Niti Aayog Releases Draft Battery Swapping Policy, EV Industry to Get Another Market Boost

Niti Aayog, India’s top government think tank, has released a draft battery swapping policy and invited comments from stakeholders. The deadline for submission of comments is June 5, 2022. We highlight the focus points of the draft policy in this article.

On April 20, 2022, government think tank Niti Aayog released a draft battery swapping policy aimed at catalyzing large scale adoption of electric vehicles (EVs) by making them more accessible, affordable and efficient. The draft policy, which will be valid till March 31, 2025 from the date of its notification, is specifically designed for battery swapping systems to be used for two-wheelers and three-wheelers.

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The policy impetus rests on resource optimization, by making effective use of scarce resources like public funds, land, raw materials for advanced chemical cell (ACC) batteries, etc. This resource optimization will be supported by promoting the adoption of battery swapping technology implemented via business-as-a-service (BaaS) business models, which will ensure lower upfront costs, minimal downtime, and lower space requirements. Additionally, the policy will also address the key technical, regulatory, institutional, and financing challenges to develop battery swapping ecosystems.

Niti Aayog has circulated the draft policy document among relevant stakeholders and invited their comments. It must be noted that the deadline for submission of comments is June 5, 2022.

What is battery swapping?

For the purpose of this policy, battery swapping refers to the method of catering to the charging requirements of battery-powered EVs. These methods entail replacing discharged batteries or partially charged batteries of EVs by charged batteries, which can be conveniently carried out manually with or without mechanical intervention.

The BaaS model decouples the EV and its battery by facilitating the use of the battery-as-a-service, without ownership of the battery. The BaaS model can be applicable in case of both:

• Fixed batteries: It means a battery that remains associated with a particular EV as long as it is used for mobility purpose.
• Swappable batteries: It refers to an ACC battery used in a battery-powered EV, which can be conveniently detached and interchanged with another battery and subsequently, electrically recharged outside the EV for the purpose of replacing a discharged battery of a battery-powered EV.

What are the objectives of the draft battery swapping policy?

• Promote swapping of batteries with ACC batteries to separate battery costs from the upfront costs of purchasing EVs, thereby driving EV adoption. It must be noted that the battery constitutes approximately 35-40 percent of the total EV cost.
• Provide flexibility to EV users by promoting the development of battery swapping as an alternative to charging facilities.
• Establish principles behind technical standards that would enable the interoperability of components within a battery swapping ecosystem, without hindering market-led innovation.
• Leverage policy and regulatory mechanisms to reduce the risks involved in the battery swapping ecosystem. Additionally, it also aims at making competitive financing more accessible.
• Support partnerships among battery providers, battery original equipment manufacturers (OEMs), and other relevant partners, such as insurance/financing. This will in turn encourage the formation of ecosystems capable of delivering integrated services to end users.
• Promote better lifecycle management of batteries, including maximizing the use of batteries during their usable lifetime and end of life battery recycling.

What is the roll-out plan for development of battery swapping stations?

The Bureau of Energy Efficiency (BEE), the central nodal agency responsible for the rollout of EV public charging infrastructure, will be responsible for the implementation of battery swapping networks across the country. It must be noted that the states and union territories (UTs) will be responsible for the implementation and governance of the battery swapping ecosystem. Appointed state nodal agencies for EV public charging infrastructure will facilitate the roll-out of battery swapping.

The battery swapping policy will be implemented in two phases:

• Phase one: This phase will be implemented over a period of one-two years from the date of launch of policy. All metropolitan cities with a population greater than four million (as per Census 2011) will be prioritized for development of battery swapping networks under this phase.
• Phase two: This phase will be implemented over a period of two-three years from the date of launch of policy. All major cities, such as state capitals, UT headquarters, and cities with population greater than 500,000, will be covered under the second phase.

What are the eligibility requirements under the draft policy?

Given the nascent stage of battery swapping, interoperability between EV batteries and other components (EVs, EVSE) within a battery swapping ecosystem is adequate for eligibility, provided that all components within the ecosystem adhere to the technical and performance standards defined for BaaS and battery swapping services.

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The draft policy also states that government approved battery service providers are expected to publish “relevant technical and operational characteristics that would allow other players to develop compatible solutions” in order to prevent certain operators from having a monopoly over the ecosystem.

The general requirements for eligibility include:

• All batteries must use ACC and must be BMS-enabled. Further, while nodal authorities will be free to check the compatibility of the battery management systems (BMS) with other systems, as well as its safety requirements, the BMS itself must be self-certified.
• The manufacturers must ensure that all batteries are equipped with internet of things (IoT)-based battery monitoring systems and remote immobilization capabilities.
• For infrastructural requirements, the draft policy states that the electric vehicle supply equipment (EVSE) used at the swapping stations must be tested and approved by the National Accreditation Board for Testing and Calibration Laboratories (NABL) or an agency appointed by the central nodal agency (that agency being the BEE).
• The batteries will continue to be tested and certified as per AIS 156 (2020) and AIS 038 Rev 2 (2020). But with evolving testing procedures, the policy will be open to adding new methods in the future.

Registration of EVs with swappable batteries

EVs with swappable batteries will be sold without a battery, providing the benefit of lower purchase costs to potential EV owners. They can be registered based on the type of approval certificate, without the need to specify any details of the battery.

What financial support is offered by the draft battery swapping policy?

• The policy proposes that the demand side incentives offered under existing or new schemes for purchase of EVs be extended to EVs with swappable batteries eligible under this policy.
• The policy has introduced a Unique Identification Number (UIN) mechanism to implement traceability across the battery lifecycle. A UIN shall be assigned at the manufacturing stage for tracking and monitoring EV batteries. It is proposed that subsidies be linked to the UIN of EVs and batteries to ensure that there is no double-dipping.
• The size of the incentive could be determined based on the kWh rating of the battery and compatible EV. An appropriate multiplier may be applied to the subsidy allocated to battery providers to account for the boat battery requirements for battery swapping stations in different battery swapping ecosystems.
• The scheme may specify a minimum contract duration for the contracts to be signed between the EV users and battery providers (or relevant ecosystem entities) to ensure that battery providers continue to provide battery swapping services after qualifying for any subsidies.
• As per the current GST regime, the tax rates on Lithium-ion batteries and EVSE are 18 percent and five percent, respectively. It is speculated that the GST Council may consider reducing the differential across the two tax rates.
• Battery swapping operators will be encouraged to develop a ‘power bank’ using end-of-life swap batteries to store and use renewable energy for EV charging or other applications.

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