With an eye on China, India plans mandatory localization for battery energy storage systems (BESS)

Core Viewpoint - The Indian government is considering a proposal to mandate local content requirements for battery storage systems in wind and solar farms, aiming to reduce reliance on imports while potentially increasing power costs during the energy transition [1][2]. Group 1: Policy and Regulation - The government is looking to require at least 50% local content for components in Battery Energy Storage Systems (BESS), excluding cells, and may introduce a list of approved manufacturers [2][4]. - A recent consultation involved executives from both state-run and private firms to discuss the timeline for indigenization and the industry's readiness to meet growing demand [3][4]. - The proposal follows a previous mandate for 20% localization under the viability gap funding scheme, indicating a significant escalation in localization ambitions [10]. Group 2: Industry Impact and Concerns - The localization requirement could impact the cost structure of projects, potentially leading to higher tariffs and slower adoption of green energy technologies [8]. - Analysts suggest that previous domestic content requirements for solar modules did not severely hinder expansion, indicating that gradual localization may be manageable [9]. - The government is particularly focused on national security, citing concerns over cyber threats associated with foreign-made equipment, especially from China [6][7]. Group 3: Market Dynamics and Future Projections - India aims to achieve 47 GW of BESS capacity by 2032, with localization accounting for approximately 35% of the cost of these batteries [5]. - Current BESS assembly capacity in India is around 15 GW, but operational capacity is only 700 MWh, highlighting a significant gap to meet the projected need of 236 GWh by 2030 [13]. - Tendering activity for BESS is increasing, with approximately 60 GWh auctioned in 2025, up from 24 GWh in 2024 [14]. Group 4: Industry Readiness and Capabilities - Industry experts believe that a supply chain for non-cell components could be established within 12 to 24 months, provided there is a favorable duty structure for domestic manufacturing [11]. - The government is encouraged to implement localization norms progressively, allowing time for the development of necessary capabilities [15][16].