IESA proposes key reforms for India's Energy Storage Sector ahead of budget session

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IESA proposes key reforms for India's Energy Storage Sector ahead of budget session

IESA proposes key reforms for India's Energy Storage Sector ahead of budget session

Industry News
Jan 23,24

This initiative aims to extend electricity access across the country. In the previous year's Union Budget, Viability Gap Funding for 4GWh of projects was announced as part of a $4 billion 'Green Growth' package.

IESA proposes key reforms for India's Energy Storage Sector ahead of budget session

The government is actively supporting the development of large-scale energy storage facilities, recognising them as a crucial tool to integrate the targeted 500GW of non-fossil fuel energy generation by 2030. This initiative aims to extend electricity access across the country. In the previous year's Union Budget, Viability Gap Funding for 4GWh of projects was announced as part of a $4 billion 'Green Growth' package dedicated to capital investments in energy transition and net-zero initiatives.

While the trade association warmly welcomed the previous year's budget, the India Energy Storage Alliance (IESA) recently proposed changes to tax regimes, emphasising their potential to boost downstream demand and encourage domestic companies to play a more significant role in equipment manufacturing and supply.

Dr Rahul Walawalkar, the founder and president of IESA, expressed optimism about India becoming a global hub for the advanced battery manufacturing ecosystem. IESA's recommendations to the finance minister for the upcoming Budget Session include:

1. 10-year Tax Holidays: Battery storage projects connected to renewable energy sources, either standalone or hybrid, and transmission-connected battery storage should be eligible for tax holidays.

2. Free Trade Agreement Imports: Exemptions on customs and excise duties for imported energy storage system goods from countries with which India has free trade agreements.

3. Uniform Goods and Sales Tax at Low Rate: Proposing a uniform low rate of 5% Goods and Sales Tax (GST) on all batteries, as opposed to the current 18% for lithium-ion batteries. This change could significantly facilitate the expansion of large-scale energy storage deployment.

4. Remove Double Charging: Advocating against levying charges for using the grid twice, addressing issues like Electricity Duty and Cross Subsidy Surcharges.

In addition to these recommendations, IESA calls for more direct support to the battery and storage system manufacturing sectors, suggesting an extension of the Production Linked Incentive (PLI) scheme. They propose doubling the PLI to 100GWh and imposing duties on imports of cells and supply chain components to enhance competitiveness for domestic producers.

Furthermore, IESA urges funding for domestic R&D initiatives and the launch of programs to develop a skilled workforce capable of contributing to the international industry and addressing skill gaps within India. The alliance also recommends the establishment of a central institution, the National Institute for Energy Storage, to advance India's R&D roadmap in this sector.

Despite similar requests in the previous year, IESA remains optimistic about the government's direction, considering the overall positive impact of the previous budget. Recent research suggests that with around 60GW of energy storage likely to be deployed in India by 2029-2030, storage will be a major disruptor in the country's electricity sector, with pumped hydro energy storage playing a significant role.

Source: Energy Storage News