BMS), fire protection systems, liquid cooling solutions, and battery energy storage system (BESS) containers, all vital to enhancing the country’s grid stability as it transitions toward its 500 GW non-fossil energy target by 2030.

The recommendation, outlined in a recent report following a high-level workshop titled 'Renewable Energy (RE) Integration through Energy Storage Systems (ESS)' held in New Delhi, highlighted India’s ongoing dependence on imports from China due to the absence of a dedicated incentive scheme for battery components.

The workshop, which focused on integrating renewable energy through energy storage systems, brought together representatives from the Ministry of New and Renewable Energy (MNRE), public sector undertakings, distribution companies (discoms), renewable energy developers, and BESS manufacturers.

In addition to fiscal incentives, the CEA has proposed setting up a national-level testing and certification laboratory for BESS. The agency emphasised that such a facility would ensure compliance with evolving safety and performance standards, while enhancing the credibility and global competitiveness of domestically manufactured systems.

The CEA is also expected to roll out new regulations covering the construction, connectivity, and safety standards for BESS infrastructure. According to the report, BESS installations have demonstrated the ability to improve overall grid performance by facilitating the integration of intermittent renewable sources, reducing dependence on coal-fired plants, lowering market reliance in peak demand periods, and offering long-term cost savings when generation and transmission are jointly optimised.

While the Indian government had announced a INR 3,760 crore scheme in 2023 to support the manufacturing of large-scale batteries for grid-scale storage, there is still no parallel policy support for key components. The CEA warned that this gap could undercut India’s ambitions in clean energy storage and called for immediate intervention to plug the missing link in the value chain.

The authority also pointed to the recent drop in solar+BESS tariffs, from INR 6.99 per unit in August 2018 to INR 3.09 per unit in September 2024, as evidence of improved cost-effectiveness. A mandated requirement for all new grid-connected solar power projects to include at least two hours of storage has further strengthened the case for rapid domestic scaling.

Highlighting a successful implementation, the CEA showcased the battery-integrated solar project on Kavaratti Island in Lakshadweep, which has significantly reduced reliance on diesel-based power. The hybrid setup, generating 2.08 million units annually, not only stabilises the grid during peak loads but also more than doubles the output of the previous 700 kW plant.

In light of these developments, the CEA is advocating for the replication of such solar+BESS projects across India’s island territories and remote regions, arguing that battery-integrated renewables represent the future of sustainable power for the country.