Make EV In India

The Prime Minister’s high decibel Make in India campaign to woo investors to manufacture in India is going to complete two years. Launched by the Modi government to improve the perception of the nation as an attractive investment destination in the manufacturing sector, saw several measures being launched. Under the Make in India campaign, 25 sectors were identified for focused interventions, and FDI policy was liberalized to promote investments.

Make in India campaign has attracted considerable attention and has resulted in growth in FDI and has also attracted major electronics company to establish their R&D and production centers.

Major theme of the Make in India campaign was to promote import substitution as Mr Modi himself had clearly articulated in his 2014 independence day speech that “We should strive to be a nation that doesn’t import, but exports, I urge the youth to reduce dependence on imported products,”

Government had identified electronics to be a key item for import substitution. Electronic items  constitute about 10% share of the imports and ranks third on the list of imports after Oil ,  Gems & Jewels.  Oil clearly tops the list of imports  for India and  GOI can transform the country by developing an alternate solution to the oil imports.

The steady growth in the last decade has led to doubling of Energy imports.  While the current lower level of crude oil price have given a temporary reprieve, however, the possibility of oil price rise and /or Rupee devaluation will always be hanging like the Sword of Damocles on the Indian economy.

India is the fourth largest energy consumer after US, China & Russia and third largest oil importer. India has recently overtaken Japan. The country’s economy is highly sensitive to the price of oil and exchange rate variations, both of which are volatile.

After half a century of economic policies and infrastructure development favoring high consumption of oil, the country needs to recognize that our high dependence on oil, for transportation, in particular poses a serious threat to the economy and environment.

There is an urgent need to wean India of its addiction to Oil and promoting a transport economy based not on oil but on alternate domestic energy sources.

The country needs a clear, bold strategy to liberate it from the volatility and vagaries of Oil.

“Make in India” strategy could prioritize policies, public infrastructure investments, and long term technology development around one central theme. The theme is “Electrification”- extensive use of electricity as the core energy and substitute for petroleum based fuels in transportation.

In 1921 Mahatma Gandhi launched the  “Swadeshi” movement boycotting the foreign cloth and  promoting the production of domestic cloth in its place.

Almost a century later,  it is the turn of Shri Narendra Modi ,  to launch the Swadeshi Energy for transport . A national domestic energy strategy to promote wide-spread “Electrification”  is the most practical,  least cost, expedient and efficient path to achieving energy security, and simultaneously ensuring job creation for the rural community and addressing environmental pollution that is rapidly becoming a severe health issue.

India  not only has  vast sources of low cost domestic energy sources, but also has the necessary skills and technology to convert the same to Electricity.  Any amount of domestic electricity can be produced at less than Rs 5 / KWhr which when used for transportation is half the cost of oil even with the current lower crude oil price.

These domestic energy sources are naturally spread across the country.  The hydro potential is concentrated in the North, North-East and central & south, coal is at the central, eastern, western and southern parts, wind energy source in north-west, west and south, solar is spread across the country, Gas in the west and southern parts connected to north, bio-mass, cow-dung and poultry litter is also available throughout the country, and Nuclear power in north, west and south.

There is a vast pool of naturally distributed energy sources that can be easily converted to electricity. Electricity thus offers the greatest flexibility.

Contrary to the general perception, that,  India suffers from a chronic power shortage,  the country is today faced with surplus power situation.  There are a number of indicators that establish the power surplus situation in the country.

One of the main reason for the surplus situation is because the  country has witnessed a rapid electricity generation growth in the last decade and the generation capacity has been almost doubled.  The electricity demand has however not grown proportionately since most investment have gone into IT and IT enabled services which are not big power consumers.

The second problem is the difficulty in evacuating low cost power from the pit-head power plants in Chhattisgarh & Orissa belt to other regions due to transmission capacity constraints.

Use of electricity as the transport fuel will not only liberate India from the clutches of the Arab world but will also provide a  cure for the current ailments of the  power sector and the environmental challenges.

Electricity as a transport fuel would immediately address all the three issues plaguing power sector : a) Absorption of surplus power due to congestion / lack of demand  b) Improve Discom’s ability to service higher cost power c)  Enable new power project development.

In the absence of an “Electrification of Transportation” policy, GOI’s grand vision of achieving 175 GW by 2022 thru Renewables is likely to be a challenge.  Artificially thrusting the higher cost renewable power thru increased RPO and other regulatory measures at the cost of lower cost power available in the market does not make any economic sense  and is not in the interest of the country.

When Oil was at US $ 100/ barrel , GOI had recognized the importance of promoting Electric Vehicles and a “National Electric Mobility Mission” had been formulated in 2012.  However, for various reasons, the NEMM did not get much traction and slowly faded out.  With the new government taking over in 2014, accompanied with a rapid drop in the crude oil price had almost eroded the need for Electric Vehicle particularly given the high cost of Electric Vehicles.

The importance and need for EVs in India has come back into the centre-stage only after the Delhi government came out with the Odd-Even policy in Delhi.  The huge media publicity surrounding the controversial odd-even policy and the Supreme Court directive banning higher capacity diesel car registration  in Delhi has brought into sharp focus the severe pollution being faced in all Metros and has brought about a huge awareness of the consequences of exposure to diesel exhaust emission and CNG exhaust emissions.

WHO has already classified  diesel exhaust emission as carcinogenic and one of the CSIR study shows that CNG run buses are harmful to humans as they emit “nanoparticles” which can cause cancer.

The increase in the diesel or CNG vehicle  leads to higher levels of exposure to the pedestrians and the open vehicle 2 & 3 wheeler commuters. It is the weaker sections of the community who are put to a higher risk & considering the poor public health services and unaffordable private medical care, it has become imperative for the government to act urgently to reduce the pollution hazard.  One of the goal of the Swatch Bharat Abhiyan should also have included the provision of Clean air for the urban public.

This leaves the government with no alternative but to promote large scale use of Electric Vehicles.  There are a variety of passenger electric vehicles ranging from 2 & 3 wheelers to cars, vans, & buses. In addition to the higher cost of the electric vehicle there are two other issues which are inhibiting the large scale adoption of EVs. The issues are the limited range of the Electric Vehicle and absence of adequate charging infrastructure.

Both these constraints can be addressed easily if the government begins with promotion of  Electric Buses.  Unlike other vehicles, Electric Buses follow a fixed route and suitable charging infrastructure can be provided  at suitable locations and the depots.

The major factor inhibiting the introduction of Electric Bus is the high cost of the electric bus and the poor health of the State Transport Undertakings which  do not have the resources to adopt the Electric Bus technology even after the subsidy provided under GOI’s  FAME (“Faster Adoption and Manufacturing of hybrid & Electric vehicles” ) scheme

The situation faced by the State Transport Undertaking is similar to the situation that the Power Discoms were faced with when the high cost solar power was to be promoted in 2009. Just as the lack of resources was the inhibiting factor in adoption of solar by Discoms, similarly the lack of resources with the State Transport Undertaking is the inhibiting factor  for adoption of electric Buses.

This can be addressed by replicating the Jawaharlal Nehru National Solar Mission ( JNNSM ) model which has proved to be highly successful in introducing high cost solar technology and a similar National Electric Bus Mobility  Mission can be launched for large scale adoption of E-bus.

An assured income stream from the center / state  for the higher cost of solar power ignited the interest of large no of private entrepreneurs which resulted in aggressive competition and  innovation leading to reduction in solar power cost over time.

The reverse auction policy on a benchmark tariff / Viability Gap Funding ( VGF ) which was used for selection of solar power developers can be suitably modified and the same policy can be adopted for selection of private Electric Bus operators.

With UNDP support, SriLanka is already implementing a similar scheme for promotion of Electric Bus in their proposed BRT with private electric bus operators being selected thru a reverse auction scheme.

A bench-mark Rs / Km can be established based on the current capital cost of  Rs 2.7 Cr – Rs 3.0 Cr/ bus ( including cost of charging infrastructure).   Government may invite bids from Private Electric Bus operators to offer discount to the benchmark Rs/Km.  Alternatively,  the rate can be fixed up at an acceptable level of the State transport undertakings and  discounts on benchmark VGF / bus can be sought.

Similar to a Power Purchase Agreement (PPA)  in case of Solar, the private Electric Bus operator enters into a long term “Transport Service Agreement” ( TSA ) with the main procurer or the STU on a fixed Rs / Km and the transit operator shall be responsible for financing, procurement and operation of the E-bus.

Presently the solar power has reached a self sustainable level and does not require any further budgetary support. The National Clean Energy Fund, The National Climate fund and the increased accrual from petrol & diesel sales (due to  the reduction in petro / diesel not being commensurate to the global oil price reduction ) can be used to fund the National Electric Bus Mobility Mission. GOI can also avail of low cost funding  from Multilateral funding agencies and make that available to the Electric Bus Operators to achieve lower cost / Km.

With GOI running the largest renewable energy capacity expansion programme in the world,  promotion of the Electric Bus would act as a complementary use of the renewable power for public transportation and address all the three major issues of congestion, pollution and oil imports.

There is a huge requirement for buses in various cities specifically the smart cities and GOI  can plan for adding 20,000 Electric buses by 2020, starting with a bid for 500 – 1000  Pure Electric  buses in this year, which can be provided to various cities on a back to back contract.

Ministry of New & Renewable Energy had constituted Solar Energy Corporation of India ( SECI )  under the ministry for solar power procurement. Similarly MORTH can consider constituting a “Electric Bus Transport Corporation of India” ( EBTCI ) for promotion of Electric Bus service for public transportation in the country.

EBTCI can enter into a contract with the E-bus service provider with a back-back to contract with STUs & EBTCI can consider entering into a  contract with SECI for solar / wind  power procurement at a competitive rate and make that available to the E-Bus operators.

Electric Bus revolution will kickstart a huge Make in India programme for E-bus integration,  large scale Battery manufacturing and a renewable energy revolution.

“Make EV in India” will enable making each house into a powerhouse and each village into an energy center interconnected similar to the internet of computers.  The villages in this scenario would not only provide food for the billions of Indians but also provide the energy for millions of vehicles. The example of the the town of Güssing in Austria which has transformed itself from a situation of being  hardly able to afford import of $8.1 million annual fossil fuel bill in early 90s,  to annual revenues of US$ 17 Million in 2007, by use of it’s domestic biomass energy source for meeting it’s lighting, heating and transportation needs is worth replicating . http://cleantechnica.com/2013/10/16/renewable-energy-powered-austrian-town-gussing The villages which have so long been viewed as a burden for the electricity sector will become net exporter of energy. Renewable Energy  Cooperatives on the lines of German Renewable Energy   cooperative model  can be set up in each / cluster of villages. Once the villages have reliable electricity, the same powerlines can be used to provide  broadband connectivity to the villages. Once the villages are connected electrically and digitally, there would be no need for migration from rural to urban centers.  On the contrary a reverse migration will occur due to the economic pressures of urban centric business.

“Make EV in India”  strategy envisages a paradigm shift of transforming India from a oil based economy to electricity centric economy which will bring freedom from imported oil,  enable power generation capacity addition, electrify, digitize and energize both rural & urban India &  create huge employment potential.

With “Electrification of transportation” enabled “Distributed Power Generation” and a unified “Digital India”, established as the cornerstone of “Make EV in India” strategy, policymakers need to develop policies for a system of public investments, incentives and regulations, which will promote  clean, efficient and cost effective electric mobility solutions. This in turn will  make the dream of Make in India, Digital India, Skilling India and achieving 175 GW of renewable power generation; a reality and provide a new energy and economic freedom for the country.