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Approach:

  1. Intro – overview of Battery Swapping Policy 2022.
  2. Briefly mention the policy prescriptions.
  3. Elaborately discuss the institutional, technical & financial aspects of the proposed policy.
  4. Conclusion including challenges & opportunities.

The NITI Aayog published the first draft of Battery Swapping Policy 2022 in April 2022, to improve interoperability and push faster adoption of electric vehicles in the country. This segment having competitive prices can play a crucial role in faster adoption of EVs. Battery swapping standards aim to de-link charging and battery usage to reduce charging downtime and increase vehicle operations. It relies on smaller battery packs, that are easy to swap, besides other advantages like time, space & cost efficiency.

Policy prescriptions:

(a) minimum technical & operational requirements for swapping,

(b) direct & indirect financial support to providers & users,

(c) business models to encourage private participation at affordable financing,

(d) reuse & recycling of batteries, and

(e) institutional framework for on-ground implementation of infrastructure.

Institutional framework: it talks about level playing field in implementation of battery swapping services, instead of a prescriptive policy framework. This gives window to industries to leverage their strengths, including cost economics of capital infrastructure. A nodal agency is conceived to roll-out services, which will delegate & coordinate with state-level agencies and network distribution. Adoption is envisaged in two phasesPhase I: in metropolitan cities with population greater than 4 million and Phase II with focus on other major cities.

Technical aspects: interoperability is the key-word. It prescribes batteries using Advanced Chemistry Cells with performance equivalent to or higher than FAME II specifications. Batteries will have unique identification number for effective cycle monitoring. Electricity consumption will be the major operating expenditure for battery charging and swapping stations. Appropriate Commission will stipulate & rationalize the tariffs. The policy mandates state authorities to facilitate documentation within 5 days of application through single-window clearance. The policy allows individuals / entities to set up battery swapping stations at any location for at least two Original Equipment Manufacturers (OEMs) to enhance network of energy providers. Non-restrictive data sharing guidelines aim at facilitating transparent communication.

Financial aspects: policy encourages industry collaboration as business model and has not mandated strict technical operation requirements for interoperability, leaving enough space for evolving market dynamics. It provides flexibility for end users at both B2B and B2C interactions. It proposes utilization of prevailing demand side incentives based on performance criteria as prescribed under FAME II. It suggests an appropriate subsidy multiplier to battery providers. To bring cost parity, it seeks reduction of differential tax rates on Li-ion batteries & Electric Vehicle Supply Equipments.

Additionally, the policy prescribes that battery management system must be self-certified and meet safety requirements in vehicles.

The policy by and large shows direction, but given the nascent market dynamics, it lacks a constructive fixed roadmap for setting Battery as a Service (BaaS) infrastructure. There are multiple industries & OEMs. With the suggested level playing field and regulated tariff, it will become a competitive market. The provision of setting up independent energy operators can be challenging in terms of setting it up & DISCOMs’ capacity. Since heavy CapEx favors B2B provisioning of infrastructure, it will be interesting to observe the business consensus & market perception around it.

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