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The year 2017 will be remembered as a significant one for defining India’s mobility architecture. India has seized its moment to announce big plans for finding next-generation ransport solutions.
To the dismay of many automobile manufacturers sitting on a huge inventory of BS III compliant vehicles, the Supreme Court passed the order in late March 2017 that vehicles with engines compliant with BS IV standards must be sold from April 1, 2017. Authorities have also been prohibited from registering vehicles that don’t meet BS IV norms henceforth, except on proof that the vehicle was sold before March 31, 2017.
But nothing has caught the imagination of the industry and policymakers quite like the government’s ambitious plans for a mass scale shift to electric vehicles by 2030 so that all vehicles on the Indian roads by then – personal and commercial will be powered by electricity. While the transformative push for electric vehicles has become a cause of celebration for India, it presents challenges along with opportunities.
India is pushing hard to electrify its automobile market, aiming to sell only electric vehicles (EVs). But what impact will that shift have on the country’s utilities and the grid?
There are multiple narratives in this fast-evolving scenario. From solar power developers and lithium-ion battery makers to automobiles manufacturers of marquee badges, everybody seems to throw their hats in the rings. India’s big companies such as NTPC Ltd, Bharat Heavy Electricals Ltd (BHEL) 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 of electricity. 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 helps in resolving the stressed asset conundrum.
Any uptake in demand for power will help improve the financial viability of these stressed power sector projects. This would, in turn, improve the per capita power consumption of around 1200 kWh – one of the lowest among large economies.
India is said to be an economy which is built on Oil and Gas, but with the future aspects of EVs, India has an opportunity to be independent and provide cheap power to its people. The industry (EV) is starting to take off and such a shift to renewable energy makes imminent sense for India as it paid Rs 4.16 trillion to buy 202.85 million tonnes of crude oil in 2015 – 16. India currently depends on foreign imports for more than 80 percent of its crude oil supply. Switching to electric cars would substantially lessen that dependence reducing consumption by 360 million barrels annually, or 15 percent of the total, by 2030. That translates to an annual savings of $7 billion. If India coverts to 100 percent electric vehicles and retires older gasoline and diesel powered vehicles by the mid – 2040 it approximately will lead to savings of about $100 billion.
There are four possible factors which appropriately determine the reason for such a change:
The rapid drop in the price of renewable source of energy like wind and solar. Faster penetration of EVs in transportation sector because of their competitive price against the internal combustion engines (ICEs). Faster adaption of distributed power with improvement in the storage battery, digitization (smart metering) and nanotechnology.
Finally efforts to decarbonise energy sector to reduce greenhouse gases to combat climate change and the approaching end of coal era.
As the tagline given by experts “The End of Oil is Near…” Policymakers recommend offering fiscal incentives to EV manufacturers and discouraging privately owned petrol and diesel-fuelled vehicles. These are potentially far-reaching moves for India’s mobility, energy and environment needs and could spell the end of the internal combustion engine as we know it. India’s policy mandarins have also thrown their weight behind EVs, impressed by their 20 moving parts as against 2000 in traditional petrol or diesel vehicles. According to the draft, national energy policy EVs is an area of huge interest to India as it holds the potential of reducing the demand for liquid fuel. The advent of EVs has helped curb a rise in the share of oil. This could be bad news for West Asia oil economies and Russia which have been buffeted by low crude oil prices. Any demand dip from China and India which together accounted for half of the 1% growth in global energy demand according to BP Statistical Review of World Energy, will also have wide geopolitical ramification. Like the “black gold” oil on which India depends today to meet its oil consumption by importing more than 80%, EVs will shift the import bills and fuel security to “white gold” lithium. Researchers at Council on Energy, Environment and Water, estimate that to meet the complete electrification of vehicles sold in India by 2030, India needs 40,000 tons of lithium. Just four countries Argentina, Australia, China and Chile account for 95% of lithium global production of 35000 tons in 2016. According to Bloomberg’s New Energy Finance, out of global vehicle sales of 83 million, only 0.65 million were EVs. In other words, as EVs become popular world demand for lithium will explode unless it is replaced by some material which is abundant and cheap. This clearly indicates to prepare for EV transition, India needs a robust supply chain to secure lithium and to support an aggressive R&D in battery technology. After all the car battery is the single biggest value item in EVs.
Increasing number of EVs will need a number of charging stations and less number of the current petrol stations. EVs will also increase the demand for electricity and how and when these are charged will have a major impact on the stability of the grid.
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