In recent times, there has been a lot of focus on e-mobility, and its implications on the power and automobile sectors. The power sector has to gear up for the new demand in terms of charging infrastructure as well as adequate supply (the latter has been less of an issue of late). On the other hand, the auto industry has to undergo a complete structural change and create an entirely new manufacturing ecosystem. While it is a recognised fact that the future lies in going electric, the question is how soon and how well can it be organised and managed as it involves substantial long-term investment.
Until recently, the government aimed at 100 per cent new electric car sales by 2030. This has been considerably watered down to 30 per cent as the government considers the revised target to be more realistic. The new target was announced by the Ministry of Power (MoP) at the launch of the National E-Mobility Programme on March 7, 2018. Significantly, the MoP has clarified that charging stations do not require separate licences, an issue that was ambiguous and holding back private investments. This development will help speed up the installation of charging stations by private parties across the country along with the deployment of electric vehicles (EVs). The government has also stated that it has no plans to come out with a comprehensive EV policy, but continues to support the EV industry under different schemes.
Power Line provides an update on the key developments in the EV space during the past few months…
National E-Mobility Programme
The programme will be implemented by Energy Efficiency Services Limited (EESL) by aggregating demand and procuring EVs in bulk to reap the benefits of economies of scale. The plan is to replace the existing fleet of petrol and diesel vehicles of public departments and offices with EVs. Within a week of the programme launch, EESL issued a new tender for the procurement of 10,000 EVs. Earlier, in November 2017, EESL successfully completed the tendering of 10,000 electric cars, which are being jointly supplied by Tata Motors and Mahindra.
Once the 20,000 EVs hit the road, India is expected to save over 50 million litres of fuel annually, leading to a reduction of over 56 million tonnes of annual CO2 emissions. The initiative will provide an impetus to the entire e-mobility ecosystem, including vehicle manufacturers, charging infrastructure companies, fleet operators and service providers.
At the launch, R.K. Singh, Minister of State (Independent Charge) for Power and New and Renewable Energy, said, “The future is electric. EVs make sense from the point of view of both the environment and the economy. The per km cost of an electric car is just 85 paise against Rs 6.50 for normal cars and this would help us achieve autonomy from expensive petroleum imports.”
EV charging not a licensed activity
During the launch, the MoP clarified the legal and regulatory stance on charging infrastructure. As per the MoP, there is no requirement for a separate licence for establishing charging infrastructure and the tariff for this segment would be less than Rs 6 per unit. The MoP followed it up with a clarification note in April 2018. It states that based on the definitions of consumer and trading in Section 2 of the Electricity Act, 2003 (which prohibits the sale of electricity without a valid distribution licence), charging of EV batteries by charging stations does not include the sale of electricity to any person as electricity is consumed within the premises owned by the charging station connected to the distribution system. Therefore, charging activity per se does not involve further distribution or transmission (or trading) of electricity, barring it from the requirement of operating under a separate licence as per the act.
According to Bhavik Damodar, chief operating officer, advisory, KPMG India, the move is expected to encourage private investments. “Charging infrastructure is critical for the adoption of EVs – for private as well as commercial use. The private sector can play a larger role with regard to the actual vehicle charging business by classifying charging as a ‘service’ and not as ‘sale of power’. This will encourage private sector investment in charging infrastructure as the pricing of the “service” of charging could be market determined without the regulatory restrictions that come with franchisee arrangements.”
Deployment of charging infrastructure
This clarification will help speed up the deployment of charging infrastructure, which is critical to support the proposed growth of EVs. This would to a large extent solve the chicken-and-egg problem of which comes first. There has been slow progress in the installation of charging infrastructure due to a lack of clarity in regulations as well as standards. While EESL initially floated a tender for 4,000 charging stations in September 2017 along with its tender for electric cars, it had to be cancelled due to the lack of clarity on specifications. Subsequently, in October, it invited snap bids for 300 charging stations, which were also cancelled.
Finally, another tender for 250 charging stations in Delhi-National Capital Region was floated in November 2017 after the government’s decision to have uniform standards for EV charging infrastructure (Bharat EV Charger AC-001 and Bharat EV Charger DC-001) to enable the charging of all EV models by different manufacturers at any station. The tender was awarded to ExicomTele Systems Limited (100 AC [slow] chargers and 25 DC [fast] chargers) and EVI Technologies (50 AC chargers). Reportedly, these chargers have now been deployed, which will enable the delivery of the first 500 EVs under Phase I of EESL’s first tender for 10,000 EVs to the government for use in Delhi-NCR. EESL plans to lease these EVs to government departments for a period of six years.
For the remaining 9,500 cars (Phase II), EESL plans to approach the two players, Tata and Mahindra, for delivery over the next six months. The Phase II vehicles will be deployed in Maharashtra, Andhra Pradesh and Gujarat to begin with. EESL has realised from the Phase I experience that supplying cars without chargers is not a good idea and thus plans to install chargers for Phase II EVs early on.
In a related development, in February 2018, the minister of road transport and highways inaugurated the slow and fast EV chargers at the Charging the Drive event, organised at the NITI Aayog premises in New Delhi. The event showcased the EV chargers of ABB, Chargepoint and Exicom, besides a quick charging demonstration of the 17 EVs on display. At the event, NITI Aayog announced that it would convert all of its fleet to EVs over the next four months. It also installed two of the EV charging stations inaugurated at the event at its own premises.
EVs for public transportation
In addition to electric cars, the government is also promoting EVs for public transportation. In December 2017, the Ministry of Heavy Industries and Public Enterprises announced that it will provide a Rs 4.37 billion subsidy to 11 cities for pilot multimodal electric public transport projects under Phase I of the (FAME India) Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India scheme. FAME itself is a part of the National Electric Mobility Mission Plan 2020, which aims at the deployment of 6-7 million EVs by 2020. The pilot involves the launch of 390 electric buses, 370 taxis and 720 three-wheelers across the cities of Delhi, Ahmedabad, Bengaluru, Jaipur, Mumbai, Lucknow, Hyderabad, Indore and Kolkata, besides Jammu and Guwahati under the special category. Each of the nine big cities will be given a subsidy for 40 e-buses each, while the special category cities will get subsidies for 15 buses each. The subsidy for taxis will be given to Ahmedabad (20 taxis), Bengaluru (100 taxis), Indore (50 taxis) and Kolkata (200 taxis) based on their demand. Bengaluru will get a subsidy for 500 three-wheelers, Indore for 200 and Ahmedabad for 20.
In response to the tenders floated for the procurement of e-buses by 10 cities (except Delhi, which plans to float a tender for procuring 700 e-buses shortly), Goldstone-BYD (a joint venture of Hyderabad-based Goldstone Infratech and Chinese BYD), Tata Motors and Ashok Leyland emerged as the winners for supplying e-buses in March 2018. The tender also saw participation from Mahindra, Eicher Motors and JBM Solaris. Goldstone-BYD won contracts to supply a total of 290 e-buses spread across Bengaluru (150 e-buses), Mumbai (40 e-buses) and Hyderabad (100 e-buses), while Tata Motors will supply 190 e-buses in Jaipur, Indore, Kolkata and Lucknow (40 e-buses each), as well as Jammu and Guwahati (15 e-buses each). Ashok Leyland has won the contract for 40 e-buses in Ahmedabad. The FAME India scheme provides 60 per cent subsidy to cities to procure EVs either as an outright purchase or on a supply-operate basis.
Tata Motors placed bids varying from Rs 7.7 million to Rs 9.9 million for different models. Meanwhile, Goldstone-BYD placed bids in the range of Rs 29.28 to Rs 36 per km to bag supply-operate contracts for Bengaluru and Hyderabad. With this development, charging infrastructure is expected to be deployed in these 11 cities to meet the new demand. As mentioned earlier, the clarity in the regulatory stance will facilitate faster deployment of charging stations.
FAME India Phase I extension and progress
Phase I of the FAME India scheme, which was originally envisaged for two years up to March 31, 2017, has been extended till September 30, 2018 or till the launch of Phase II of the scheme. This is the third such extension of Phase I, now restricted to only EVs with the discontinuation of benefits to mild hybrid technology from April 1, 2017. Under the scheme, 148,275 electric and hybrid vehicles have received direct support through demand incentives totalling Rs 1,925.6 million between April 1, 2015 and June 30, 2017, resulting in fuel savings of 13.56 million litres and CO2 reduction of 33.97 million kg. Fourteen Indian and foreign automobile manufacturers registered with the Department of Heavy Industries are eligible for availing of demand incentives on the sale of their electric/hybrid vehicles. Demand incentives accounted for 72 per cent of the total government support of Rs 2,683.2 million under the scheme. Other areas of support include technology platform (Rs 380.8 million), charging infrastructure (Rs 10 million) and pilot projects (Rs 366.8 million).
Meanwhile, the government plans to extend assistance of Rs 87.3 billion under Phase II of FAME over five years. This reportedly includes Rs 55.5 billion for demand incentives for buses (Rs 25 billion), four-wheelers (Rs 10 billion), two-wheelers (Rs 6 billion) and three-wheelers (Rs 7.5 billion), among others.
Individual states are also coming up with their own EV policies to attract investments. Karnataka became the first state to roll out its EV policy in September 2017. Other states that have either launched or are in the process of finalising EV policies are Telangana, Maharashtra, Andhra Pradesh, Uttar Pradesh and Goa. This is also expected to result in more tenders for EVs as well as the installation of charging infrastructure in the coming years.
In a separate development, cab aggregator Ola, which introduced its first EV project in Nagpur in May 2017, with a commitment to invest Rs 5 billion across 200 EVs and 50 charging points, launched a new programme, Mission Electric, in April 2018. Under this, it plans to add 10,000 e-rickshaws and electric auto-rickshaws to its platform over the next 12 months. In the medium term, Ola aims to get 1 million EVs on its platform by 2021. Reportedly, Ola has run into some issues with the Nagpur transport authorities as well as cab drivers, and is yet to meet its originally committed targets with less than 100 EVs plying on the Nagpur roads, catered to by only 20 charging points. Nevertheless, given the experience it has gained over the past one year, Ola plans to expand its commitments in the EV segment with a focus on the e-rickshaw segment. Significantly, Ola’s announcement came soon after the MoP’s clarification on the licensing requirement of charging stations, which has been a contentious issue.
The way forward
It is evident from the recent developments that the industry is keen on investing in the EV sector only if there is some kind of hand-holding from the government. For instance, the tender for e-buses was completed largely due to the support available under the FAME India scheme. Earlier, EESL had reported that it was not planning to float tenders for e-buses due to lacklustre interest from the state governments. EESL also dropped its plans to float a tender for electric three-wheelers as no big players showed interest in the expressions of interest invited by it.
The EV segment in India is at the early stages of evolution. Clarity on the licensing policy for EV charging infrastructure is a significant development and will help in the faster deployment of EVs across the country. While the clarification overcomes a major stumbling block, further policy support will help scale-up EV charging infrastructure swiftly. “In major cities, building codes may be amended to mandate the setting up of charging points in new residential and commercial buildings. Also, oil marketing companies may be encouraged to set up charging points within existing filling stations that are larger than a certain area,” says Damodar. He adds that discoms may be asked to outline processes aimed at providing connectivity to charging stations on a priority basis, while government land may be provided on concessional lease for setting up charging stations, besides giving tax incentives and holidays to charging companies/ projects.
Government support under the National E-Mobility Programme and the FAME India scheme will give the initial push needed to the sector. The government must, however, ensure consistency in its policy stance in terms of long-term goals and support for the EV sector so that the industry commits investments more confidently.