India’s energy transition well underway

Regularly we are reading about the joint venture, Energy Efficiency Services (EESL). Often it concerns LEDs but it is obvious they do just about everything related to energy efficiency. Dhirendra Tripathi writes on the Moneycontrol website about an interview with EESL MD Sauragh Kumar. He said EESL would wait for the department of heavy industry to finalise its new policy on charging stations before going ahead with a new tender for buying electric cars.

 

INTERVIEW | New charging station policy to bring many more players, says Energy Efficiency Services MD Saurabh Kumar

Energy Efficiency Services, a joint venture company of government-owned four power sector companies, has many firsts in its impressive bouquet of achievements — executing the world’s largest programme of replacing incandescent and CFL bulbs with LEDs in India and then spearheading the government’s move to replace its fleet with electric cars. Saurabh Kumar, as managing director of EESL, is marshalling all his acumen and resources to make the initiatives a success.

Kumar told Moneycontrol in an interview that the Rs 11.8 lakh cost of the electric car the company is procuring on behalf of the government is almost 60 percent of the cost a similar car internationally, thus proving the efficacy of the aggregation model the company has adopted. Of the 10,000 such cars that EESL is buying under the first tender, he said Tata Motors and Mahindra & Mahindra would equally share the spoils.

He said EESL would wait for the department of heavy industry to finalise its new policy on charging stations before going ahead with a new tender for buying electric cars. The new policy would incorporate all the prevailing standards on charging stations, thus attracting more players to the expanding market, he said.

Here are the edited excerpts from the interview:

The cost of the car that you are purchasing under the first 10,000 unit tender has come to be Rs 12 lakh. That’s on the higher side of your estimate. How do you view this?

Rs 11.8 lakh (cost of the electric car). There is no doubt about that. Worldwide, the capital cost of an electric car is almost 30-40 percent higher than that of a normal, same segment ICE (internal combustion engine or conventional engine) engine car. There is nothing new that we are seeing. The new we are seeing is that the capital cost of the car that was discovered by us is almost 60 percent of the same cost internationally of a similar car.

So may be, perhaps, that aggregation model has worked which hasn’t been tried elsewhere in the world but we did that and because of the economies of scale, we have seen capital cost of the cars about $17,000, about Rs 12 lakh, yeah around $16,000-$17,000. Normally these are in the range of $25,000 similar kind of car.

In Delhi alone, about 150 cars are running for the last three-four months. There has not been, I mean had there been a complaint, you would have been the first, the press would have been the first to know that cars are non-functional or there is some problem.

But on a serious side, there has been no problem. Yeah in bits and pieces, some things may happen off and on, but even in this hot temperature, the AC s is working fine, the cars are running very well. They are getting charged. So there is no problem.

How many deliveries of these cars have you taken so far?

Nearly 200 in Delhi NCR and I think another about 100 in Andhra Pradesh and slowly the numbers are increasing.

At the end, it will be 50-50. We wanted the deliveries to end by March of next year. Obviously, Tata could have taken 70 percent because they were L1 but they only gave a schedule of around 50 percent that they can deliver by March. So we asked Mahindra and they will were willing to take up that additional 20 percent.

You came out with a fresh tender for another 10,000 cars but then extended the date. Why so?

We came out with a bid of 10,000 in March. Right now, we have extended the time for a particular reason.

The reason is the department of heavy industries has come out with a draft, technical specifications for charging infrastructure. Now these are materially different from what existed when we started this whole exercise because these are more open specifications. They can, these are specifications which are aligned to the international specifications. You can get better quality of cars using these charging stations.

If you take a car which has higher specification than what we have today, the chargers we have presently bought, they can’t charge those cars. This notification is in the draft stage right now. It is a unified kind of a charging specification which allows for all kinds of charging.

The present one which is notified, also Chademo, which is a Japanese standard and CCS’ which is the European standard. So it allows for all three to be put together. But it is on public consultation. So after the ministry receives the comments from people, they will look at those comments and then notify a final one.

So we want to wait for that final specifications to be out to decide can we out of the next 10,000, can we have certain percentage of cars which can comply with those standards which will also open up the market. Right now, we know there are only two players. But the moment this charging specification and the battery specification is specified, there will be many more players in the market.

This is based on the current charging station specified by heavy industries which are called Bharat AC001 and Bharat DC001. These are sufficient for the cars that are there today, the Tata and Mahindra. But if you have a higher, I mean these cars run for 130 km. If there is car which is 250 or 300 km, these chargers can’t charge those cars.

What is critical to understand in EV space the charging specifications decide what kind of batteries you can use in the car, they decide the battery chemistry. And that is why it is important to first wait for the charging specifications to be finalised and then go in for procurement of a vehicle.

There may not be a separate policy for electric vehicles and the government may push its electric vehicles through the existing module of FAME (Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India). Is that in anyway disappointing for you?

I do not have knowledge about this. FAME existed, FAME part 1. FAME 2, as I understand, with a much larger allocation is being finalised by the government. Whether there will be a separate policy apart from FAME, I do not know. But whatever little knowledge I have of FAME, it is actually a policy enunciation. And if you also look at what power ministry has come out with for the way you can price your charging infrastructure, I think the pieces are getting together.

Now whether a unified policy will be brought out or not, that is something I am not privy to.

There are incentives for a certain category of vehicles in FAME-2. We would like to wait for a while. Let these be finalised, formalised by the government, framed, notified in whichever manner and then the whole bidding process can work in a different manner. Then I can say that these cars will be eligible for this kind of subsidy. Because then the capital cost becomes different.

You had said the Electricity Act would need to be amended to create a viable ecosystem for charging stations. How is that discussion going with the ministry of power?

That was the understanding of the ministry of power at that point in time. But last month they came out with a guidance that you don’t need to change anything in the Electricity Act. This is a service, they have treated this as a services and not as a sale of electricity which means anybody can put up a charging structure. They have indicated what should be the tariff that the discom will charge to the owner of the charging infrastructure. So all that guidance has already come out.

What more policy support you think are needed to create the ecosystem for electric cars?

I think the clarity on what are the incentives which are going to come in and FAME 2 is hopefully addressing a lot of these questions and the demand. So FAME 2 also talks about aggregators. What we have done will also continue to drive demand for a while because it may not be possible immediately for the market to take it up on its own.

What are the challenges in faster adoption of electric vehicles by taxi services and cab aggregators?

You have 40 cars, we will replace it with electric. But the issue particularly for the taxi, if you want to run a taxi service, the minimum mileage you have to run to make taxi viable is 230 km which means you need one charge in between.

Now given the present specifications that we have, charges a car in 90 minutes. Now that’s not possible to really have a viable model and we have seen that In Nagpur where nothing much has happened, honestly speaking. So that is where the new specifications which have been issued which will hopefully become final India specifications allow for charging stations that can charge in 30 minutes and that is when you will see this ecosystem develop.

What’s your capital expenditure for FY19?

Capex for the year is about Rs 6,000 crore. We fund it on a debt:equity of 80:20. So we have tied up debt of nearly Rs 5,000. I have tied up about Rs 3,500 crore, rest we will issue bonds and equity will come in from internal accruals and also from our promoters.

We are told that at least one of your parent companies is keen to increase its stake. When will that happen?

Right now, 32 percent each is held by NTPC, PFC and REC and 4 percent by Power Grid. For a while it will remain the same. Power Grid is thinking about increasing its share but this is again something the shareholders. Could be or may be injecting more equity or we do a rights issue.

We already are deeply engaged with large number of organisations. We have an MoU with United Nations’ Environment programme where we are supporting several of their efforts in capacity building.

 

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