Niti Aayog’s battery swapping policy provides direction, but lacks a constructive roadmap

Context: The Niti Aayog released the first draft of the Battery Swapping Policy 2022 on April 21, 2022, to improve interoperability and push for faster adoption of electric vehicles (EV) in the two-wheeler and three-wheeler segment.

Why the battery swapping segment if significant?

This segment has competitive prices compared to others. Further, it also constitutes about two-thirds of vehicles registered and can thus play a critical role in faster adoption of EVs.

What are the advantages offered by battery swapping?

Battery swapping standards aim to de-link charging and battery usage to reduce charging downtime immensely and increase vehicle operations.

The scope relies on smaller vehicles with smaller battery packs that can be easy to swap. Other advantages include time, space and cost efficiency.

What are the different aspects under the policy?

Institutional framework

The government will be setting up a nodal agency to ensure a roll-out of services. This will integrate the role of different state-level agencies in delegating, coordination and network distribution.

Adoption is envisaged in two phases: Phase I will focus around metropolitan cities with a population greater than four million and Phase II will focus on other major cities.

Technical aspects

Interoperability definitely has been the key word in battery operations. The policy rightly targets to bring technical uniformity to make this practical.

It prescribes batteries using Advanced Chemistry Cells with performance equivalent or higher than Faster Adoption and Manufacture of (Hybrid and) Electric Vehicles or FAME II specifications. Batteries will have a unique identification number for effective battery cycle monitoring.

The policy also mandates state authorities to facilitate documentation within five days of application through a single window clearance portal. This will bring huge momentum to otherwise slow processes of setting up capital infrastructure and land allotment.

The tariff regime for Battery Charging Stations (BCS) and Battery Swapping Stations (BSS) will be applicable under existing or future time-of-day tariff regimes as stipulated by the appropriate commission.

The policy also allows an individual or entity to set up a BSS at any given location for at least two EV original equipment manufacturers (OEM). This is to enhance the network of energy providers.

It also prescribes only certified agnostic swapping stations to be set up according to Section 3 of the Union Ministry of Petroleum standards on charging infrastructure.

Data sharing aims for transparent communication and non-restrictive data sharing guidelines.

Financial aspects

The policy encourages industry collaboration and has not mandated strict technical operation requirements for interoperability.

It proposes utilisation of prevailing demand side incentives under eligibility criteria based on performance as prescribed under Fame II to ensure superior EVs on road.

Technical and operational requirements will be key for providing subsidy to battery providers in the swapping ecosystem. It suggests an appropriate subsidy multiplier to battery providers to account for overall battery requirements.

Bringing cost parity has been a popular demand. Hence, the policy asks for a decision on the reduction of differential tax rates on Lithium-ion batteries and Electric Vehicle Supply Equipment (EVSE). According to the current Goods and Services Tax regime, taxes on batteries and EVSE are 18% and 5% respectively.

Safety aspects

Additionally, it prescribes rigorous testing protocols to avoid breakdown or unwanted risk from temperature increase.

The policy, by and large, shows direction. But due to nascent market dynamics, it lacks a constructive fixed roadmap for setting up of Battery as a Service or BaaS infrastructure.

Source: This post is based on the article “Niti Aayog’s battery swapping policy provides direction, but lacks a constructive roadmap” published in DTE on 25th Apr 22.

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