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 1/3^rd 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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Karnataka solar rooftop PV regulation

Electricity markets have always witnessed a tussle between the utilities and the regulators, Karnataka state is no different. The electricity regulator has always been among the first in the country in implementing progressive policies in the Renewable Energy (RE) sector. However, the progress of all the plans has been disheartening and in most cases it is due to lack of co-operation from the utility in the state. A case in point is the solar rooftop projects, in spite of having the highest Feed-in Tariff (FiT) of ₹ 9.56/kWh in the country in 2013, there was a lack of adoption for well over a year. The reason, Distribution Companies (DISCOMs) came up with an implementation plan nearly a year after the order.

Karnataka Electricity Regulatory Commission (KERC) has recently drafted a regulation to address the concerns of domestic residents living in apartment complexes with shared roofs and electrical connections. The proposed regulation intends to offer existing solar rooftop owners in shared roofs an option to increase their capacity and also new residents who wish to install a bigger system by aggregating the contract demand of multiple households in the building.

The proposed regulation aims to fill all the gaps existing in the current system which hinders adoption of solar rooftop system in residential complexes. The proposed tariff at Average Pooled Power Purchase cost (APPC) which is currently at ₹ 3.97/kWh for BESCOM will raise eyebrows considering the FiT is at ₹ 7.08/kWh for domestic consumers.

Will the regulations have a positive impact?

• The regulation is likely to have a positive impact because it removes the regulatory hurdle currently preventing residential complexes in implementing the system.
• Residential complexes tend to install solar as a way to reduce their energy bills and hence the type of metering or tariffs wouldn’t matter much.
• The regulation would however impact early adopters who will have to surrender their individual Power Purchase Agreements (PPA) if the complex as a whole is going for a bigger system in the common roof.

Overall, the regulation is definitely a good step but I believe there are technical challenges like metering involved in the implementation phase which only the DISCOMs can solve. I had a conversation with a regulator in KERC prior to the drafting of this regulation discussing issues related to solar rooftop in the state. He clearly admitted that at their level they can only bring in the best-fit regulation considering all stakeholders in mind but the final implementation is out of their purview. The comments to this draft regulation are open till 5^th July post that there could be a revised regulation coming up.

Check the proposed regulation:Here

Karnataka Solar Rooftop story

The recent announcement of the  solar rooftop tariff revision in the state of Karnataka has not gone very well with the general public even as they were expecting the tariffs to be reduced eventually. Tariff revision seemed to be an obvious move considering the ever decreasing cost of the solar power system and the recent solar bid results dint quite justify the prevalent tariff of INR 9.56 which is more than double the lowest tariff in the country with knowledge of the fact that the scale and projects are totally different.

The new tariff

Cty: KERC

The tariffs are differentiated and low compared to the previous order of 2013.

Cty: KERC (2013)

But the biggest announcement of the order came in the form of gross metering for domestic, hospital and institutional consumers.

Why is gross metering good for residential consumers?

The initial reaction to the tariff revision was surprisingly negative, with the so called industry experts calling KERC’s new tariff as a deterrent to the expansion of solar rooftops in the state but the gross metering policy will only aid the development of rooftop projects in the state. Gross metering will pay for every single unit of solar generated on domestic rooftops at the agreed price unlike the previous net metering scheme where consumers were paid for the excess sold over a billing period.

In short, consumers will be paid more for every solar unit they generate compared to every single unit they consume from the utility. The current tariff for domestic consumers in Bengaluru is between 3-6.90 INR. A quick calculation shows the slight benefit an average consumer stands to gain with the new policy.  The energy consumption numbers are conservative and the savings with gross metering will be higher than these on average.

And for the utilities

The utilities will be disappointed considering that they will be losing the extra revenue in terms of the energy the consumers will not be consuming. Since the consumption will go down for consumers they will also consume in the lower slabs of electrical tariffs and will be paying lower tariff.

BESCOM tariff 2016-17 Cty :KERC

In addition to losing out on energy revenue, utilities will also be paying up for the solar generation in totality. That will definitely be an added burden and for the utilities who have been complaining for a long time on losing out on consumers through the Open Access regulation.

Why is this a bad precedence?

Solar rooftops should definitely be incentivised but not at the cost of utilities. We have enough evidence of how such tariff regulations have failed in the long run in many places and is not sustainable. Germany, UK and even a few states in the US went this way in promoting solar with high Feed In Tariffs and then had to reduce or remove FiTs which then dint go well with the consumers.

The commission could have rather kept the new tariffs on par with the existing utility tariffs with similar slabs which wouldn’t have been harsh on the utilities. The tariff structures need a rethink, instead of  tilting the favours towards consumers the regulators can balance the situation by favouring the utilities in terms of tariffs but seeking a commitment in terms of service delivery or penalising on default of service.

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