The year 2017 will be remembered as a significant one for defining India’s mobility architecture. From big ticket announcements on the marque Ahmedabad-Mumbai high-speed rail project to Hyperloop, India has seized its moment in the sun to announce big plans for finding next generation transportation solutions.
But nothing has caught the imagination of the industry and policy makers quite like the government’s ambitious plans for a mass scale shift to electric vehicles (EVs) by 2030 so that all vehicles on Indian roads by then—personal and commercial—will be powered by electricity. While the transformative push for electric vehicles has become a cause célèbre for India and the world, it presents challenges along with opportunities.
With Volvo’s July announcement that it would phase out the internal combustion engine and manufacture only electric or hybrid vehicles by 2019, many believe India’s EV moment has arrived. It won’t be long before major automakers in India follow Sweden-based Volvo’s lead in phasing out internal combustion engines and electrifying their line-ups to meet the 2030 deadline.
Silver bullet
There are multiple narratives in this fast evolving scenario. From solar power developers and lithium ion battery makers to automobile manufacturers of marque badges, everybody seems to have thrown their hats in the ring. India’s Maharatna and Navratna companies such as NTPC Ltd, Bharat Heavy Electricals Ltd (Bhel) and Power Grid Corp. of India Ltd, all want a piece of the EV pie in order to remain relevant in the uncertain and evolving energy landscape of the country.
For energy firms, setting up a charging infrastructure is an attractive prospect, given the lucrative market potential projected to be around 90 billion units (BU) of electricity. For comparison, India generated 1,107 BU in 2015-16.
Electric vehicles are also expected to help generate fresh demand for electricity —the lack of which is weighing down the entire power sector—and also help in resolving the stressed assets conundrum.
Any uptake in demand for power will help improve the financial viability of these stressed power sector projects. This in turn would improve the per capita power consumption of around 1,200 kWh—one of the lowest among the large economies.
“In a world in which renewable energy has a very high penetration, India has the opportunity to be independent and provide cheap power to its people in ways that are quite different than say in an economy that is built upon oil and gas,” David Sandalow, fellow at Center on Global Energy Policy at Columbia University, said at a conference in New Delhi in September.
India, the world’s third-largest energy consumer after the US and China, is working towards building a green economy and plans to achieve 175 gigawatt (GW) of renewable energy capacity by 2022 as part of its commitments under the global climate change accord. Of this, 100GW is to come from solar.
“This industry (EV) is starting to take off. And it’s still a tiny percentage of the overall vehicle market but it’s starting to reach an inflection point where it can have I think a very significant impact globally,” said Sandalow, who was acting under secretary of energy during former US President Barack Obama’s term.
Such a shift to renewable energy makes imminent sense for India which paid Rs4.16 trillion to buy 202.85 million tonnes of crude oil in 2015-16. “Particularly in a high solar resource country like India, it is a very good strategy for providing transportation,” Sandalow said.
EVs as a storage
The fates of solar power and electrical vehicles in India are likely to be closely interlinked, given that EVs have batteries that can offer a storage solution to India’s clean energy push.
Solar power generated during the day needs to be stored in batteries. The storage capability of EV batteries could help with grid balancing, complementing the National Democratic Alliance government’s push for solar power.
With lithium battery prices having nose dived from $600 per kilowatt-hour (kWh) in 2012 to $250 per kWh in 2017, the solution is becoming economically viable. The EV industry is betting on a further drop to $100 per kWh by 2024.
