Niti Aayog Releases The Draft For Battery Swapping Policy

Considering the constraint of space in urban areas for setting up charging stations at scale, Finance Minister Nirmala Seetharaman in her Budget Speech 2022-23 announced introducing Battery Swapping policy and interoperability standards in order to improve efficiency in the EV Ecosystem. In this regard, NITI Aayog held an inter-ministerial discussion to formulate a robust and comprehensive Battery Swapping policy framework in February 2022. NITI Aayog also held an extensive pre-draft stakeholder discussion with a wide spectrum of stakeholders representing Battery Swapping Operators, Battery Manufacturers, Vehicle OEMs, Financial Institutions, CSOs, Think Tanks and other experts. 

After due deliberations and taking cognizance of all the inputs provided by relevant stakeholders, NITI Aayog has drafted the Battery Swapping Policy. The policy comes at a time when several incidents of EV scooters catching fire have been reported triggering safety concerns among people. 

The policy seeks a level playing field across business models involving the sale of EVs with fixed or swappable batteries. The draft policy also proposes that demand side incentives offered under existing or new schemes for EV purchase can be made available to EVs with swappable batteries eligible under this policy. "The size of the incentive could be determined based on the kWh rating of the battery and compatible EV," it suggested.

 As per the draft policy, an appropriate multiplier may be applied to the subsidy allocated to battery providers to account for the float battery requirements for battery swapping stations. It is also proposed that a seamless mechanism for the disbursement of subsidies shall be worked out by the ministry or department concerned, the draft policy stated.

What is battery swapping?

Battery swapping is an alternative which involves exchanging discharged batteries for charged ones. Battery Swapping de-links the vehicle and fuel (Battery in this case) and hence reduces the upfront cost of the vehicles. Battery swapping is popularly used for smaller vehicles such as 2 and 3 wheelers which have smaller batteries that are easier to swap compared to other automotive segments wherein the same can be implemented mechanically. Battery swapping offers three key advantages relative to charging: it is time, space, and cost efficient, provided each swappable battery is actively used. Further, Battery Swapping provides level playing field to innovative and sustainable business models such as ‘Battery As a Service’. 

Highlights of the new policy

It promotes swapping of batteries with Advanced Chemistry Cell (ACC) batteries to decouple battery costs from the upfront costs of purchasing EVs, thereby driving EV adoption. It offers flexibility to EV users by promoting the development of battery swapping as an alternative to charging facilities.The policy seeks to establish principles behind technical standards that would enable the interoperability of components within a battery swapping ecosystem, without hindering market-led innovation; leverage policy and regulatory levers to de-risk the battery swapping ecosystem, to unlock access to competitive financing; encourage partnerships among battery providers, battery OEMs and other relevant partners such insurance/financing, thereby encouraging the formation of ecosystems capable of delivering integrated services to end users and promoting better lifecycle management of batteries, including maximizing the use of batteries during their usable lifetime, and end of life battery recycling. 

To strengthen its ecosystem

This policy stipulates the minimum technical and operational requirements that battery swapping ecosystems would need to fulfil, to enable effective, efficient, reliable, safe, and customer-friendly implementation of battery-swapping infrastructure. It highlights the possible ways in which various national and sub-national government agencies and Public Sector Enterprises (PSEs) may provide direct and indirect financial support to Battery Providers (for the cost of batteries) and EV users (for the upfront cost of purchasing EVs), with the aim of driving EV adoption by lowering the costs of EVs for users, relative to ICE vehicles. It emphasizes enabling innovation in adoption of possible business models, and derisking the investment in required infrastructure to encourage private sector participation and attract affordable financing.

During the COP26 summit in Glasgow, India committed to reduce carbon emission intensity by 45 per cent, and take our non-fossil energy capacity to 500 GW by 2030 and meet 50 per cent of our energy requirements from renewable energy by 2030, and finally achieve the Net Zero target by 2070. The road transport sector is one of the major contributors to CO2 emissions and accords to one third of the particulate matter emissions.

To decarbonize the transport sector, transition to clean mobility, led by electric vehicles, is paramount. Electric mobility represents a viable option to meet these commitments, while packed with innovative business solutions, appropriate technology, and support infrastructure. Several supporting initiatives have been implemented, such as the Faster Adoption and Manufacturing of Electric (Hybrid) Vehicles in India (FAME) I and II, and the Production Linked Incentive (PLI) for National Programme on Advanced Cell (ACC) Battery Storage (NPACC), to boost indigenous battery manufacturing capacity. State governments are developing complementary policies to promote EV adoption.

India’s e-mobility revolution is led by the two-wheeler (2W) and three-wheeler (3W) vehicle segments. 2Ws account for 70-80% of all private vehicles, whereas 3Ws play a critical role for last mile connectivity in cities. While the upfront costs for EVs are typically higher than internal combustion engine (ICE) counterparts, these are offset by lower operations and maintenance costs over its lifetime which has brought the total cost of ownership of electric vehicles at par with ICE vehicles.

(With additional inputs from PTI)