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India mulls $2.5 billion aid to manufacture grid-scale batteries

India’s power ministry is proposing a nearly $2.5 billion incentive plan to encourage domestic manufacturing of grid-scale batteries, aiming at bringing down the cost of energy storage to speed up its energy transition.

There are early-stage discussions in the government about offering incentives to manufacturers for batteries they produce over a certain time period, power minister Raj Kumar Singh said in an interview last week. The total payout could be in the realm of 200 billion rupees, he said.

Worried over rival China’s dominance in lithium, the nation is in talks with countries including Australia to secure supplies of the battery metal, he said. India also plans to promote other battery technologies.

Lower storage costs will be key to providing around-the-clock renewable power supplies from intermittent renewable sources like wind and solar. Until that happens, India is prioritizing energy security, with plans to expand its coal power fleet by a quarter through 2030 unless cheaper storage becomes available.

Large Indian conglomerates, including the Adani Group and Reliance Industries Ltd., have committed to investing billions of dollars in energy storage. The government plans to make developers bundle energy storage with future wind and solar projects to add capacity.

“I’m adding storage capacity because that will bring down costs. When enough volumes start getting added, the costs will come down,” Singh said. “I’m not going to compromise on the availability of energy for our people and for the growth of our economy.”

The battery plan would follow the blueprint of Prime Minister Narendra Modi’s Make In India initiative. The government has offered financial incentives to spur domestic manufacturing of everything from solar panels to car batteries and electronics goods, in order to reduce dependence on imports and create local jobs.

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