High battery import taxes impact india’s renewable energy drive

High import tariffs in India are rising the cost of building storage, which is critical to meeting the country’s climate change targets at COP26, according to the chairman of ReNew Power, one of the country’s leading renewable energy providers.

The administration of Prime Minister Narendra Modi has vowed to meet 50 percent of India’s energy demands with fossil fuels by 2030. Wind and solar, on the other hand, necessitate the use of batteries, which can store and release renewable energy as needed. Customs and imports are incorporated into battery storage systems at a rate of roughly 40%.

“The only thing they [the government] can do with this budget is cut taxes on battery imports,” said Cement Sinha, chairman and CEO of ReNew Power, which was included on the NASDAQ list last year. Sinha estimates that it would take “at least four or five years for the household batteries to start generating.” “Until then, lowering tariffs will merely make battery installations much cheaper.”

Fluence lithium-ion batteries are manufactured in a California factory. Fluence, an energy storage firm, and ReNew Power announced a January agreement to construct battery storage in India. Its initial project will be a 150MW storage facility in the Indian state of Karnataka. In order to safeguard and promote native manufacture, India presently charges at least 38% in customs and combination taxes for the import of battery packs.

“This 38% tax is absurdly exorbitant, crippling a sector that has yet to be created,” said Tim Buckley of Australia’s Institute of Energy Economics and Financial Analysis. According to Buckley, India still relies on renewable energy insufficiently for the absence of battery storage to be a severe issue. “However, if you do not plan, you will face a severe chance of breaking within a year to two years.”

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Despite a spike in electricity generation, battery storage installations have been slow to catch up. Tata Power, the conglomerate’s energy division, established one of India’s first battery storage network scale systems in 2019, alongside energy companies AES, Mitsubishi, and Fluence.

New Delhi has said that developing a domestic battery manufacturing industry is a major priority. It announced a production-driven incentive package worth 181 billion rupees ($ 2.4 billion) in January to lure major enterprises to set up operations. Price proposals from Reliance Industries, Hyundai, Ola Travel Company, and seven other companies were received for the 50GWh battery production program.

Mukesh Ambani, the tycoon behind Reliance Industries, has outlined ambitious battery ambitions. Reliance New Energy Solar, a subsidiary of Reliance Industries, paid £ 100 million in December for the acquisition of Faradion, a British battery technology business. Reliance will employ Farion’s sodium ion battery technology to store energy at the Giga project, which is slated to be built in Gujarat.

State governments are attempting to entice international businesses, including Tesla, to establish battery-production plants for electric vehicles and energy storage. “Still working on a lot of difficulties with the government,” Tesla CEO Elon Musk tweeted in January, leading a number of governments to offer collaborations to the electric vehicle manufacturer.

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