The NITI Aayog has issued a draft request for proposal (RfP) to prospective bidders who can manufacture advanced chemistry cells (ACCs) in the country.

All stakeholders are requested to provide their feedback by December 14, 2020.

Advanced Chemistry Cells (“ACCs”) are the new generation advanced storage technologies that can store energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required. Globally, manufacturers are investing in these new generation technologies at a commercial scale to fill the expected boom in battery demand through 2030.

Recently, the central government approved a production-linked incentive’ (PLI) plan in ten critical sectors, including ACC, to enhance India’s manufacturing capabilities and exports under the Atmanirbhar Bharat initiative. Under the PLI plan, the Union Cabinet will allocate ₹181 billion (~$2.44 billion) to support 50 GWh of domestic ACC manufacturing.

The draft notes that in the first stage, the technical bid will be evaluated on the basis of the value addition committed by the bidder and the scale of production. Only those bidders who commit a minimum of 60% value addition at the project and installation of ACC manufacturing capacity between 5 GWh to 20 GWh within five years would qualify for further consideration and would be ranked from highest to the lowest based on their technical score.

Winning bids are entitled to receive subsidy after they commit to set up an ACC manufacturing facility of minimum 5 GWh capacity and establish an ACC manufacturing facility with value-addition of minimum 25% at the mother-unit and a minimum of 60% across the spectrum.

The government would execute a program agreement with the special purpose vehicle (SPV). State governments would also extend support and additional incentives for implementing the project by executing a tripartite agreement between the SPV, the state, and the central governments.

Under the eligibility criteria, the bidder must have a corporate long-term credit rating of CRISIL AA+ or ICRA AA+ if the bidder is incorporated in India. If incorporated outside India, the bidder should have a corporate long-term credit rating of S&P BB+ or FITCH BB+ or Moody’s Ba1, from at least two credit rating agencies.

The bidder must have a minimum net worth of ₹2.25 billion (~$30.14 million)/GWh for the financial year preceding the date of submission of the bid.

In the case of a consortium, the lead member should have an equity share of at least 26% in the SPV for at least five years.

The bidders must deposit a bid security amount calculated at 1% of ₹2.25 billion (~$30.14 million)/ GWh. The ceiling on the bid security is ₹100 million (~$1.33 million) up to 5 GWh; ₹150 million (~$2 million) up to 10 GWh; and ₹200 million (~$2.68 million) up to 20 GW of annual committed production capacity.

In the first year from the appointment date, the winning bidder would receive a 100% subsidy that would reduce year over year (YoY) by 50% by the 10^th year. The subsidy will be curtailed to a cumulative 50 GWh of manufacturing capacity in India. A single winning bid will not exceed 20 GWh of cell manufacturing capacity.

This draft notification and the recent incentive announcement comes on the heels of the government’s recent push for domestic manufacturing after the pandemic disrupted the overall supply chains.

Earlier, R.K. Singh had said that power is a sensitive and strategically important sector as all the essential services depend on the power supply. The minister noted that power is a critical sector for the development of the country, and there is a need to reduce dependence on imports and strengthen domestic manufacturing capacity.

Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.