India's Struggling Green Energy Ambitions: A Critical Look at Reliance's Pivotal Shift from Cell Manufacturing to BESS

India's green energy transition has long been heralded as a cornerstone of its economic and environmental strategy. Yet, the path to self-reliance in energy storage remains fraught with challenges, particularly in the absence of foreign technology transfer. Reliance Industries' recent strategic pivot from lithium-ion cell manufacturing to battery energy storage systems (BESS) underscores both the ambition and fragility of India's energy storage ecosystem. This shift, while aligned with broader net-zero goals, raises critical questions about the viability of domestic manufacturing and the role of alternative technologies like sodium-ion batteries in overcoming systemic bottlenecks.

Reliance's Strategic Reorientation: From Lithium-Ion to BESS

Reliance Industries, under the leadership of Mukesh Ambani, has long positioned itself as a key player in India's energy transition. However, its initial foray into lithium-ion cell manufacturing under the Production-Linked Incentive (PLI) program has faltered. According to a Bloomberg report, Reliance New Energy, the company's energy arm, has yet to meet its manufacturing deadlines, risking penalties for non-compliance with capacity commitments. The company now faces a stark reality: global overcapacity in lithium-ion cells, coupled with declining import prices, has rendered local production economically unviable.

In response, Reliance has pivoted to BESS and green hydrogen, announcing plans to launch solar photovoltaic (PV) module production by late 2024 and battery storage by mid-2025. The company's 30GWh battery manufacturing plant, slated for the second half of 2025, will initially focus on utility-scale BESS before transitioning to cell and battery chemical production. This shift aligns with Reliance's broader Net Carbon Zero target by 2035 and its vision to position India as a global energy transition leader. However, the move also highlights the sector's reliance on imported components and the lack of a mature domestic supply chain.

Systemic Challenges in India's Energy Storage Ecosystem

India's BESS manufacturing sector remains in its infancy, with domestic production capacity far lagging demand. Despite government incentives such as the PLI scheme for Advanced Chemistry Cell (ACC) batteries, progress has been sluggish, and reliance on imported components-particularly from China-persists. High capital costs, technological complexities, and fluctuating market conditions further complicate local manufacturing efforts. For instance, Reliance's delayed lithium-ion plant underscores the difficulty of scaling production in a sector where global overcapacity has driven down prices.

The Indian government's recent mandate requiring 10% of solar projects to be co-located with two-hour BESS systems is expected to drive deployment, but implementation remains in its early stages. Meanwhile, the cost of BESS in India has plummeted, with tariffs dropping from INR 10.18/kWh in 2022–23 to INR 2.1/kWh by 2025. While this makes storage more competitive with solar energy, it also reflects the dominance of imported Chinese cells, which continue to undercut domestic producers.

Sodium-Ion Batteries: A Domestic Alternative?

To mitigate reliance on lithium-ion technology, India is increasingly turning to sodium-ion batteries (SIBs), which offer lower costs, enhanced safety and compatibility with existing manufacturing infrastructure. Recent advancements in SIBs, such as Naxion Energy's launch of India's first sodium-ion–based energy storage systems for residential and commercial applications, signal growing self-reliance. Additionally, the International Advanced Research Centre has validated indigenous sodium-ion technology, developed with a Sodium Vanadium Phosphate cathode material.

Macsen Labs' breakthrough in synthesizing high-performance Prussian White cathode material for SIBs further demonstrates India's potential to innovate in this space. These developments are supported by government policies that allocate incentives under the PLI scheme to alternative battery technologies. However, challenges remain in scaling production and securing raw material supplies, which are critical for long-term self-reliance.

Policy Alignment and the Road Ahead

India's energy policy has increasingly aligned with Reliance's initiatives, emphasizing net-zero goals and domestic manufacturing. The PLI scheme and Viability Gap Funding program aim to deploy 43.2 GWh of BESS capacity by 2028, with substantial budgetary support. Yet, the recent quarter's solar sector innovations-such as high-efficiency modules and automation-highlight the need for continued policy support to bridge the gap between ambition and execution.

For Reliance and other players, the absence of foreign technology transfer remains a double-edged sword. While it reduces dependency on global supply chains, it also limits access to cutting-edge innovations. Domestic R&D, as seen in sodium-ion advancements, is critical but requires sustained investment and streamlined certification processes.

Conclusion: A Delicate Balance for Investors

Reliance's shift to BESS and green hydrogen reflects both strategic pragmatism and the broader challenges facing India's energy storage market. While the company's pivot aligns with national goals, the sector's reliance on imported components and the nascent state of domestic manufacturing underscore the risks for investors. Sodium-ion batteries offer a promising alternative, but their scalability and cost competitiveness remain unproven at scale.

For India to achieve its energy transition ambitions, policymakers must accelerate R&D funding, simplify regulatory frameworks, and incentivize domestic value addition. Reliance's journey-from lithium-ion to BESS-serves as a microcosm of these challenges and opportunities. Investors, meanwhile, must weigh the potential of India's green energy market against the realities of a sector still grappling with self-reliance.