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Niti Aayog’s Draft Battery Swapping Policy

Context:

Government think-tank Niti Aayog has prepared a draft battery swapping policy, under which it has proposed offering incentives to electric vehicles (EVs) with swappable batteries, subsidies to companies manufacturing swappable batteries, a new battery-as-a-service business model, and standards for interoperable batteries, among other measures.

Relevance:

GS II- Government policies and Interventions

Dimensions of the Article:

  1. What is battery swapping?
  2. What are some of the key proposals?
  3. What is the battery-as-a-service model?
What is battery swapping?
  • Battery swapping is a mechanism that involves exchanging discharged batteries for charged ones.
  • This provides the flexibility to charge these batteries separately by de-linking charging and battery usage, and keeps the vehicle in operational mode with negligible downtime.
  • Battery swapping is generally used for smaller vehicles such as two-wheelers and three-wheelers with smaller batteries that are easier to swap, compared to four-wheelers and e-buses, although solutions are emerging for these larger segments as well.
Advantages of Battery Swapping
  • It will address the problem of setting up charging stations and also reduce range anxiety of drivers.
  • It can help EV owners save the cost of purchasing a battery. 
  • It is less time consuming and takes only a few minutes compared to charging at a battery station which could take hours. 
  • It also requires minimum infrastructure.
Barriers to Battery Swapping
  • High Cost of Battery (Batteries account for close to 60% of the cost for an e-two-wheeler)
  • Lack of standardization among batteries
  • Unsuitable battery pack design
  • Higher GST on separate batteries (18% versus 5% for EVs) 

What are some of the key proposals?

Tax rate:

  • The draft policy has suggested that the GST Council consider reducing the differential across the tax rates on Lithium-ion batteries and electric vehicle supply equipment.
  • Currently, the tax rate on the former is 18 per cent, and 5 per cent on the latter.

Incentives:

  • The policy also proposes to offer the same incentives available to electric vehicles that come pre-equipped with a fixed battery to electric vehicles with swappable batteries.
  • The size of the incentive could be determined based on the kWh (kilowatt hour) rating of the battery and compatible EV.

Float battery requirements:

  • An appropriate multiplier may be applied to the subsidy allocated to battery providers to account for the float battery requirements for battery swapping stations in different battery swapping ecosystems

Contract duration:

  • The government will also specify a minimum contract duration for a contract to be signed between EV users and battery providers to ensure they continue to provide battery swapping services after receiving the subsidy.

Battery charging stations:

  • The policy also requires state governments to ensure public battery charging stations are eligible for EV power connections with concessional tariffs.
  • It also proposes to bring such stations under existing or future time-of-day (ToD) tariff regimes, so that the swappable batteries can be charged during off-peak periods when electricity tariffs are low.
  • It also proposes to install battery swapping stations at several locations like retail fuel outlets, public parking areas, malls, kirana shops and general stores etc.

Registration process:

  • Transport Departments and State Transport Authorities will be responsible for easing registration processes for vehicles sold without batteries or for vehicles with battery swapping functionality.
  • Municipal corporations will be responsible for planning, zoning permissions and land allocation for battery swapping stations.

Unique identification number (UIN)

  • The policy also proposes to assign a unique identification number (UIN) to swappable batteries at the manufacturing stage to help track and monitor them.
  • Similarly, a UIN number will be assigned to each battery swapping station.

EV Safety

  • To ensure a high level of protection at the electrical interface, a rigorous testing protocol will be adopted to avoid any unwanted temperature rise at the electrical interface.
  • The battery management system, which is a software that controls battery functions, will have to be self-certified and open for testing to check its compatibility with various systems, and capability to meet safety requirements.
  • Additionally, for better protection of assets, swappable batteries will have to be equipped with advanced features like IoT-based battery monitoring systems, remote monitoring and immobilisation capabilities.

What is the battery-as-a-service model?

  • Niti Aayog said battery swapping will fall under the battery-as-a-service (BaaS) business model, and such models would have to ensure interoperability between EVs and batteries for a successful mainstreaming of battery swapping as an alternative.
  • Apart from the batteries themselves, major battery providers will be encouraged to sign data-sharing agreements to provide information on battery health and performance, and to enable more flexibility to consumers through peer-to-peer roaming networks.
  • “This policy requires ecosystems to be ‘open’ to allow participation from other market players in order to be considered for support under the policy”.
  • The policy will only support batteries using Advanced Chemistry Cells (ACC), with performance that is equivalent or superior to EV batteries supported under the government’s FAME-II scheme.
    • As of now, two-wheel EV maker Bounce has launched an electric scooter with a swappable battery.
  • Under the company’s business model, customers can pay to swap their battery at one of their stations, whenever it runs out of juice.

-Source: Indian Express

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November 2022
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