Welcome to the latest edition of "Inside India" — your one-stop destination for stories and developments from the world's fastest-growing large economy.
India shares a complex relationship with its neighbor China. While New Delhi heavily relies on imports from Beijing, it also seeks to position itself as an alternative to China for manufacturing and investments from Western businesses.
But to drive its manufacturing agenda, promote local chip and AI companies, and attract data center investments, India needs ample and reliable power supply. And it seems here, New Delhi is too dependent on Beijing.
Any thoughts on today's newsletter? The big story
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Experts told CNBC that green energy is available in India, but its supply is not reliable, and battery-based energy storage solutions hold the key to resolving this issue. The challenge, however, is that nearly 80% of these batteries originate from China, hampering India's plans of "self-reliance" to meet its growing energy needs.
Not surprisingly, the green energy push has not managed to wean India off coal-fired power plants. that will store green power and dispatch it when needed.
While this will improve the reliability of solar and wind energy supply, in the absence of local battery manufacturers, it will deepen India's reliance on China.
India's domestic battery manufacturing currently
The ties between the two neighbors have improved over the past year after Modi and Chinese President Xi Jinping's in Tianjin last year. Yet, the issues between the two sides are far from resolved. According to local media reports, Indian businessmen and executives are facing "
While India is easing investment rules for Chinese firms, it is also imposing some trade restrictions on goods in sectors where India is closer to self-sufficiency. Meanwhile, China is wary of technology transfers to India as it could undermine Beijing's role in key global supply chains. India, for example, is already emerging as a key supplier for Apple smartphones after the company started diversifying its manufacturing base away from China. But to drive its manufacturing program, promote local chip and AI champions and attract data center demand, India needs an ample and reliable power supply. "Energy security is the need of our times," Indian Prime Minister Narendra Modi said during his Independence Day speech last month. "It is becoming
Increasing India's alternative energy production has been one of the key achievements of the Modi government, but its role in enhancing India's energy security is limited. Storage of solar and wind energy is becoming "increasingly critical," Ray Tay, executive director of project and infrastructure finance at Moody's Ratings, told CNBC. "Solar and wind availability varies by time of day, weather and season, and peak resource availability does not usually coincide with peak demand," explained Tay. Storage can help shift surplus generation into peak hours. It can also improve the credit profile of renewable energy producers by stabilizing revenue and "reducing curtailment risk," Tay said. Curtailment risk in India refers to a situation when renewable power plants are forced to cut their generation to meet the electrical grid's capacity to safely absorb or transmit power. It is easier for renewable plants to scale down generation than it is for thermal power plants, which need to function at a critical level, experts said.
Local manufacturing
China controls over 80% of global manufacturing capacity across several major battery supply-chain components, leaving India exposed to price volatility, trade restrictions, and technology-concentration risks, Ashish Singla, director of South Asia power and renewable research at S&P Global Energy, told CNBC.
But he is hopeful that India's local cell manufacturing capacity "could reach around 140 GWh," if execution remains on track and critical-mineral initiatives and recycling policies pan out.
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Coming up
Sep 12-13: India hosts BRICS Summit in New Delhi
Sept. 14: India CPI and WPI inflation data for August
