Karnataka Electric Vehicle and Energy Storage Policy

The Electric Vehicle and Energy Storage policy announced by the state government of Karnataka is well ahead of even the Indian government’s proposed Electric Vehicle policy. The opening lines of the policy declare that Government of Karnataka wishes to make Bengaluru, the Electric Vehicle (EV) capital of India.

Check the link to know more about India’s Electric Vehicle Vision

The statement from the Government of Karnataka looks ambitious, but considering what Bengaluru, the silicon valley of India, has managed to achieve with the IT sector and subsequently turn into a start-up capital, the statement could in fact have more substance than what meets the eye. In the past few years, there has been an upspring of start-ups not only in the IT space but also in alternate energy and electric vehicles in the region.

A key characteristic feature of this policy happens to be the fact it tries to integrate energy storage manufacturing which is key to fostering an electric vehicle industry. The proposed policy as expected is filled with incentives and concession packages to lure investments. The policy has a validity of 5 years or until a new policy is announced.

The policy document intends to align with the national objective of having an all-electric vehicle fleet by 2030. In addition to reducing the dependency on crude oil consumption, where in 80% of India s oil requirement is imported and about 1/3rd of it is used in the transportation sector; the policy also emphasizes to reduce emissions in the sector by promoting EVs, which is laudable. Incidentally there is a mention of recent World Health Organization report that says India is home to 10 of the world’s 20 most polluted cities.

Highlights of the policy

Listen to the conversation to know more.

  • A key major objective of the policy is attracting investments of around 31,000 Crore (about 5Bn$) and employ 55,000 people in the sector.
  • EV manufacturing zones and clusters with complete infrastructural facilities is envisaged like in similar automobile manufacturing.
  • Three wheelers, cab aggregators, corporate fleets and school buses/vans are to be encouraged to shift to electric transportation. Already, non-transport private vehicles are exempt from paying taxes under the Karnataka motor vehicles act. Also, the national committee is evaluating the proposal to use standard batteries for public vehicles like 3 wheeler rickshaws. These are likely to aid this objective.
  • Similarly public fleet operators will introduce 1000 EV buses during the policy period with Bangalore Metropolitan Transport Corporation proposed to have EV fleet services within city by 2018.
  • An emphasis on EVs has been made for goods transportation within city limits operated by logistics firms. Logistics firms operating with e-commerce platforms are likely to benefit.
  • Battery manufacturing will be facilitated by the Karnataka Udyog Mitra who will operate an online clearance system with special incentives for modular lithium ion batteries.
  • The policy proposes to adopt BIS standards for setting up charging infrastructure with proposal to amend any existing bylaws to setup charging stations in public buildings.
  • The government will encourage industry and academia to undertake research in this space and setup charging infrastructure that adheres to ARAI/BIS standards.
  • A Special Purpose Vehicle (SPV) involving different government agencies in Bangalore will be mooted to setup charging infrastructure in the city.
  • A special tariff is likely to be proposed for EV charging in the state including proposals to permit energy resale at charging stations. This is an interesting proposal considering there are regulatory hurdles before any such proposal can go through even at the central level.
  • Fast charging stations and battery swapping networks at every 50km interval to be established on prominent highways of the state including Bangalore-Mysore is also proposed.
  • Public bus and metro stations to have EV charging infrastructure.
  • The policy also intends to encourage lease or pay-per-use business models for battery swapping stations. A few companies in the state are already evaluating the business proposition of swappable batteries.
  • An end of life battery use for solar PV applications is also envisaged including a safe disposal mechanism in Public-Private Partnership model.
  • On the manufacturing side for batteries the state has declared a target of inviting investments up to the tune of 5GWh, which is expected to generate a net employment of over 10,000.
  • Special incentives for skill development in battery manufacturing is also proposed.
    • An Investment Promotion Subsidy (IPS) in the range of 20-25% of total fixed assets shall be provided to manufacturers of EV components.
    • The Investment Promotion Subsidy will be available over and above any subsidy offered by Government of India (GoI).
    • Total exemption on payment of stamp duty, concession on land registration charges, reimbursement of land conversion fee and exemption from tax on electricity tariff are other incentives proposed.
  • A special package of incentives and concessions will be considered for Ultra Mega and Super Mega EV enterprises/Lithium ion battery manufacturers catering to exclusively for EV market based on investment and employment potential.
  • All project proposals and incentives will be subject to the approval of technical committee. A high level inter departmental review committee will also be constituted to regularly review the progress of developments under this policy.
  • Incentives in the form of capital subsidy up to the tune of 25% of capital investment for the first 50-100 fast charging, battery-swapping stations depending on the type of EV served.

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Cover image :Tesla Energy

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India’s new electrification scheme: Saubhagya

According to various report sources India has a population of about 200-300 million without access to electricity i.e. about 15-20% of the total population. In spite of having various electrification programmes over the years from multiple governments, household level electrification has been a distant dream for many in rural community. This past week, Indian Prime Minister, Narendra Modi made an announcement, yet another electrification scheme, this time targeting household level electrification, Pradhan Mantri Sahaj Bijli Har Ghar Yojana  or “Saubhagya” as its popularly referred to.

Will this scheme help India achieve a 100% electrification by December 31,2018? On this episode of ‘Emerging Tech Radio’ I look at India’s long road towards a 100% electrification and the new programme.

Check the full audio episode below

Electrification in India has long been a major talking point both at the national and international level. Power availability has been a major point of concern for long. Only in the last financial year did India turn positive in terms of net energy availability at the national level, however, that has not translated into energy access for all. In terms of village level electrification, India witnessed a strong progress between the census period of 1981-1991 where electrification in villages crossed 50% and reached over 85%. The next couple of decades however saw no progress with less than 7% increase in the electrification status. Incidentally that also happened to be a period where large market reforms were announced in India including in the electricity sector which underwent a period of deregulation. However, since 2011, the electrification drive has gained momentum moving from just over 90% to 99% in recent times.

Since the new Government took office in 2014, India has seen a new range of programmes aimed at rural electrification. In 2015, the Prime Minister made a statement that 18,452 un-electrified villages at that point in time would be electrified in 1000 days. In the last response made to the parliament in July by the then Minister for Power, the no of villages to be electrified stood at 3618. However, the latest update on the interactive online platform GARV that is built to update and track this progress the no has come down to 2952.  The concept of village electrification has been a point of debate for a long time, officially a village is considered electrified if it has basic distribution infrastructure, electricity for public places and 10% of households have access to electricity.

The Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) launched in 2014 has been the pioneering scheme to drive village electrification. In addition to laying wires to village it looks at feeder separation, augmentation and strengthening of rural transmission and distribution network. The plan laid significant emphasis on developing distributed rural micro-grids to cater to remote community electrification.

The focus of the Indian government since last year has steadily turned to household electrification. Even their portal GARV was revamped to provide household level electrification status. The previous target year for household level electrification was 2022 under the 24×7 Power For All proposal which included The Integrated Power Development Scheme (IPDS), launched in 2015 with a budget outlay of 45,000Cr with an emphasis on Power quality and reliability.

The Saubhagya scheme announced by the Prime Minister in the past week has a total budget outlay of 16,320 Crore rupees or 2.5bn$.  The funding has a central and state government component with a major outlay being funded by the central government.  Rural Electrification Corporation (REC) which has been leading India’s electrification initiatives has been chosen as the nodal agency for this scheme. The scheme as the government notes will support both the central and state government achieve power for all objectives by focussing on one of its key component of electricity connection to all.

I tried to invite a director from REC for the podcast show, however since the programme is yet to be formally approved by the CCEA, the Committee for Economic Affairs, there is no concrete roadmap that REC has been given for him to talk about and hence declined to comment on this. However, he did clarify that this programme will run totally in parallel to the DDUGJY programme with a different set of objectives, targets and budget outlays. States are expected to prepare project reports on status on household level electrification before seeking funds under this scheme. He went out to add the DDUGJY programme is well on its way to achieve the objectives of strengthening the rural electricity distribution network. Also, as per a recent parliamentary note by Ministry of Power, the programme has provided over 26mil free electricity connections to below poverty households since launch.

So Whats different in this programme?

A major talking point since the announcement was the mention of independent solar panel with battery systems for remote and inaccessible households. The solar power packs of 200 to 300 Wp with battery bank would comprise of Five LED lights, One DC fan, One DC power plug. It also includes the Repair and Maintenance warranty for 5 years. The primary mode of supply in the programme will still be drawing lines from the nearest distribution point, if not available a pole and line will be installed and only remote locations will be offered the single home systems. The Saubhagya programme will build on the work done under previous programmes by also reaching out to electrified villages and ensuring every household has a power supply.

Does this solve the problem?

As the electrification drive progressed for the last three years under the current central government there were regular updates from the former Power Minister, Piyush Goyal. He had stated the problems faced by agencies in implementing the programme a few times in the parliament. For e.g. nearly a thousand out of the identified 18000 odd villages are uninhabited.  This points to a gap in the existing benchmark for this data, which happens to be last census in 2011. People in these villages could have migrated since then. The second problem happens to be the actual remoteness of the village, its terrain or other issues including naxal affected areas. Apart from the infrastructure issues like right of way and forest land clearances etc. the other major factor was, deciding who gets the subsidy under the programme.

The new Saubhagya scheme will probably remove the hurdles of infrastructure development through the offgrid systems but issue of subsidy will remain.  The scheme guarantees free electricity connection for all under the Below Poverty Line (BPL) status as per the 2011 census. Families who are not covered under the scheme can still be eligible for the programme benefits by paying 500 Rs which is recovered in instalments spread over 10 months. Just to clarify, the ministry has subsequently released a note saying energy consumed will be billed as per local state tariffs, only the installation and setup costs will be waived off which is a significant cost to reach the last mile electricity consumer. The plan also proposes to have a comprehensive review mechanism to track status of each household who receive benefits.

How is the new announcement perceived?

As per the official statistics, nearly 40 million households are yet to be electrified. The 1600 Cr proposal would equate to a 4000 spend per household approximately for electrification.

The Saubhagya scheme intends  to plug existing gaps and comprehensively address the issues of entry barrier, last mile connectivity and access to electricity connections to all un-electrified households in rural and urban areas. At the moment the industry view on this is divided right in the middle with a few who believe the programme has the specifics to fill the gap and connect the last mile consumer and a few others who term this programme as a lack in aspiration by moving away from the concept of micro-girds that have been providing reliable power supply in remote locations to switching to a single-panel battery system that serves a light and mobile charging unit. Not to forget, there are instances where even an electrified village receives less than 12hrs of supply every day with poor quality being a major issue.

I had a quick chat with Dr Rahul Walawalkar and this is what he had to say in the podcast about the MICRO initiative.

Finally, at this moment I feel it is tough to be highly critical of the programme, only time will tell if it is going to be a success. I just hope it doesn’t turn out to be a check-box solution, where a scheme was formulated just to make sure India ticked the box of 100% electrification. Power has to be seen as economic enabler for the rural community. It’s high time, India moves away from a check-box mentality and offers reliable power solutions for all.

Economic Survey: Climate Change, Sustainable Development and Energy

Electricity is one the key sectors of the Indian economy and with the emergence of non-fossil power plants unsettling the traditional businesses it was high time to have a comprehensive take on the subject, the recent economic survey tries to do just that. A chapter aptly titled ‘Climate Change, Sustainable Development and Energy’  is a clear indication that the electricity sector today has wider impact on the people than portrayed by the phrase ‘Bijli, Sadak, Pani‘ (Electricity, Road, Water).

Climate Change

The chapter on economic survey clearly brings out the Govt.’s objective to stick to its commitment to the Paris Agreement (Read more on India’s climate commitment). The chief economist goes on to say India will stick to its stand irrespective of what happens with the US’s stance on climate change.

Sustainable Development

Its been over two years since UN released its objectives for Sustainable Development and the 17 Sustainable Development Goals (Know more about SDGs) and India has produced the first review of the goals. As expected the emphasis is on SDG 7, “Ensure access to affordable, reliable, sustainable and modern energy for all”. Incidentally, SDGs also have 2030 as the target year like the Paris Agreement.

Energy

The narrative of the chapter is quite clear right from the start, justify the need to transition to Renewable Energy (RE) alternatives by stressing the benefits of climate change and sustainable development. A detailed analysis on the costs of energy and net benefits have been studied and presented in the study. A few of the analysis have been spot on like the one on anticipated RE penetration by 2027, a 43% of the grid total and getting better of coal.

RECoal

Solar Power

The past year has been a clear indication that rapid deployment of solar power is possible with declining costs (highlighted below). (Solar bids: No more outliers)

Solar

The survey interestingly points out to the key factor that determines if a solar power development is really sustainable. I’m glad to be proved right, that the development costs of solar power is high considering land use is impacted especially if the plants are performing below their efficiencies (Read more: Is Solar Power Development Sustainable?) Survey points out the land requirement for solar is 10 times the requirement for coal plants, clearly a loss of opportunity cost.

Need explanation: Social costs

As a surprise, in what looks to be a clear approach to show the net benefits of RE switch is not significant as thought, the economic survey throws up an analysis that points social costs of Renewables is three times that of coal but reduces as we progress to 2030.

SocialCosts

Similarly an explanation is needed to justify the lack of accounting of actual costs of stranded assets in thermal power plants while the same has been well accounted for renewables. If there is a valid justification, calculations have to be made public for debate.

SocialCosts1

Subsidies

It is understandable that subsidies for RE have been high in the past and wind accounted for a major chunk considering the Generation Based Incentives (GBI) were in place until March 2017. How are the budget estimates for 2017-18 FY expected to be close to last year when the major financial incentive of GBI has been waived off? There have been no known policy announcement that can justify this estimate.

Subsidies

National Clean Energy and Environment Fund (NCEEF)

A topic that needs further debate considering that the new proposal of  Govt. is to use this fund for compensating states for the loss of revenues from GST implementation. I had earlier pointed out NCEEF allocation had to be re-looked considering its objectives (NCEEF: A review). The survey points out the NCEEF has been under utilized, no projects have been recommended by Inter Ministerial Group (IMG) to be funded from this corpus for the past two years.

NCEF

Overall, summaries from a few analysis are highly debatable especially related to social costs of renewable energy. But, the Economic Survey brings out the major topics for discussion in the public domain, a clear indication that the government is actively pursuing these policy objectives. The chief economist has promised to release all the data pertaining to the economic survey in public domain in due course and I’m looking forward to it.

On a personal note, I’m glad that a chapter in Economic Survey talks about Climate Change, Sustainable Development and Energy in the same breadth, the very topics I have been writing about in my website.