Giant Li-ion Batteries Revolutionize Electrical Grids?

January 2025: Anish Narang, MD, Karavan Advisory Enterprises LLP participating at India Battery Manufacturing and Supply Chain Summit 2025.

As we know, Batteries are not only used for commercial items, such as electric vehicles (EVs) or battery energy storage systems (BESS)—they’re also crucial military enablers employed in unmanned aerial, surface, and subsurface systems, diesel-electric submarines, electronic warfare systems, military microgrids, and directed energy weapons.

U.S. President Donald Trump’s rollback of electric vehicle targets may temporarily slow demand for lithium and other critical minerals but is unlikely to hamper the mining industry amid surging global EV demand, analysts and industry leaders said.

The future of energy policy in the US is a major uncertainty however, LG Energy expects to see sales increase 5% to 10% this year as new assembly lines at North American plants jointly run with Honda Motor Co. and Stellantis NV start up. The company is also looking to start selling new products, including a next generation 46-millimeter cylindrical battery.

Accordingly, increasing and accelerating tariffs on Chinese-made lithium-ion storage batteries would bolster US and allied manufacturers at the expense of Chinese competitors.

Strikingly, the per-kilogram prices of Chinese lithium-ion batteries exported to the United States are lower than the same product sold to any other market. The low per-kilogram prices may stem from China’s export of heavier BESS batteries to the United States—or anti-competitive tactics meant to oust US, Korean, and Japanese manufacturers in a militarily relevant technology. Given batteries’ dual-use potential and domestic production prospects, the United States should raise tariffs on Chinese imports and boost funding for domestic and allied supply chains.

Significantly, Chinese Li-ion battery exports to the United States have risen sharply in recent months, reaching an all-time high of $1.9 billion in December 2024. US battery investment has surged, rising from under $4 billion in 2021 to over $33.8 billion by late 2024, potentially triggering worries in Beijing that the United States could eventually surpass China in this dual-use technology.

Global energy storage capacity has tripled in recent years:

Inside an unmarked stucco building in a Silicon Valley office park, more than 1,000 black metal cabinets, each about the size of a fridge, line the floor in rows. Each cabinet contains 20 new lithium-ion batteries that, starting this spring, will feed power into California’s often-strained electrical grid, helping prevent blackouts. They’re essentially bigger versions of the rechargeable batteries that power phones, laptops and electric cars. Together they’ll supply 75 megawatts of electricity to the grid, enough to power 56,250 homes.

The rapid growth of large-scale energy storage is driven by plunging battery prices, rising electricity demand and a recognition among operators, utilities and public officials that grids are less reliable than they once were.

The deployment of grid-scale batteries in California began in 2013, when a state commission established energy storage targets for large utilities. However, installations spiked after a brutal August 2020 heat wave led to rolling blackouts and a reckoning among policy leaders about the state’s preparedness for climate change.

From 2021 through 2023, the state installed 8,171MW of storage, according to BloombergNEF. That’s more than all the power plants in Alaska and Hawaii combined. There hasn’t been a rolling blackout since, despite plenty of high temperatures.

Tesla Inc. developed an expansive battery system in Australia. China, which requires batteries to be installed at new solar or wind farms, overtook the US as the world’s biggest energy storage market in 2023 and was expected to add 36 gigawatts of batteries in 2024, equivalent to the output of 36 nuclear reactors. The US, in contrast, was on track to add almost 13GW in 2024, according to BNEF research, with an additional 14GW coming in 2025.

China Leads the World in Grid Batteries with close to 33% Global energy storage capacity in 2023, in gigawatts with US coming second at 20%.

India’s Giant Batteries Are Transforming its Electrical Grids?

India is projected to account for 16 per cent of global consumption at purchasing power parity (PPP) by 2050, up from 4 per cent in 1997 and 9 per cent in 2023 according to World Data Lab, a McKinsey Global Institute analysis said in a report on “Dependency and Depopulation: Confronting the Consequences of new Demographic Reality” released a few days ago. Only North America, with a 17 per cent share in 2050, will have a higher consumption share.

With growth in global consumption, in recent years, India has embarked on a transformative journey to revolutionize its electrical grids through the deployment of giant battery storage systems. As one of the world’s fastest-growing economies with an ever-increasing demand for electricity, India faces significant challenges in ensuring a stable and reliable power supply. The integration of large-scale battery storage solutions is playing a pivotal role in addressing these challenges, marking a new era in the country’s energy landscape.

The Need for Energy Storage in India

India’s energy sector has long grappled with issues of power outages, grid instability, and energy deficits, particularly during peak demand periods. The nation’s heavy reliance on coal and other fossil fuels has exacerbated environmental concerns and hindered the transition to cleaner energy sources. Additionally, the rapid expansion of renewable energy, such as solar and wind, has introduced variability and intermittency into the grid, further complicating the task of maintaining a balanced and reliable power supply.

Addressing Grid Reliability

To tackle these issues, India has turned to advanced battery storage technologies. These giant battery systems are designed to store excess electricity generated during periods of low demand and release it back into the grid during peak hours. This capability is crucial for balancing supply and demand, reducing the risk of blackouts, and ensuring a consistent power supply even when renewable energy sources are not producing electricity.

Environmental and Economic Benefits

The adoption of battery storage systems also brings significant environmental and economic benefits. By reducing the need for fossil fuel-based peaking power plants, which are typically expensive and polluting, battery storage helps lower greenhouse gas emissions and air pollution. Furthermore, it enables the integration of a higher share of renewable energy into the grid, supporting India’s ambitious goals for clean energy and sustainability.

Key Projects and Milestones

Several key projects and milestones highlight India’s progress in deploying large-scale battery storage solutions:

National Energy Storage Mission:

The Indian government has also launched the National Energy Storage Mission (NESM) to promote the development and deployment of battery storage technologies across the country. The NESM focuses on creating a robust policy framework, incentivizing investments, and fostering research and development in energy storage solutions. Through this mission, India aims to achieve a substantial increase in energy storage capacity over the next decade.

Private Sector Initiatives:

In addition to government-led efforts, the private sector is actively contributing to the growth of battery storage in India. Companies like Tata Power, Reliance Industries, JSW Energy, Amara Raja, Ola Electric are investing in gigafactories to enhance grid stability and support their renewable energy portfolios. These initiatives are not only transforming the energy landscape but also creating new business opportunities and driving technological innovation.

While the progress in battery storage deployment is promising, several challenges remain. High upfront costs, regulatory hurdles, and the need for advanced manufacturing capabilities are some of the key obstacles that India must address to fully realize the potential of energy storage technologies. Additionally, ensuring the sustainability and recyclability of batteries is crucial for minimizing their environmental impact.

Policy and Regulatory Support

To overcome regulatory challenges, the Indian government is working on creating a conducive policy environment for energy storage. This includes streamlining approval processes, providing financial incentives, and implementing standards and guidelines for battery installations. Collaborative efforts between policymakers, industry stakeholders, and research institutions are essential for driving the growth of energy storage in India.

India’s giant batteries are undeniably transforming its electrical grids, offering a viable solution to the challenges of grid reliability, renewable energy integration, and environmental sustainability. As the country continues to invest in and expand its energy storage capacity, it is poised to achieve a more resilient and sustainable power system that can meet the demands of its growing population and economy. The journey towards a clean and reliable energy future is well underway, and India is emerging as a global leader in the adoption of advanced battery storage technologies.