The Indian Department of Heavy Industries (DIH) has released its tender for 50GWh per year of domestic manufacturing capacity for advanced electrochemical battery cells. Bid winners will receive cash subsidies for setting up and operating their cell production facilities in India. Officially called “the National Program on Advanced Chemical Cell Battery Storage”, the tender is initiated under a larger industrial policy scheme introduced by the Indian central government known as the Performance-Linked Incentive Program (PLI). Below is an overview of the tender based on the information from the Indian government and various industry news websites:
Regarding the eligibility requirements, the bidder must have a certain minimum net worth per GWh in accordance with the production capacity specified in its technical bid for the financial year prior to the date of its bid submission. The bidder must commission its production facility within two years from the date of appointment and set up a cell production capacity of 5-20GWh within five years from the date of appointment. The bidder must also invest INR 2.25 billion into the parent company of the cell manufacturing operation. Furthermore, the bidder must commit to at least 25% and 60% domestic value addition to its cell manufacturing operation within two and five years from the date of appointment respectively. The calculation of the subsidy amount takes account of the applicable amount, the percentage of the value addition attained, and the actual sales of cells in kWh. The amount is capped at INR 2,000 per kWh, and bids that exceed this limit will be rejected.
In addition to cash subsidies from the central government, state governments will also provide bid winners with other incentives through tripartite agreements. Under such an agreement, a special purpose vehicle will be jointly created by the central government, the state government, and the bid winner. Incentives from state governments include encumbrance-free land, trunk infrastructure, and subsidized electricity.
The tendering process is divided into three phases. The first phase is the technical evaluation that shortlists bidders. The second phase is the financial evaluation that assesses bidders with respect to the subsidy amounts that they seek. In the third phase, bids will be ranked in accordance with their combined scores from the two evaluations. The allocation of the 50GWh tendered capacity will be based on the ranking.
Regarding the technical evaluation, DHI said that the tender accepts most kinds of advanced electrochemical cell technologies. However, the tender does not accept bids that come from “the conventional battery pack segment” of the domestic battery industry.
The bidder will begin receiving the cash subsidy when the committed production capacity enters operation and the committed value addition has been reached. The cash subsidy will be paid out on a quarterly basis for a period of five years.
The bid submission deadline is December 31, 2021. However, technical bids and financial bids will remain open until January 3 and February 4, 2022, respectively. A pre-bid conference for providing interested parties with further information will be held on November 12, 2021. Feedback on the tender has to be given before December 14, 2021. Letters of award will be sent to bid winners on February 4, 2022.
The National Program on Advanced Chemical Cell Battery Storage is projected to disburse a total of INR 181 billion. There are similar programs under the PLI scheme being introduced to industrial sectors that the Indian government regarded as being critical to future national economic development. It is worth noting that the Indian Renewable Energy Development Agency has also just released its tender for 10GW per year of vertically integrated manufacturing capacity for PV modules.
