Cathode active material manufacturing is vital to India’s energy storage ambitions

A major transition towards renewable energy, accompanied by the shift to electric vehicles, has expedited demand for advanced energy storage systems, mainly in the context of lithium-ion batteries. Cathode Active Materials (CAMs) play an instrumental role in these batteries, acting as central features that determine efficiency, long lifecycle, and nearly 40-50% of the cost of a battery. Currently, India is at an important juncture towards becoming the alternative to China in terms of cell manufacturing. However, this requires India to get a hold of the supply chain that comes along with cell manufacturing, overcome economic, logistical, and policy challenges, and further capitalize on emerging opportunities.

Economics of CAM Manufacturing in India

There are three key aspects to Cathode active material (CAM) manufacturing.

– The first is securing and having reliable supply chains of raw materials. With over 90% of the refineries in China, and China having control over most resources over the world, this is a challenge but not impossible. The basic raw materials that a manufacturer requires are Lithium (in hydroxide or carbonate form), nickel, cobalt, manganese salts, and phosphate salts. The requirement of these raw materials depends on the chemistry that the manufacturer is producing. Currently, the two most prominent chemistries in the world are NMC (Nickel Manganese Cobalt) batteries and LFP (Lithium Ferrous Phosphate) batteries. For India to compete, it is very important to work with countries that mine such critical minerals/metals and then further refine them here in India, similar to what China does. For example, Australia and Zimbabwe are emerging as significant lithium resources. At a diplomatic and policy level, the Government of India can step in and promote such relationships between the two nations.

– The second critical step is the production of the precursor. This is a combination of the metal salts before the lithiation stage (mixing with Lithium).

– The third and final step is the post-lithiation stage and the production of cathode active materials (Li-NMc or LFP).

Both of the above steps are technology-intensive processes that require many iterations within both R&D labs and pilot plants before scaling into a giga facility is possible. It is where some India-based companies have come in.

A typical CAM plant requires considerable infrastructure, raw materials, and energy investments. For example, establishing a 20,000 tonnes CAM manufacturing facility (roughly translating into 10-12 GWh batteries production depending on the chemistry) would require a capital investment of around $ 50-75 million dollars (Rs 4,0000-5,000 Crore). This amount covers land acquisition, factory space, warehousing, and utilities. Moreover, such facilities consume large amounts of energy annually, and thus, there is a need for sustainable and cost-effective energy solutions.

India is on course to require at least 150,000 tonnes of active cathode material powders annually by 2030, and even that will only capture 50% of the country’s battery requirement. To meet such an enormous demand, a strong, localized supply chain is required.

Role of Policy and Incentives

The Indian government has invested $2.5 billion in incentives to boost the local manufacturing capacity of energy storage systems. These incentives include customs duty exemptions on machinery and components and reduced tariffs on lithium-ion batteries. The PLI scheme for ACC battery manufacturing will drive investment worth $4.5 billion for the development of 50 GWh of lithium-ion cell manufacturing capacity.

Addressing Supply Chain Challenges

11–25% of the final cell value can come directly from India through indigenizing cell manufacturing and 22–61% with upstream component manufacturing and material processing. It is vital to cut costs and enhance competitiveness by creating an indigenous supply chain for those major raw materials needed, which include lithium, cobalt, nickel, and manganese. Strategic sourcing of the minerals through international partnerships, as well as encouraging recycling technologies, shall be crucial for a closed-loop supply chain.

Scaling Up for Increasing Demand

India is planning to put more than 100 million EVs on the road by 2030. This translates into an estimated 145-158 GWh of demand in battery space every year. Simultaneously, utility-scale energy storage systems will also need 903 GWh of capacity between 2021 and 2030. In order to bridge this ever-growing demand, Indian manufacturers should scale up production, stimulate innovation, and optimize their processes.

Environmental Sustainability and Recycling

As the adoption of lithium-ion batteries grows, so does the challenge of managing battery waste. Recycling used batteries can recover valuable materials like lithium, cobalt, and nickel, reducing the need for new raw material extraction. This not only lowers production costs but also minimizes the environmental impact of battery manufacturing. Establishing efficient recycling infrastructure and promoting research into eco-friendly battery technologies are essential for creating a sustainable ecosystem.

The Strategic Importance of Energy Storage

Energy storage systems are crucial for decarbonizing India’s electricity and transport sectors, which account for nearly 49% of the country’s greenhouse gas emissions. Lithium-ion batteries, with their high energy density and versatility, are expected to dominate the energy storage landscape in the coming decade. However, achieving self-reliance in this sector requires a concerted effort from all stakeholders, including the government, industry, and academia.

Recommendations for Future Growth

To strengthen India’s position in cathode active material (CAM) manufacturing and lithium-ion battery production, a multi-pronged approach is essential:

• Cost Reduction through Innovation

Manufacturers must focus on optimizing production processes to minimize costs. Leveraging expertise from related industries, reducing energy consumption, and integrating advanced technologies like data analytics for fault detection can enhance efficiency and output.

• Policy Support and Ecosystem Development

Favorable government policies remain critical for fostering growth in the energy storage sector. Continued financial incentives, infrastructure support, and initiatives like reduced tariffs on cell components can attract investments. Promoting advanced battery-powered public transportation systems will also create significant demand and encourage local manufacturing.

• Recycling and Circular Economy

Building a robust recycling framework can recover valuable materials, reduce dependency on raw material imports, and mitigate environmental impact. Policymakers should create incentives for businesses to adopt circular economy practices, prioritizing battery reuse and recycling.

• Focus on Research and Development (R&D)

An Energy Storage Innovation Roadmap with dedicated budgets and timelines can propel innovation. Strengthening collaboration between academia and industry will facilitate the transition from lab research to commercial applications, enhancing India’s competitiveness in the global market.

• Strategic Sourcing of Critical Minerals

India must align its foreign policy with securing critical minerals. Partnering with resource-rich nations and investing in mining operations abroad will ensure a steady supply of raw materials, essential for scaling the domestic battery manufacturing ecosystem.

By addressing these key areas, India can become a global leader in CAM production and lithium-ion battery manufacturing.

Road Ahead

Manufacturing Cathode Active Materials (CAM) in India is not just an industrial opportunity but a strategic necessity for driving economic growth, reducing greenhouse gas emissions, and achieving energy security.

Innovation and sustainability must be at the forefront of India’s CAM manufacturing strategy. By investing in advanced technologies, fostering partnerships between academia and industry, and developing an Energy Storage Innovation Roadmap, India can accelerate research and commercialization. Simultaneously, robust policies to promote recycling and the circular economy will conserve resources and reduce the environmental impact of battery production. 

Strategic sourcing of critical minerals and strengthening international partnerships will be pivotal for securing raw materials while scaling up domestic manufacturing capacity is essential to meet growing demand. With an ambitious EV deployment target and increasing utility-scale energy storage needs, a localized and competitive CAM production ecosystem will be critical in powering India’s decarbonization journey. 

About the author

Ankit Sharma, Co-Founder & Director, Vidyuta Materials Pvt. Ltd. Vidyuta Materials manufactures advanced battery materials for energy storage systems (ESS), electric vehicles (EVs), and consumer electronics.

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