Review: What does NITI Aayog’s draft ‘Battery Swapping Policy’ contain?

As India looks to accelerate the adoption of Electric Vehicles, batteries & issued related to batteries may play the most important role in deciding the future. The draft ‘Battery Swapping Policy’ of the NITI Aayog becomes an important policy in this context. Here is what the policy contains.

India is the fourth-largest greenhouse gas emitter and third-largest CO₂ emitter in the world. Among the sectoral composition of CO₂ emissions, transportation stands as the third biggest contributor. More than 50% of this sector‘s emissions come from 2 & 3 wheelers and cars alone. Further, the transport sector is projected to be among the fastest-growing sources of carbon emitters. However, India still does not have a long-term strategy to make this sector consistent with the goals of the Paris agreement.

Having made significant progress in renewable energy generation capacity, India had pledged to become net-zero by 2070. While this transition requires a multi-sectoral approach, the widely accepted strategy for the transport sector is the electrification of transportation. Accordingly, India adopted the National Electric Mobility Mission Plan (NEMMP), 2020, which aimed to increase the fleet of electric/hybrid vehicles to around 7 million by the year 2020. As a part of this mission, Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME-1 and FAME-2) were adopted. However, the adoption of Electric Vehicles(EVs) has not happened at the anticipated pace. EVs are a nascent but fast-growing industry in India. In 2021, more than 3 lakh electric vehicles were sold which is more than double the number in 2020.

EVs suffer from a range of issues, starting from ‘range anxiety’ to the ‘right to repair’. Providing meaningful solutions to these challenges could further drive the adoption of electric vehicles as the primary mode of transport. This story looks at one of those plausible solutions that have the potential to spur the growth of adoption of EVs– ‘Battery as a service’ or ‘Battery Swapping’. We discuss NITI Aayog’s recently released ‘Draft Battery Swapping Policy’ in this story.

What is Battery Swapping?

In simple terms, battery swapping is a mechanism that enables the de-linking of the charging and the battery, thereby providing users with the flexibility to exchange the discharged batteries with charged batteries. This is aimed to minimize the charging downtime as well as to provide users more convenience in faster adoption of EVs. Battery swapping has several advantages, some of which are,

Reduced vehicle downtime
Easier to set up and scale considering the urban space constraints
Removes the ‘Range anxiety’
Provides better interoperability between different players in the EV ecosystem.
Reduced upfront EV cost.
Eliminates the safety concerns associated with charging

That being said, battery swapping also comes with the following challenges that could become roadblocks to the mass adoption of EVs.

Interoperability through standardization of batteries could potentially kill innovation.
Difficult to adopt for corporations that have different vehicles in the fleet.
Financing new technologies could be risky initially, preventing adequate capital inflow.
Geography & demographics have the potential to influence the success of battery swapping models.

To address these challenges and to enable mass-scale adoption of EVs, India’s premier think-tank, NITI Aayog has come up with a draft battery swapping policy. This was earlier announced by the Finance Minister in her budget 2022 speech. The scope of this policy is limited to light electric power train vehicles (LEV) of category L, and E-rickshaws/E-carts. However, the government can expand this scope to other segments of EVs. The draft policy address cross-sectoral issues like the financing, technical specifications and requirements, scope of regulatory mechanisms, and better lifecycle management of batteries. The following sections deal with these aspects in detail.

Technical & operational requirements:

Interoperability plays a key role in determining the success of battery swapping. Interoperability is nothing but the compatibility of the batteries with the components of electric equipment of different EVs. This can be made easier if adequate standardization is ensured across the whole EV ecosystem. Standardization of technical parameters as well as the performance standards is the need of the hour. Caution must be exercised to make sure that this standardization does not destroy the innovation and prevent efficient alternatives in the future. Some key requirements as mentioned in the draft are as below:

This policy is applicable and supports only batteries that use ‘Advanced Chemistry Cells (ACC)’. This must-have has equivalent or superior performance to the EV batteries supported under the FAME-II scheme.
End-to-end compatibility, with due authorization from the certified agencies, must be demonstrated by the battery providers.
The manufacturer must ensure that the batteries covered under this policy must be Battery Management System (BMS) enabled. This helps in protecting the batteries from thermal runaways.
IoT-based monitoring systems, immobilization capabilities and remote monitoring must be enabled in the swappable batteries for maintaining the battery safety and security.
A unique identification number (UIN) is assigned to both the batteries as well as the battery swapping stations to support the life-cycle traceability as well as centralized monitoring. This UIN is tamper-proof and contains data regarding the technical aspects of the batteries as well as stores the usage and performance history.

Infrastructure standards:

Bureau of Indian Standards (BIS) approved standards, and approval from the Automotive Research Association of India (ARAI) will be considered as the benchmarks for testing and certification of batteries including the EVs. Additionally, a robust testing protocol shall be adopted to avoid any electrical issues.
Infrastructure for Battery Charging Stations (BCS) and the Battery Swapping Stations (BSS) shall be safe and cost-effective and will be approved by the Ministry of Power or BIS. In addition, the equipment used in BSS/BCS must be certified by National Accreditation Board for Testing and calibration Laboratories (NABL) or any other duly authorized agency as specified.
Guidelines of the Central Electricity Authority (CEA) or the DISSCOMS must be adhered to during the operation of the charging infrastructure.

Data sharing and communication:

Data forms an important element in the battery management cycle. Hence, proper standards for communication that are approved or defined by BIS must be deployed, and an open standard communication protocol such as Open Charge Point Protocol (OCPP) could be adopted. In addition to this, data-sharing agreements between battery providers are encouraged to provide better insights into the battery health and performance.

Regarding the data tracking, only such data which is pre-defined is to be tracked by the providers and the government agencies have the authority to access them at any time. Considering the privacy of the users, a non-restrictive guideline shall be developed for the adherence of industry players.

Business models:

A variety of business models exist in the battery as a service (BaaS) model. These models differ in the coverage and the entity responsible under this ecosystem. Models could range from being completely integrated with a single entity’s responsibility to multiple agencies catering to different aspects of the battery swapping ecosystem. Accordingly, future models in the BaaS shall allow for flexibility and the cooperation and collaboration between the stakeholders to ensure mass adoption of BaaS.

Fiscal support:

One key element in driving the large-scale adoption of EVs is the fiscal capacity. The Government of India had undertaken multiple initiatives to ease the financial burden on the consumers. Similarly, for the expansion of the BaaS model, this policy seeks to create a level playing field across the EV business models having fixed battery or swappable batteries.

Additionally, Kilowatt-hour rating-based incentives for EVs with swappable batteries should be adopted. For seamless disbursement of subsidies, revision of the existing schemes or launch of a new scheme must be carried out. The scheme may further chart out the modalities of the eligibility criteria for subsidies, as well as the minimum contract duration between users and battery providers for continuous swapping services. Any additional incentives may be provided by sub-national governments.

Electricity expenditure is the major cost-centre to run a BCS. Accordingly, provisions of the consolidated EV charging Infrastructure guidelines shall be applicable to the public as well as captive BCS. For charging at other locations like the Kirana stores and commercial properties, tariffs set by the appropriate agency for those consumer types will be charged.
Since land becomes important to enable the setting up of large-scale public BCS, the policy calls for land provisioning at a cheaper and promotional rate by the state governments.
The policy also suggests the GST council remove the existing differential GST rates for lithium-ion batteries (18%) and the EV supply equipment (5%).

Life-cycle management of batteries:

Since the batteries consist of harmful chemicals, life-cycle management becomes crucial to maintain the tag of ‘environment friendly’ for EVs. A strategy that covers the entire life cycle of the batteries is of utmost importance.

Regulations regarding the durability and minimum battery performance parameters should be developed by BIS.
A standard definition of ownership and liability shall be provided by the Ministry of Environment, Forest and Climate Change (MoEFCC) or BIS. Additionally, Battery Management rules will separately be released to cover the Extended Producer Responsibility (EPR) in detail.
The collection and the re-use of the disposable batteries shall be carried out in accordance with the Draft Battery Waste Management Rules, 2020.
Adequate standards are to be developed by BIS to re-use and re-purpose the End-of-first-life batteries from EVs.

Implementation aspects:

As mentioned earlier, the scope of this policy is limited to e-2Ws and e-3Ws. The rollout of the BSS is in a phased manner, of which, all metropolitan cities with more than 40 Lakh population will be prioritized under phase-1 (years 1-2). Cities with population greater than 5 Lakh and state capitals shall be covered under phase-2 (years 2-3). The Bureau of Energy Efficiency (BEE) shall act as the nodal agency to oversee the rollout of BSS. Multiple agencies at various levels of the government are responsible to perform different functions.

Transport departments are responsible for easy registrations of EVs.
Municipal departments must ensure land zoning and allocations for BSS.
State Electricity Regulatory Commissions are responsible for incentives in power tariffs and access provisioning.
DISCOMS should ensure an adequate power supply to set up these BSS.

Additionally, a single-window portal must be developed to assist in the setting up of BSS including the land allocation, electricity supply, trade licenses and so on. Mandating the approval processes within 5 days of receipt of application should also be considered by the respective nodal agencies.

While the draft policy is a welcome step, challenges remain

While there are significant advantages to the battery swapping policy, there are equal number of challenges. Battery swapping has been experimented at different scales in China and United States by private entities. While the US experiment proved to be a disaster with the company ‘Better Place’ going into bankruptcy, the Chinese experiment is doing fine. One reason for this could be that these countries initially focussed on building charging infrastructure in other forms like independent charging networks, auto manufacturer charging networks, charging in malls, commercial places, and so on. In addition to these, factors like the geography and demographics play a crucial role in determining the success of this policy. Places that have a less daily driving range with relatively less population density might not prove to be conducive to battery swapping.

Examples from countries that have successfully switched to electric vehicles must be studied for informed & better policy suggestions. It is also important to consider all these factors prior to the rollout of the battery swapping service networks. Else, this policy could simply become an addition to the list of policies that may not have translated into actual gains on the ground.

Featured Image: NITI Aayog’s draft Battery Swapping Policy