About:
Incubated at IIT Madras, founded in 2014, Cygni Energy is a leading storage technology company specialising in advanced energy storage solutions for Electric Vehicles (EVs) and stationary storage (Grid-scale, C&I and Telecom Storage) applications.
Overview:
Driven by an urgent need to address the climate crisis, the global shift away from carbon-intensive fossil fuels towards clean & renewable energy sources is imperative. However, unlike a seamless power supply that fossil fuel provide, renewable energy like solar and wind are intermittent – meaning, they can only provide energy when the sun is shining and winds are blowing. To become a seamless source, overturning the need of fossil, RE requires storage solutions called battery energy solar system (BESS) to store excess solar or wind energy and provide energy supply even when not actively available. While this solves the problem of intermittency, another is that the resources of batteries that can store this energy is scattered and uneven, while its technology is still nascent and mostly dominated by one country. An added issue is the circularity element of batteries.
In the path to become Aatmanirbhar Bharat and also transitioning towards cleaner and greener energy, Vasudha Foundation interviewed the CEO of Cygni Energy, Mr. Venkat Rajaraman, to know how Cygni is leading battery energy storage industry in India, the policy, market and technology landscape and what is needed to overcome challenges.
Interview:
- From an India market perspective, let’s look at the drivers first.
- The first driver is PM’s COP26 Panchamrit Commitment – 500 GW of non fossil-fuel energy by 2030; 50% installed capacity of energy coming from renewable energy. These were clear metrics that we put for ourselves.
- The second is that RE (both solar and wind) has crossed 100 GW overall, so the intermittency of RE is clearly seen. One would need some mechanism to overcome the intermittency obstacle. Today, at the spot market, Day-time spot exchange prices have gone below Re. 1 and Night-time spot exchange prices are hovering around Rs. 10. So the clear indication is that there is a duck-curve that is playing out eventually.
- The third driver is the cost of the magnet market. Last year, we heard USD 100/kwh for battery pack which has been breached. So, now there is a precipitous drop in prices which has become a lot more – sitting on the financial model. In the month of August alone, total tenders worth more than 10GWh between 3 states of Gujarat, Maharashtra and Rajasthan were released. The Ministry of Power’s (MoP’s) plan, under the new Power Sector Development Fund (PSDF) Scheme, talks about 30GWh. Under the previous scheme, it talked about 13.5 GWh. Tenders that are being floated in the past few months are very short term of the order of 40+GWh out of which many of them are tendered, awarded and some of them are commissioned as well. By 2027, we are expecting about a minimum of 30GWh of capacity to be commissioned and by 2030 this is going to grow 6x which means that it is going to breach the 200 GWh mark. MoP estimates that by 2032, it is going to be about 232GWh upwards.
- Though, today we are at less than 1GWh, this kind of trajectory is exactly how solar was at. There was a target of 100GW of solar and at the time there was not even 1 GW installed then. The fact that many of the aggregators are aggressively bidding and many of the developers are part of this, it clearly augurs well for the energy storage for India.
- Cygni is singularly focused on energy storage. We are business of about 10+ years. Unlike solar PV modules, the battery energy system is a fairly intelligent device. Here, there is a good confluence of semiconductor software, battery energy chemistry which are going to play a big role along with thermal, fire, mechanical, electrical – a cross-collaborative effort. We are incubated from IIT-Madras, so we have a very strong research team working with us which is also looking at the kind of future technology development that is going to happen.
- There are 3 verticals in Cygni:
- Product engineering – which does the product engineering pact level characterisation, cell-level qualification, second-life re-use, which performs engineering capability.
- Manufacturing capability which handles a 4.8GWh battery pack manufacturing;
- Insulation commissioning, the preventive maintenance.
- We have a fairly strong Solutions Engineering team as well – this is going to be a confluence of all of the above verticals. We need the battery-energy storage systems. Today, this looks as a big shifting kind of application, one wants to use it in evening peak-hours. But there is a whole lot of ancillary applications that are going to be very critical and are going to come up very soon. In order to do this, one needs a very strong solutions engineering. Design+solution engineering, manufacturing + support.
- If today India does not localise, I believe it is going to be instead of petroleum-dollars to the Middle-East to lithium-dollars to China. There is no shift. Energy Security is still going to be a big concern. The bigger concern would be cybersecurity since these are all large-scale grid-scale connected projects which will determine the nature and stability of the grid. So, India needs to make sure that the entire monitoring and controlling mechanism stays with us. So, given these points, the mandate is going to be that local manufacturing is not a luxury to have, instead, it is a must to have.
- To ensure whether we are there yet is like peeling onions to see where we are going to be.
- To start, one needs to start from the lower-most product – cells. A bunch of cells form battery packs and battery packs form to become containers, and containers are what is being deployed on the field.
- The lowest hanging fruit is going to be coming from containers to battery packs to cells and manufacturing of these cells. A lot of discussion is ongoing with Ministry of New & Renewable Energy (MNRE) and MoP to give a clear mandate in terms of how to localise with timelines. Industries have been a part of these discussions as well. For pack-to-container line, which is the assembly of all these packs with thermal management, fire fighting, etc. one has to make sure all the certifications are done and do one level-of manufacturing. The second-level of manufacturing is a cell-to-pack line where all the cells are interconnected, do laser-vending and thermal processes to put it inside the enclosure and then use them. Each one of them these requires a specific timeline during which the industry needs to be ready.
- For the cell itself, there is an ACC-PLI scheme, although a bit delayed, it is clear in terms of who has to produce, what are the timeframes and so on, and at least 50 GWh is on the pipeline. In the short-term, you’ll be going from pack-to-container fairly soon, then we will do cell-to-pack immediately after this and then indigenise the cell post that.
- I think I do see a clear roadmap, both in terms of policy makers – how we want to do it and in terms of industries’ ability to take this on. But this is just one part of the problem.
- The other part of the problem is that the technology underneath is also constantly changing. Today, for example, folks are talking about a 5 MWh container but that itself, I see, that in 1-2 years, is going to be 6.6-6.9 MWh and so on and so forth – it’s almost like in the silicon industry where they talk about the wafer going from 25nm to 15nm to 7nm. So, India not only has to do what is currently there globally, but also look ahead and plan for what might be needed in future now so that by the next 2-3 years we are able to get there.
- The answer to your question is that it has to be done. We are getting there. Some are in process and some may take time and the longest lead item is for us to transition cell manufacturing and then going upstream. But I do see that local manufacturing will happen as far as BESS is concerned.
- It’ll go through a similar kind of support that has happened for solar. Some kind of PLI support for battery manufacturing is needed.
- Then it also needs to reflect in a Market Price Consumption (MPC) differential or tariff differential so that if we need to import something from China, for example, a full container or assist in getting it assembled, there needs to be a differentiation because the Indian industry needs that incentive for a shorter period to make sure that they come up to speed in terms of how other are.
- The third one is going to be an equivalent of the approved list of module and cell manufacturing (ALMM) called ALPM. So, today, for example, if I go to get a complete container import, basically it’s about 10-12% since they consider everything as a module (though it’s technically between 10-20%, but 10-11% is for container). The cell import, for example, is at 5%. So, the differential of 5% is really not much when one is to compete with the might of China which has TWh of capacity. Today, you need to give that excess differential to make a level-playing field for companies like Cygni.
- If we wait and see, all of them will happen – though not at the same time, but over a period of time – from a PLI to a PCL differentiation to an ALPM and that is the direction which will help in the Make in India Scheme.
- There was a mandate from the MoP last week where they said that the Energy Management System (EMS) for BESS and its software needs to be indigenised. In fact, we had an India Energy Storage Alliance (IESA) meeting a few days back where we talked about the capability of various Indian manufacturers. I clearly see that we are capable of doing it – predominantly, SCADA software monitoring has been done for solar and several other industries, so this is no different. Instead of monitoring something else, as voltage in a current cell temperature we will be monitoring the battery-related one.
Are we ready there yet? No. But all of us are talking about the window of 18-24 months when most of these projects are going to be commissioned - In terms of fire-fighting systems, chillers and liquid-cooling systems and the like, today, there are people in India – like Hindalco – who are in a much better position and are capable to handle this. They have done it well for E-mobility industry. Car-related, liquid-cooling are now manufactured in India locally. So, there is a lot of applicability, but it’ll come with a certain volume because it’s going to invest in dyes and moles – these are all non-trivial kind of investment.
- What I see is: to some extent, we may import some sub-components from other countries but for us to indigenise them, it can happen very easily because if we have to get into the first principles of that, we are very capable of doing this.
- 100% correct. This issue is close to my heart as well. Today, if we look at the battery safety and accident rates which are there – accident rates are much smaller than what is there for aviation industry, for instance, or train accidents. So, we are at a much lower rate which is basically at about 0.06 hours for every 100,000 operating hours. I agree that there were a lot of fire incidents earlier.
- But if we look at EPRI’s dashboard, one of them is leakage, the other is incorrect settings of EMS as well. So today, I think, indigenisation of EMS is going to be very critical, monitoring of that EMS to make sure that we don’t compromise on those settings is very important, and related ones too.
- If we look across the BESS lifecycle, almost all the tender documents are talking about fire safety, hazard mitigation to planning and transport in terms of how to handle it, there is a very clear set of certifications and guidelines which are there. Maybe, for India, the guidelines in terms of decommissioning still needs to be better done. The decommissioning SOP, or disassembling procedures are still there, but we still need to implement the battery passport kind of thing, so that we have end-to-end replaceability or visibility of the battery assets and all. There is a fairly robust set of standards which are there – whether it is IEC 62933 or UL 9540 or 9540A or 62619, and all of them are going to help us in that direction. However, the bigger thing is that for India, even the fire tender or fire substations clause in the projects where they are implemented, they’re very far away. For example, UL 9540A in the US is assuming that fire engines can reach the site within a certain time. In India, this is not even possible due to road accessibility, for instance. So, the question is that though we still have a way to go, we need to take this direction. I think there has to be India-specific guidelines that needs to emerge on top of what is already globally available. To take into account our global terrain, take into account our local infrastructures and so on and so forth, that is one of the things that is needed to be understood and looked at – BIS is looking at some of the standards.
- End-of-life today is what is defined in the Extended Producer Responsibility (EPR) procedure. Cygni is one of the authorised EPR registered organisations under Central Pollution Control Board (CPCB).
- So, firstly, we are responsible for what we are producing, which means that we have to make sure that the end-to-end responsibility lies with the producers such as us.
- But, secondly, we don’t do the recycling ourselves. We have tied up with recycling partners and got our recycling certificates to make this happen. The biggest challenge that I find (not for the large-scale BESS) but a lot of smaller ones is collection of batteries. Cygni has shipped about 200,000 EV batteries.
- The CPCB portal still has a long way to go to be automatic or become user-friendly. Though they have mandated that the EPRs and producers will also sort of give details, but it’s not fully robust.
- The challenge with such things is, we had a strong policy for the lead acid battery industry but all went for the local one because to operationalise the policy was the biggest problem – they had a lot of local guys who could do the refurbishment of the lead acid batteries. Lithium, however, is a lot more dangerous and local refurbishment does not exist for this. But policy and its operational procedures will have to go hand-in-hand. I clearly see that the battery passport has to be made effective as well.
- I do see a tremendous opportunity there. For example, Petronas, they entered into India through acquisition of Armplus Energy Solutions and they have also gotten into the electric mobility through the Gentari partnership work.
- I do see a lot of opportunity for India, especially South Asia – Malaysia, Indonesia.
- The challenge is the dominance of China. In some ways, we will have to make a Make-in-India mandate and making sure that the manufacturing ecosystem thrives and is able to handle as the opportunity in India is also far bigger. In the next couple of years, the local manufacturing is going to pick up pace so much that we not just need to have the ability to cater to our demands, but also need to cater to neighbouring countries’ demands as well. But, to some extent, there is also a need for policy support to enable this.
- Today, the export of battery through the DG category needs a well-explained policy framework and policy incentives.
- 100%. I do definitely believe that. In ISA, India took the global leadership and made sure to become the torchbearer for the same.
- In this case too, India has a tremendous opportunity to do the same.