EQ Magazine December 2017 Edition by EQ Int'l Solar Media Group

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CONT EN T

VOLUME 9 Issue # 12

Disclaimer,Limitations of Liability While every efforts has been made to ensure the high quality and accuracy of EQ international and all our authors research articles with the greatest of care and attention ,we make no warranty concerning its content,and the magazine is provided on an>> as is <<basis.EQ international contains advertising and third –party contents.EQ International is not liable for any third- party content or error,omission or inaccuracy in any advertising material ,nor is it responsible for the availability of external web sites or their contents

30 ENERGY STORAGE Elon Musk wins a bet to build world’s largest lithium-ion battery

ELECTRIC VEHICLES

ROOFTOP & OFFGRID

E-payments to be permitted for charging electric vehicles

Chennai: Solar rooftops to cater 90 per cent power to corporation buildings

ROOFTOP & OFFGRID

Tata Power Olar CommisSions Inia’s First Rooftop Solar Carport

10 ROOFTOP & OFFGRID Kavita Gupta Announces Solar Energy Package For Small Power Looms

The data and information presented in this magazine is provided for informational purpose only.neither EQ INTERNATINAL ,Its affiliates,Information providers nor content providers shall have any liability for investment decisions based up on or the results obtained from the information provided. Nothing contained in this magazine should be construed as a recommendation to buy or sale any securities. The facts and opinions stated in this magazine do not constitute an offer on the part of EQ International for the sale or purchase of any securities, nor any such offer intended or implied Restriction on use The material in this magazine is protected by international copyright and trademark laws. You may not modify,copy,reproduce,republish,post,transmit, or distribute any part of the magazine in any way.you may only use material for your personall,Non-Commercial use, provided you keep intact all copyright and other proprietary notices.If you want to use material for any non-personel,non commercial purpose,you need written permission from EQ International.

December 2017

RENEWABLE ENERGY Not a simple case of more is better

RESEARCH & ANALYSIS India’s Clean Energy Push Could Create New Jobs & Reduce Poverty

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37 ENERGY STORAGE INDIA’S ENERGY STORAGE MISSION:

24 56

BUSINESS & FINANCE Investor group launches new investment vehicles for clean energy in India

ELECTRIC VEHICLES VALUING SOCIETY FIRST An Assessment of the Potential for a Feebate Policy in India

26 16

INDIA India can achieve 200 GW renewable energy by 2022: R K Singh

20 INDIA

PV MANUFACTURING

China-based LONGi to invest RM100mil more in Malaysia

POLICY & REGULATION

Decisions taken in respect of solar pumps in the Quarterly Review...

Coal import may see further dip on selfsufficiency push: Fitch

INDIA Will make 24 hour power supply mandatory for all state DISCOMS: Centre

INDIA

Govt to auction up to 21 GW solar, wind capacity by March 2018

INDIA

India needs over $200 bn of investment in renewable infrastructure

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EQ NEWS Pg. 07-37

December 2017

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December 2017

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ROOFTOP & OFFGRID

Chennai: Solar rooftops to cater 90 per cent power to corporation buildings The Greater Chennai Corporation is all set to install solar panels in 1,378 Chennai corporation owned buildings.

id to swerve towards green energy from non-renewable energy. “A detailed project report (DPR) has been prepared for installing solar panels in the corporation buildings. The project will be implemented with the help of a private service provider. Ministry of new and renewable energy would provi-de a subsidy to the tune of Rs 9.16 crore. Chennai Corporation has to spend `24.67 crore for the project. The service provider will be paid according to the amount of energy produced, the official said. “Proposal has been sent to Board of Chennai Smart City Limited for approval. Once the approval is given, we will proceed to call for tenders,” explained the official. It is to be noted that the Tamil Nadu Solar Energy Policy 2012 has targeted to achieve 2,000 MW of solar power by 2015.

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According to the DPR, the buildings will be installed with solar panels at a capital cost of `33.83 crore,” a corporation official said. It is learnt that the total power production capacity of these panels will be 5,639KW. “By installing these panels, it is assumed that 90 per cent of the power needs of the corporation buildings will be met through this project,” the official added.

December 2017

ROOFTOP & OFFGRID

TATA POWER SOLAR COMMISSIONS INIA’S FIRST ROOFTOP SOLAR CARPORT Car parking built on Unity One in association with DMRC will provide 300KW of solar electricity.

ata Power Solar, India’s largest integrated solar company, sets another landmark by commissioning an unprecedented rooftop project in India – a solar carport on the rooftop of the sprawling 70,000 sq.mtr Unity One mall, a Unity Group endeavor in Rohini. The unique rooftop carport is estimated to set off 438 Tons of carbon emission annually. Tata Power Solar won the bid in the open tender process fielded by Delhi Metro Rail Corporation (DMRC) for multi-level car parking. The carport was inaugurated by Mr. Satyender Jain, Minister of Power, PWD, Health & FW, Industries and Gurudwara Elections, Govt of NCT Delhi. The project has been envisaged under net-metering scheme enabling self -reliance in the energy consumption and production cycle. It enables the mall to receive real value of the energy produced by earning on the unused and excess solar electricity produced. It also cuts down the need to install a second meter or an expensive battery storage system as it is directly connected to the local power grid.

December 2017

Speaking on this occasion,

Mr. Ashish Khanna, ED and CEO, Tata Power Solar said,

“We feel proud to be associated with yet another milestone solar project for India. It has been achieved by our excellent engineering skills and project management capabilities. After earning the distinction of executing world’s largest rooftop at a single location and India’s largest carport at Cochin, we feel proud to accomplish India’s first carport on a rooftop.”

Tata Power Solar has been consistently ranked number one rooftop player for four years in running (Bridge to India). It is rated tier-1 module manufacturer by BNEF (Bloomberg New Energy Fund). It has shipped 1 GW modules to over 30 countries – the first Indian company to achieve this milestone.

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December 2017

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ROOFTOP & OFFGRID

KAVITA GUPTA ANNOUNCES SOLAR ENERGY PACKAGE FOR SMALL POWER LOOMS Union Textile Ministry recently announced Solar Energy Scheme for small power loom units, on Grid Solar Photo Voltaic Plant (without battery backup) and Off Grid Solar Photo Voltaic Plant (with battery backup).

The government will provide INR 2.50 lakh subsidy per unit. This will help the unit to pay back bank loans within 3-4 years, after which the unit shall get practically free electricity, stated Textile Commissioner Dr. Kavita Gupta.

he was speaking while inaugurating Buyer-Seller Meet (B2B) and Textile Exhibition organized by The Regional Office of the Textile Commissioner, Navi Mumbai on 26th November 2017. The Fair shall remain open till 28th November 2017 at Kohinoor MangalKaryalaya, Opposite Swami Narayan Temple, Dadar( E), Mumbai. Dr. Kavita Gupta further stated that Union Textile Ministry and State Government have announced several promotional schemes for power loom textile industry but there is hardly any awareness of the schemes in the industry. Entrepreneurs from Gujarat and Tamil Nadu have availed maximum benefit from these schemes.

There are 25 lakh power looms in the country out of which 50% are in Maharashtra. There are 108 power loom clusters in the country. There are 72 Textile parks. Rahul Mehta, President, (CMAI), “Apparel export for the year 2016-17 was 16.8 billion dollars and the target for 2017-18 was 20 billion dollars. However, the export target for 2017-18 will not be attainable and is likely to remain at the last year’s level. Recently, the government has raised the incentive rate from 2% to 4% for garments and madeups under Merchandised Exports from India Scheme. (MEIS). In addition government has also increased RoSL rates from 0.9% to 1.6%. However, duty drawback rates have ended on 30th September 2017 and new rates have not been announced. Supposing if duty drawback rates announced are around 2 to 3%, the total incentive will be around 8%, which was 11.50 to 12% earlier.”

Source : Textile Excellence

December 2017

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December 2017

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ELECTRIC VEHICLES

E-payments to be permitted for charging electric vehicles In yet another move to curb pollution, electric car users will be permitted to pay for charging of their electric vehicles through digital means, following the government accepting the recommendations of an expert committee, informed sources in New Delhi

he Committee for Standardisation of the Protocol for Charging Infrastructure, set up by the government, has also recommended adopting uniform standards for electric vehicle (EV) charging stations in the country so that EVs of various models by different manufacturers can be charged at any station.

In this connection, the report suggested that metering be done as per units consumed for charging each vehicle, along with a grid-responsive billing. The committee also advised setting up a massive charging infrastructure for EVs, while the government has adopted the panel’s report on Bharat Public EV Charger Specifications, A study by the Society of Manufacturers of Electric Vehicles (SMEV) released earlier this week showed Gujarat, West Bengal, Uttar Pradesh, Rajasthan and Maharashtra have emerged as the top five states in EV sales. Its survey of EVs sold during the last fiscal showed that 1,926 of these were sold in Maharashtra, 2,388 in Rajasthan, 2,467 in Uttar Pradesh, 2,846 in West Bengal and 4,330 in Gujarat, which made it the to the top in bringing the maximum number of e-vehicles on road.

December 2017

“The customers need to be billed for the charging and payment needs to be made. There are multiple options, including debiting the user’s account based on VIN (vehicle identification number).”

Direct debiting the funds to user’s equipment based on VIN will be adopted. Alternately, a mobile application to be defined, which allows a user to charge using BHIM or Bharat QR code or other digital payment schemes specified by Indian Government, to be used both for AC (alternating current) as well as DC (direct current) chargers,” the committee said in its report.

“In addition, 25,000 e-vehicles were sold across India between 201617,” an SMEV release said. “As far as other states are concerned, there is a dire need for them to go electric on an urgent basis,” SMEV Director (Corporate Affairs) Sohinder Gill said in a statement, adding that challenges such as delay in subsidies and weak infrastructure need to be addressed. State-run Energy Efficiency Services Ltd (EESL) announced earlier this month it will invite bids for supply of a second lot of 10,000 e-vehicles around March-April next year. Electric car makers Tata Motors and Mahindra & Mahindra had emerged as successful bidders in its first tender for 10,000 cars finalised last month. The governments’s National Electric Mobility Mission Plan

launched in 2013 aims at gradually ensuring a vehicle population of about 6-7 million electric and hybrid vehicles in India by 2020. The vision enunciated two years ago is for India to have 100 percent EVs by 2030. However EESL Managing Director Saurabh Kumar said the major roadblock in realising this vision is the lack of e-vehicle charging infrastructure.

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ELECTRIC VEHICLES

India’s transition to electric mobility system can save US$330 billion by 2030 One giga-tonne of carbon-dioxide emissions in the air can also be avoided : FICCI – Rocky Mountain Institute Report vercoming key barriers to vehicle electrification in India’s passenger mobility sector presents an enormous challenge for India—and also a tremendous economic opportunity. India can leapfrog the western mobility paradigm of private-vehicle ownership and create a shared, electric and connected mobility system, saving 876 million metric tons of oil equivalent, worth US$330 billion (INR 20 lakh crore) and 1 giga-tonne of carbon-dioxide emissions by 2030.

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A FICCI – Rocky Mountain Institute report titled ‘Enabling India’s Transition to Electric Mobility’ was released by the Union Minister Shri Nitin Gadkari at a conference on smart mobility, arranged by FICCI in New Delhi today. Using a collaborative approach, coordinated action and the strategies and solutions in this report, India can overcome key barriers to EV adoption and potentially become a global leader in electric mobility. Estimates indicate that India’s urban population will nearly double in the next decade, to approximately 600 million in 2030 and forecasts suggest that by then India’s urban population will take almost 500 million trips per day. While this rapid growth presents major policy and business challenges for India’s public and private sectors, respectively, it also presents an enormous economic opportunity. Optimizing e-mobility use for everyday life with greater thrust on use of public transport, e-vehicles, metro solutions and shared rides as means for mass transit could also prove game-changers in addressing the issue of air pollution in urban areas.

Public Transport, to reduce congestion on roads, the cost of transportation for travelers, transportation energy use, and negative environmental impacts Sharing and mobility services, to unlock the competitive and often superior economics of highmileage EVs through a variety of innovative business models, while creating jobs and enhancing access to India’s critical public transit network; Interoperable transit data, to enable sharing and mobility services, as well as better access, affordability, and multimodal integration; EV charging infrastructure, to power EVs and to provide valuable grid services, reducing customers’ concerns around range anxiety and enhancing India’s rapidly changing electric grid; Battery swapping, to reduce the upfront cost of EVs and to complement EV charging infrastructure through a more centralized, less distributed form of charging EV batteries; and Battery manufacturing, to reduce the cost of batteries—currently the most expensive EV component—and to make them in India, hereby accelerating EV adoption, both in India and globally, while creating jobs and avoiding a future in which India replaces costly oil imports with lithium imports.

December 2017

INDIA

Officials wrongfully charging duty on solar panels: RK Singh Renewable energy minister Raj Kumar Singh has complained to finance minister Arun Jaitley that customs officials are demanding duty on imported solar equipment,

enewable energy minister Raj Kumar Singh has complained to finance minister Arun Jaitley that customs officials are demanding duty on imported solar equipment, which has led to ports getting jammed with shipments and jeopardised the prime minister’s flagship programme of accelerating renewable energy projects. The solar industry has delayed acceptance of the consignments, protesting the decision of the Central Board of Excise and Customs to start charging basic import duty of 7.5% on solar panels and modules, which had been exempted from the levy until recently.

“I shall be grateful if officers are directed that photovoltaic panels/modules being imported for solar power generating systems/ plants be allowed to be imported under the nil rate of duty… as has been done so far,” the minister said in the letter. However, the letter has made no impact. Instead, developers with consignments reaching the ports of Krishnapatnam, Mundra and Nava Sheva faced the same duty demand. When the problem started in September, most developers resisted paying, but with consignments piling up and the prospect of projects getting delayed, some are falling in line, either paying or providing bank guarantees“Ultimately, we gave a bank guarantee of Rs 52 lakh for the basic 7.5% duty. We were not charged any penalty,” said a leading developer with 108 containers held up for 20 days at Krishnapatnam. “At Chennai port, we had to pay Rs 3.15 crore, along with another 15% as penalty. We expect consignments of around 900 MW in the next few months and if this new A new interpretation of import duty rules, initially at classification continues, we will have to pay an additional Rs 162 Chennai as reported in ET on October 12, has been crore.” extended to other ports, leading to a pile-up of thousands “It is simple arm-twisting,” said another developer, which of solar panel and module containers even after renewable provided a Rs 70-crore bank guarantee at Chennai and incurred energy ministry secretary Anand Kumar brought the matan additional loss of Rs 40 crore on demurrage. Developers are ter to the notice of the customs official concerned more unanimous that unless the matter is resolved, the additional charge than six weeks ago. More than 90% of the solar panels will increase solar tariffs. “There is certainly going to be an effect and modules used in India are imported, mostly from on tariffs, to the tune of 40 paise per unit or so, which will impact China. the bottom lines of developers,” said a developer. Solar modules were traditionally clubbed with diodes, transistors, photosensitive semiconductor devices and light-emitting diodes, which are exempt from import duty. Lately, however, customs officials insisted they fall in the “It is a matter of wrong clascategory of electrical motors and generators and attract sification,” MNRE secretary 7.5% import duty, apart from education cess. “There is no Anand Kumar had told doubt that panels and modules are used for generating ET when the problem first electricity – but they are used for generating renewable emerged. “They are sorting out energy and that is why the government took a conscious the matter. I’ve talked to the decision that they should be allowed to be imported withboard member concerned.” out any customs duty,” Singh said in the recent letter. “ Source: economictimes.indiatimes

December 2017

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December 2017

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INDIA

India can achieve 200 GW renewable energy by 2022: R K Singh India can easily achieve 200 GW of renewable energy capacity by 2022 as against the “conservative target” of 175 GW, while unveiling the roadmap for clean energy

B There was a long pending demand from the industry to declare the renewable energy roadmap, he said at a press conference to unveil solar and wind energy capacity addition plan of the ministry of new and renewable energy (MNRE). “Hence, with the declaration of this trajectory, the government has clearly spelt out its plan of speeding up of RE installation in country and strengthening the RE manufacturing base in India,” said Power Minister R K Singh

Singh said that in order to encourage ‘Make in India’ in the RE sector, the MNRE is working on a scheme and will issue Expression of Interest (EoI) for establishing domestic manufacturing facilities for up to 20 GW. He further said that MNRE is exploring innovative ways to achieve additional installed RE capacity through floating solar power plants (FSPP) over dams, offshore wind energy systems (OWES) and hybrid solar-wind power systems (HSWPS), which may provide over 10GW additional capacity. The MNRE team of experts has already surveyed the Bhakra Nangal dam for FSPPs and Gujarat and Tamil Nadu for wind power plants, Singh said. Talking about the issues in Power Purchase Agreements, he said the sanctity of the PPAs have to be ensured and they would have to be mandatorily honoured. The ministry is in constant discussions with state governments, including Andhra Pradesh and Karnataka, to ensure that, he said. Talking about the Renewable Purchase Obligations (RPOs), the minister said that these obligations are mandatory and need to be adhered to strictly.

December 2017

uoyed by the success of reverse auction of renewables, which resulted in tariffs dropping to all time low rates, Singh also unveiled the plan to auction up to 21 GW solar and wind capacity by March 2018. On the RE capacity addition, “175 GW of Renewable Energy by 2022 is a very conservative target. India can easily achieve 200 GW of renewable capacity by 2022.”

Elaborating the RE Development road map MNRE Secretary Anand Kumar said that for achieving 100 GW solar power target by 2022, the ministry, along with states, would lay out bids for ground mounted solar parks for 20 GW in 2017-18, of which 3.6 GW has already been bid out. He said 3GW of solar energy capacities will be bid out next month, 3 GW in January, 5 GW in February and 6 GW in March. As much as 30 GW each will be bid out in 2018-19 and 2019-20 to add 60 GW solar capacities. Kumar said that as against the target of 60 GW for wind power, 32 GW has already been commissioned. The central government, along with states, intends to issue bids of cumulative capacity of about 8 GW of wind capacities this year. Of this, 5 GW (including present 2 GW) has already been bid out and 1,500 to 2,000 MW will be bid out in January and as much in March. He also informed that 10 GW will be bid out each fiscal in 201819 and 10 GW in 2019-20, leaving a margin of 2 years for commissioning of projects. Kumar said that the ministry soon issue the Wind Bidding Guidelines. He also said that with wind power tariffs becoming competitive and state DISCOMs encouraged to buy more of RE, the government has doubled the auction capacity for the third national level wind auction from 4GW last year to around 9GW in this year. Regarding clarity on GST rates on Solar panels, Kumar said that the MNRE is in talks with the Ministry of Finance and in the next 7-10 days all the issues would be resolved. Source : PTI

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INDIA

Will make 24 hour power supply mandatory for all state DISCOMS: Centre Government said, the Centre will soon make it obligatory for all State DISCOMS to ensure 24 hours power supply to all the consumers.

Minister of Power and New and Renewable Energy R K Singh said this while unveiling a roadmap of bidding of solar and wind energy capacity at a function in New Delhi.

here is adequate availability of power in the GRID and transmission systems are strong and so there is no reason for not making it a mandatory obligation. The Power Minister said, the Central government is also supporting the State power distributions system to strengthen them for the purpose. Mr Singh said, the government will easily achieve 200 Giga Watt

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renewable energy capacity against the targeted capacity of 175 MW. He said, roadmap will help the industrialists to plan for bidding to generate power through sources of renewable energy. On the occasion, Power Sale Agreements (PSA) for purchase of wind power were also signed with Solar Energy Corporation of India (SECI) with utilities of Uttar Pradesh, Bihar, Jharkhand, Assam, Punjab, Goa and Odisha.

December 2017

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INDIA

Govt to auction up to 21 GW solar, wind capacity by March 2018 Buoyed by the success of reverse auction of renewables, the Ministry of New and Renewable Energy announced auction of up to 21 GW solar and wind capacities by March 2018.

(We) will think about imposing Customs duty on solar equipment once we develop our domestic manufacturing capacity.” R K Singh

New and Renewable Energy Minister

he government has already auctioned 2 GW wind capacities so for in first and second rounds this year. It has also decided to put for bidding 10 GW wind capacities each in 2018 -19 and 2019-20 to meet the target of 60 GW by 2022. At present, wind power installed capacity is 32 GW. As far as solar auction is concerned, the govt is looking at 17 GW capacities by March 2018. So far, 3.6 GW solar capacities have been auctioned. To meet the milestone of 100 GW of solar capacity by 2022, the Centre will go in for auction of 30 GW solar capacities each in 2018-19 and 2019-20.

The ministry will put on the block 3-4 GW wind power capacities during third and fourth rounds by March 2018. Each round will be of 1.5-2 GW each, said Power and New and Renewable Energy Minister R K Singh during a media interaction.

The Solar Energy Corporation of India will be the nodal agency for most of the auctions.Wind power tariff had dropped sharply to an all-time low of Rs 2.64 per unit during the second auction by the SECI for 1 GW projects in October. Solar power has seen a similar play where the tariff had dropped to a record low of Rs 2.44 per unit in a tariff-driven bidding earlier this year. The power minister asserted that India will easily achieve 200 GW renewable energy capacity by 2022 against the targeted 175 GW. The competitive wind and solar tariff is seen as a big boost for India’s ambitious target of achieving 175 GW of renewable energy by 2022. Source : PTI

December 2017

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December 2017

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INDIA

Coal import may see further dip on selfsufficiency push: Fitch

Essel Infra UP solar tariff gets regulator’s OK, others to match bid

Coal import for October came in flat at 16.65 million tonnes, underpinned by cautious buying by consumers due to high prices in the overseas market, according to the data from mjunction services, a leading name in the e-auction space.

Essel Infra would be the biggest beneficiary as its tariff at Rs 7.02 paise was the lowests.

lobal rating agency Fitch has said India’s dependency on imported coal may continue to decline as the government moves ahead on the path of selfsufficiency.

“We expect India’s thermal coal imports to continue to fall as the government maintains its push for self-sufficiency and as renewable energy output increases,” the global rating agency said. “This is amid lower-than-expected demand because of reduced offtake from financially stressed power distribution companies and subdued industrial performance,” Fitch Ratings said. In September, the import went up temporarily as generators stocked up the fossil fuel ahead of winter, it said. Coal import for October came in flat at 16.65 million tonnes, underpinned by cautious buying by consumers due to high prices in the overseas market, according to the data from mjunction services, a leading name in the e-auction space.

The figure for October 2016 was 16.68 million tonnes (mt).

Import of coal declined 6.37 per cent to 191.95 mt in 2016-17, mainly because of higher production by Coal India Ltd (CIL). CIL accounts for over 80 per cent of the domestic coal production. Source : PTI

ariff of Essel Infraprojects’ solar power plant at Uttar Pradesh (UP) has been upheld by Uttar Pradesh Electricity Regulatory Commission, more than a year after the project was commissioned. After considering a demand for rejecting Power Purchase Agreements between Uttar Pradesh Power Corp and eight other power producers including Essel on the ground that the tariff is not consumer friendly, the commission has now accepted the tariff discovered through competitive bidding. Essel Infraproject, would be the biggest beneficiary as its tariff at Rs 7.02 paise was the lowest and all other eight successful bidders will now have to match it. However, most of the bidders expressed their unwillingness to accept Essel’s lowest bid.

Essel Infraprojects, an enterprise of Dr Subash

Chandra-led Essel Group, was awarded 50 mega watt (MW) solar project by Uttar Pradesh New and Renewable Energy Development Agency under the state Solar Power Policy 2013. UPNEDA in 2015 carried out tariff-based competitive bidding process for grid-connected power projects for the procurement of 215 MW capacity solar power at fixed tariff for a period of 12 years. The Power Purchase Agreements were then signed with Uttar Pradesh Power Corp. The financial bids of 25 technicallyqualified bidders including firms belonging to Essel and Adani were opened in June 2015 and the Bid Evaluation Committee recommended approval of tariff quoted by 15 bidders which was subsequently approved by UP government Cabinet in September. Essel InfraProjects quoted the lowest at Rs 7.02 a unit, Adani Green Energy was among the highest at Rs 8.44, with Sukhbir Agro and Sree Radhey both quoting the highest tariff of Rs 8.60 a unit.Later in a public hearing, the regulatory commission was urged to delve into reasonability of the discovered tariff with a demand for rejection of discovered tariff.

In the petition for acceptance of the tariff, the regulatory commission remarked in February “it is incumbent on the Commission to closely scrutinise the reasonability of the tariff before passing it on to consumer to protect consumer interest.” Source : PTI

December 2017

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INDIA

Nagpur Metro to get solar power at less than Rs4.50 a unit Nagpur Metro has decided to go in for captive solar power generation and will get it at Rs4.50 a unit. It will use costly conventional power in evening.

ahametro will tie up with Solar Energy Corporation of India (SECI), a central government undertaking, for solar generation. "We will go only for SECI registered companies. The current rate offered by SECI is Rs 4.50 a unit. We have made it clear that we want power at less than this rate," Dixit further said. Nagpur Metro needs 14MW solar power to meet 65% of its energy needs. Earlier, Mahametro had decided to float a tender for entire 14MW. Now, it will install of solar panels in stages. "The first tender will be only for three stations in

the at grade section — Khapri, New Airport and Airport South — which will be used by public from January 2018. The rate of solar power is reducing by the day and we want to take advantage of this trend. We will increase our solar capacity as and when required," the MD said. The advantage of open access captive mode is that no permission is required from Maharashtra Electricity Regulatory Commission (MERC). "Earlier, we wanted to generate power under solar roof top policy. The problem is that there is a cap of 1MW under this policy. We had filed a petition in MERC to remove the cap for us as a special case but were not successful,"

Mahametro managing director Brijesh Dixit said that the earlier state power generation company Mahagenco was to generate solar power for Nagpur Metro. "It was costing us Rs7.50 per unit and hence we decided to go for self generation in open access captive mode," he added.

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December 2017

INDIA

India needs over $200 bn of investment in renewable infrastructure India is on track to catalyse $200-300 billion of new investment in its renewable energy infrastructure in the next decade with global capital inflows playing an increasingly crucial role, a top financial analyst with a leading US-based institute foresees.

India’s decarbonisation policy is in line with global trends which, since 2011, have been seeing investments in renewable energy infrastructure running at two-three times of that for new fossil fuel capacities, Tim Buckley, Director of Energy Finance Studies Australasia with the Institute for Energy Economics and Financial Analysis (IEEFA), said.

t present, India relies on thermal power generation for 80 percent of its electricity, while hydro supplies a significant 10 per cent and renewables just seven per cent. However, India has set an ambitious but achievable national target of 275 GW of renewable capacity installed by 2027.

CHANGES TO TAP RENEWABLE RESOURCES ARE ON THE WAY.

ndeed, the tipping point may have been 2016-17, when the net thermal capacity plummeted and renewable installs more than doubled, Buckley said in his report “Indian electricity sector transformation” made public Recently . These developments continued into 2017 with costs of both falling by an unprecedented 50 per cent and recent tenders now pricing renewables at 20 per cent below the average price on existing Indian thermal power generation.

he report examines the rapid transformation in India’s electricity market, showing how renewable energy and energy efficiency measures can help the country minimise the growth of coal-fired electric generation.Electricity demand in India is expected to double over the coming ecade, and how this electricity will be generated is important for both India and the world.

e present an electricity sector model out to 2027 showing how India can meet almost all of its growing electricity needs via increasingly cost-competitive renewable energy resources and numerous energy efficiency measures, while at the same time keeping its coal use in check, at perhaps no more than five-10 per cent above current levels,”

December 2017

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INDIA BUCKLEY TOLD IANS IN AN EMAIL RESPONSE. ndia is the world’s second-largest producer, consumer and importer of thermal coal. It’s also the third largest electricity user in the world after China and the US. Toeing the path of developing renewable energy infrastructure, prices of both wind and solar power have recently fallen significantly in India with record low prices seen this year. As a result, for the first time in India, addition of new renewable generation topped that of thermal power in 2016-17. During this period, net thermal power addition fell to just 7.7 gigawatts, well below the roughly 20 GW added annually in the prior four years, while renewable additions jumped to 15.7 GW, the report said. India’s draft national electricity plan calls for renewable energy installs to average 21-22 GW annually going forward. Given the rapidly improving economics of renewable, solar’s cost is down 50 per cent in just two years, for example hovering at about $0.038 per kilowatt-hour, making this an achievable target. Some in India have been concerned about rising module prices in the near term, but IEEFA pointed to the record low $0.018 and $0.021/kWh tariffs awarded in Mexico and Chile respectively this past week. Clearly India can look forward to further renewable energy tariff reductions medium term, the report said. While renewables are expected to surge, IEEFA forecasts that net thermal power capacity additions are likely to remain below five GW annually in the next decade, held in check by increased retirements of highly polluting, endof-life sub-critical coal-fired power plants.

We expect retirements to average more than 2.5 GW annually, but with coal-fired power plant utilisation rates averaging just 56.7 per cent in 2016-17 and little prospect of this improving over the coming decade, retirements could well accelerate to four-five GW annually,” said Buckley.

These retirements are likely to be pushed forward by the reality that solar and wind already are being deployed at tariffs below those of even existing domestic thermal power generation. India’s target to all but cease thermal coal imports by the end of this decade is now the logical economic outcome, especially since plants using expensive imported coal are increasingly the high-cost dispatch option. As the second largest importer of thermal coal globally, this is a materially adverse development for nations exporting thermal coal.“The challenges to integrating India’s 40 per cent renewable energy target by 2030 are real, but the momentum over the past three years, gained through government policy and economic merit, give us confidence India will stay the course,” the report said. ndia is ranked 14th in the Climate Change Performance Index (CCPI) 2018 out of 56 nations and the European Union by environmental organisation Germanwatch, an improvement from its 20th position last year, for reducing greenhouse gas emissions by opting to transform its electricity sector towards green technology. China, with its high emissions and growing energy use over the past five years, still ranks 41st, says the Germanwatch’s report released last week. At the just-concluded UN Climate Change Conference (COP23) in Bonn, a coalition led by Canada and Britain jointly launched the Powering Past Coal Alliance with more than 20 partners, and even a US state, to move away from coal, a major source of air pollution.

Source: IANS

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December 2017

BUSINESS & FINANCE

Investor group launches new investment vehicles for clean energy in India The India Innovation Lab for Green Finance – a group of investors and government representatives that accelerates green finance instruments to meet India’s green infrastructure goals – launched two new instruments that could help catalyze millions of dollars for clean energy in India.

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he India Innovation Lab for Green Finance - a group of investors and government representatives that accelerates green finance instruments to meet India’s green infrastructure goals – launched two new instruments that could help catalyze millions of dollars for clean energy in India. The launch is in partnership with the India Lab’s public and private Lab Members, including the Indian Ministry of New and Renewable Energy, the Ministry of Finance, the Indian Renewable Energy Development Agency (IREDA), the Asian Development Bank, ReNew Power, Cyril Armachand Mangladas, HSBC India, KfW Bank, YES Bank, the World Bank, and the development agencies of the French, UK, and US governments, among others. Lab members and other experts have spent the last year vetting and developing the new instruments, to ensure they meet stringent criteria and can help meet India’s green infrastructure goals.

December 2017

The new instruments are:

Solar Investment Trusts (SEITs): An instrument similar to a mutual fund, which can help small-scale rooftop solar developers in India raise capital at a lower cost of financing. Proposed by Cleanmax Solar, SEITs can mobilize capital worth USD 1 billion within the next five years in key Indian markets.

Sustainable Energy Bonds (SEBs):

Debt instruments that aim to drive impact investment to sustainable energy in India by offering debt exposure, sufficient returns, and standardized impact measures for impact investors. Proposed by cKers Finance, SEBs will create credible benchmarks for impact evaluation, lower transaction costs, and de-risk small-scale lending. The India Lab is one of four programs of a larger Lab network. Founded in 2014, the Lab has helped develop and launch 25 innovative sustainable investment instruments globally that have mobilize USD 977 million to date.

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BUSINESS & FINANCE

“Accelerating more finance to sustainable energy and other green sectors in India is essential for meeting the country’s sustainable development goals. The instruments launched by the India Innovation Lab for Green Finance show considerable potential and will help mobilize the financial resources needed to meet our clean energy targets.”

Mr. Krishan Dhawan, CEO, Shakti Sustainable Energy Foundation “Cyril Armachand Mangladas is proud to be a part of the India Lab, and we’re excited to see this new class of innovative green finance instruments take off and attract needed investment for green infrastructure in India.”

Mr. Santosh Janakiram, Partner, Cyril Armachand Mangladas “India is in a crucial moment, where the potential of clean energy and green infrastructure is immense, but finance is currently lacking. We applaud the India Lab and this new class of promising transformative green finance instruments, which could catalyze millions of dollars for green growth in India.”

Mr. Thibaut Wolff, Investment Officer, PROPARCO “The Lab is a great platform to promote innovative financing instruments for sustainable development in India.”

Mr. Hemant Bhatnagar, Senior Sector Speacialist, KfW Bank “The green finance instruments launched by the India Lab aim to tackle some of the most difficult financing challenges for clean energy and sustainable urbanization in India. Our analysis shows that they’re ready for this challenge, and we look forward to seeing them in action.”

Mr. Gireesh Shrimali, Director, Climate Policy Initiative India and India Lab Secretariat

The Lab identifies, develops, and launches sustainable finance instruments that can drive billions to a low-carbon economy. It is comprised of several regional and sectoral programs: the Global Innovation Lab for Climate Finance, the Brasil Lab for Green Finance, the India Innovation Lab for Green Finance, and the Fire Awards for Sustainable Finance. The Lab’s programs have been funded by Bloomberg Philanthropies, the David and Lucile Packard Foundation, the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), the Netherlands Ministry for Foreign Affairs, Oak Foundation, the Rockefeller Foundation, Shakti Sustainable Energy Foundation, the UK Department for Business, Energy & Industrial Strategy, and the U.S. Department of State. Climate Policy Initiative serves as Secretariat.

Source: climatepolicyinitiative.org

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December 2017

PV MANUFACTURING

China-based LONGi to invest RM100mil more in Malaysia China-based Xi’an LONGi Silicon Materials Corp (LONGi) will invest about RM100mil next year in expanding the company’s various manufacturing facilities in Samajaya Free Industrial Zone (SFIZ), Kuching, to boost the production capacity of solar panels

THE FACILITY HAS A CAPACITY OF 600 MW. According to LONGi (Kuching) Sdn Bhd chief executive officer Ngieng Sii Jing, the company’s major investments last year were in the construction of new manufacturing facilities – a silicon ingot plant, a solar wafer plant, a passivated emitter rear cell solar cells plant as well as a high performance module plant.

“We are ramping up in stages the production of the various plants,” he told StarBiz. LONGi Kuching is the first in the world to have a full supply chain for monocrystalline silicon products in one single location. Kuching is also LONGi’s first overseas operation. Ngieng said the ingots were supplied to the wafer plant while the produced wafers supplied to the cells plant. The solar cells will then be sold to the module plant, which produces the solar panels. LONGi Kuching made another major acquisition in June, taking over the solar manufacturing plant owned by Comtec Solar International (M) Sdn Bhd for 200 million yuan (RM130mil). China-based Comtec Solar is a pure-play monocrystalline solar ingot and wafer manufacturer.

December 2017

hina-based Xi’an LONGi Silicon Materials Corp (LONGi) will invest about RM100mil next year in expanding the company’s various manufacturing facilities in Samajaya Free Industrial Zone (SFIZ), Kuching, to boost the production capacity of solar panels. LONGi – the world’s larg-

est manufacturer of solar-grade mono-crystalline silicon products – has invested some RM1.3bil in SFIZ since spreading its wing to Sarawak with the acquisition of US-based SunEdison’s silicon wafer production facility in SFIZ for US$63mil in March last year.

“With the acquisition,Comtec Solar gives us an additional 700MW capacity. We refurbished the plant and upgraded its cooler system. The plant re-started operations two weeks ago,” said Ngieng. LONGi also acquired the former factory of Sanmina-SCI Corporation (M) Sdn Bhd,which was involved in the production of printed circuit boards (PCB) in SFIZ. Sanmina-SCI shut down its factory in 2012 after it shifted operation to its new facility in Wuxi, China The old factory has been converted for solar production. LONGi Kuching operation currently cover some 42 ha. Ngieng said next year’s proposed investment in the expansion of various plants,including purchase of new equipment, and in new warehouse facilities and operation areas, would raise their respective production capacity. He said the company would sell solar wafers and cells if there is any surplus after meeting its own requirements. LONGi Kuching currently exports only solar panels to the United States, Canada and Europe. The company ships out between 300 and 360 containers per month and ships in a similar number of containers per month of raw materials. The raw materials, like glass panels, aluminium frames, EVA solar film (a key material for solar panel lamination), backsheets, packaging materials and chemicals, were sourced from China and other countries. Ngieng said LONGi Kuching had qualified a Chinese firm, which owns a glass factory

“The proposed expansion will increase the ingot plant’s capacity from the current 300 MW to 1 GW in third quarter-2018. The wafer plant’s capacity will be raised to 1GW from 600 MW,cell plant’s capacity to 700 MW from 600 MW while that of the module plant to 900 MW from 600 MW. “With full operation of the various manufacturing facilities,we expect to achieve annual sales of RM2bil by next year,” added Ngieng in Melaka, for the supply of raw materials. The company expects to source polysilicon – an essential raw material for solar cells – from South Korea’s OCI Co Ltd-owned plant in Samalaju Industrial Park, Bintulu once the latter has met with the quality standard set by LONGi. OCI acquired the polycrystalline silicon plant from Japan’s Tokuyama about six months ago. “We are trying to bring our China suppliers to set up manufacturing plants in SFIZ. We are also helping to develop local suppliers.” Acording to Ngieng, LONGi, listed on the Shanghai Stock Exchange, commanded 42% share in the global market in mono-crystalline silicon as at the end of 2016. Source: The Star

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PV MANUFACTURING

SINGULUS TECHNOLOGIES Offers Key Production Steps for the Manufacturing of Heterojunction Solar Cells (HJT) Through Wet-Chemical and Vacuum Coating Machines SINGULUS TECHNOLOGIES Offers Key Production Steps for the Manufacturing of Heterojunction Solar Cells (HJT) Through Wet-Chemical and Vacuum Coating Machines

ahl am Main – The SINGULUS TECHNOLOGIES AG (SINGULUS TECHNOLOGIES) continues to be successful in marketing production equipment for the manufacturing of heterojunction (HJT) highperformance solar cells. A few days ago, a delivery contract for a production line of the SILEX II type as well as the delivery of the new cathode sputtering system under the product name GENERIS PVD was signed. The still pending prepayment for this order is expected to be received shortly.

New GENERIS PVD with high reproducibility and highest efficiency with low operating costs.

SINGULUS TECHNOLOGIES has already assembled and delivered numerous vacuum coating machines for the use in the solar industry. With the new GENERIS PVD sputtering system SINGULUS TECHNOLOGIES transfers its know-how of these coating machines to the work area of heterojunction. The solar cells are automatically conveyed through the process chambers and are coated on both sides. The GENERIS PVD ensures a high level of uniformity in terms of layer thickness amid a level of reproducibility of the layer with highest efficiency and low operating costs. The GENERIS PVD was specifically designed for very thin substrates such as wafers for heterojunction solar cells. The concluded contract includes the delivery of the new GENERIS PVD coating machines by SINGULUS TECHNOLOGIES.

• New delivery contract for production machines signed • First PVD coating machines for HJT ordered • Contract includes SILEX II processing line

“Our SILEX II production machine is developing towards a standard for wet-chemical processes for the manufacturing of heterojunction solar cells. We have developed the SINGOZON systems, which is integrated into the production chain, for the optimum implementation of this processing step. This enabled us to considerably lower the operating costs.”

DR.-ING. STEFAN RINCK,

CEO of SINGULUS TECHNOLOGIES AG

SILEX II production machine with SINGOZON safeguards optimum results with regards to capacity, flexibility and stability

SINGULUS TECHNOLOGIES has extensively invested in the further development of this machine in the past couple of years and was able to win several new customers due to the machines’ high performance and modern process technology. Compared to traditional systems, the SILEX II enables producers of solar cells to implement a substantially more cost-efficient production through the use of processes with ozone.

The SILEX II offers a broad range of process options and is characterized by a high degree of modularity and a particularly compact build. The SILEX II concept meets all requirements for the industrial manufacturing of heterojunction solar cells in terms of capacity, flexibility and stability. Depending on the system version, capacities of up to 6,400 wafers or cells are possible. The delivery contract includes a SILEX II processing machine for the wet-chemical treatment of heterojunction solar cells.

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December 2017

inverter

Growatt won the No.1 award of CREC in China residential & distributed PV market. Growatt, the world leading manufacturer and provider of cost-effective photovoltaic inverters with high efficiency, won the No.1 award of CREC in China residential market and distributed PV market , and had a luncheon party for the gathering of PV heroes.

REC (Chinese Renewable Energy Conference and Exhibition) is an expo of leading solar product manufacturers and suppliers company in China. The theme of the exhibition is â&#x20AC;&#x153;New Town, New Energy, New Life.â&#x20AC;? It displays the photovoltaics, distributed energy, energy storage, the green car and the charger. Except the display, there are also 1 big conference, 10 Sub-Forums, 3 presentation of awards and press conference, and more than 30 activities of popularization of science, theme training, photography show, green walking, etc. There are 200 speakers, 2500 audiences. The show area is nearly 40,000 square meters, which attracts 400 companies and 40,000 participants. With the innovative technology and excellent quality, Growatt was outstanding from many PV suppliers. It won the No.1 award in China residential market and distributed PV market, which told that Growatt had a big brand influence as a world leading PV pioneer.

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December 2017

The CREC voting activity and award ceremony has been held for 5 years since 2012, which honors the excellent design solutions, business model, operation achievement and pioneering performance in China PV industry, and greatly encourages the technology innovation and professional communication, as well as speeding up the transformation of scientific and technological achievements. That greatly boosts the whole PV market development. The awards is organized by PV media Solarbe and Shine solar magazine, which work together with PV association and authorized experts, famous research institutes for the public voting.To strengthen its leading market position in China, on Nov3, 2017, Growatt set the luncheon party at the show at Wuxi city, and had the conference for the gathering of PV heroes, who shared the PV solutions with our participants.

It was pretty energizing seeing all these seasoned professionals come together from China and the other countries with one clear focus: THE CUSTOMER. Happy to be a part of our big family ! Growatt gathering of PV heroes are started since Jun 2016 around China, which is held in 14 provinces, more than 30 cities. More than 30 conferences of PV training are already held and cover more than 50,000 customers. To solve the difficulties of PV people, Growatt gathering of PV heroes provides the onsite and online service, which is oriented to the customers demand, focusing on PV solutions, type selection of equipment, system design, maintenance service, technical exchange of intelligent energy, etc. Once Growatt gathering of PV heroes starts, it is a burning topic online, and causes much more concern.

Source: ginverter

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POLICY & REGULATION

Decisions taken in respect of solar pumps in the Quarterly Review Meeting with Test Labs empanelled under Solar Off- Grid Programme of MNRE The water pumps should be tested for the summer and winter radiation profile. In the order to pass the pump it should meet the requirement as per MNRE specs, for both the profiles. NISE would provide profiles detail to all test centers.

MEETING HELD IN DECEMBER 2016

uction head with realistic physical head of 7 meter only should be used for testing the pump. No simulation of suction head is allowed for testing of the pump.

MEETING HELD IN MARCH 2017

MEETING HELD IN JULY 2017

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test report must have a concluding remark i.e. qualifies or does not qualify as per the MNRE specifications.

he report should include the module wattage and number of the modules. A Maximum variation of ± 3% in the module to module wattage and +5% in the overall capacity of the total array should be allowed.

•

ll the test labs should provide the details of the remote monitoring parameters observed in the test report.

N tories.

ISE will provide the test report format to all the test labora-

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The pump shall be tested for summer and winter profiles. Also the pump shall be tested under realistic field conditions by using the PV modules provided by the manufacturer. In order to qualify as per the MNRE specifications the pump shall meet the requirement under realistic field condition testing and with summer & winter profile. The test report shall contain the data achieved with realistic field condition testing, testing with summer profile and winter profile. The ‘Test Charges’ due to this additional test shall not be increased.

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For the testing of surface pumps sea level factor need to be considered. NISE will cross check the reference IS: 1520-1977 for the suction lift correction factor (factor) and will incorporate it in testing of surface pumps. The other factors which need to be checked are velocity head at correction and ambient temperature conditions.

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In view of the practical difficulties faced by the stakeholders (in marketing suitable series parallel combinations), it was decided that the overall capacity of the “total array” is allowed up to + 10% (instead of +5%)

The real condition testing of solar pumps is mandatory. Reports issued after 1st April 2017 (later extended to 1st September 2017), without real condition testing are invalid.

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Orientation of the flow meter should be as per the standard procedure to avoid any air bubble within the pump. NISE may look into the standards.

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NISE will initiate the ILC with common (hot and cold) profile and circulate it with labs. NISE will coordinate the ILC program. After testing, the confidential data of testing will be shared with NISE only and the pump shall be transferred to another test lab.

NISE will initiate inter lab comparison testing of a PV pump by involving all the test labs. After completion of the inter lab comparison testing the results will be reviewed. All testing lab will submit the test results to NISE only without sharing among the test labs.

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Test labs shall start the testing of Micro Solar Pumps with immediate effect.

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The validity of a test report shall be for a period of three years from the date of issue or till the new specification is in force whichever is earlier.

December 2017

Energy storage

Elon Musk wins a bet to build world’s largest lithium-ion battery

hile Model 3 continues to give sleepless nights to Elon Musk, seems like he finally has something to cheer. Tesla has completed the construction of world’s largest lithium-ion battery as part of a renewable energy project for South Australia with the testing process expected to commence in coming days ahead of its December 1 deadline. Elon Musk and Lyndon Rive, the head of Tesla’s battery division, proposed building an energy storage facility in the state following severe blackouts after a storm in March 2016.

At the time Musk made a bet with Atlassian founder Mike Cannon-Brookes, saying Tesla would get the battery installed and working within 100 days of the contract being signed or the $50m system would be free. The 100-day countdown officially started 56 days ago on Friday, September 29, when SA-based electricity transmission company Electranet signed an agreement to install Tesla’s batteries. The 100-megawatt battery array, made up of Tesla Powerpacks, is connected to the nearby Hornsdale wind farm, operated by Neoen. Set to be launched by Tesla Neoen and the SA government next week, it will then go through a testing phase to ensure it meets regulations.

South Australian Premier Jay Weatherill said in a statement, “An enormous amount of work has gone into delivering this project in such a short time. The world’s largest lithium-ion battery will be an important part of our energy mix.”

The battery aims to “stabilize the South Australian grid” and supply enough power for over 30,000 homes for a little over an hour which is about equal to the number of homes that lost power in September. Source: ciol

December 2017

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December 2017

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RENEWABLE ENERGY

Renewable Energy Forecasting in India –

Not a simple case of

‘more is better’ AUTHOR

Rahul Tongia Fellow Brookings India

Growing Renewable Energy (RE) means a greater increase in variability of supply, a relatively newer phenomenon for grids where demand was the usual variable, and supply was tightly controlled, or ‘despatchable’. One cannot control the wind or sun, but one at least needs to predict it well, so that the rest of the grid can plan its output accordingly. This is one of several key aspects of making RE grid integration cheaper and more scalable. Otherwise, as RE penetration grows, its challenges for the rest of the grid will increase.

History of RE forecasting in India

ndia has had a number of attempts for mandating output forecasting by RE sources – these were expectably resisted. Even despite Central Electricity Regulation Commission (CERC) draft notifications or frameworks as far back as 2015, no penalties were put in place for deviations beyond the 30 per cent norm post enactment. The dominant view was to first get predictions and data, and then worry about penalties later. Let’s leave aside whether the norms

December 2017

were right or not (why 30 per cent?), it could be argued that one needs a hybrid model for allowed deviation that factors in both the percentage and absolute scale. After all, even a 100 per cent error in prediction is easy to handle if RE is only 1 per cent of the state load. But at, say, 40 per cent of state load, even a 25 per cent deviation will mean a 10 per cent absolute deviation. Maybe we need a formula similar to the Duckworth-Lewis (formally, Duckworth-Lewis-Stern) formula for

runs required in an interrupted cricket match, where it’s not just the remaining overs but also the remaining wickets that matter. Part of the government’s efforts over a few years have been to enable Renewable Energy Management Centers (REMCs), specifically to improve forecasting. There have also been updates to scheduling norms to allow RE to flow inter-state, norms which were originally designed for conventional (despatchable) power plants.

Forecasting is just one part of the puzzle – “what next” is the key issue. If you deviate from the forecast, should you be penalised, and by how much? These are key issues.

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RENEWABLE ENERGY Should all the risk for deviations from a schedule be borne by the RE provider? Can they be ameliorated by larger balancing areas and improved transmission? Just like the question “how much RE can the grid handle” cannot be answered either easily or even deterministically, these questions are a moving target in reality. As the grid evolves, storage matures, price signals improve (a big gap in India!), the ability to handle RE will improve. Thus, over time, RE prediction norms should become tighter and the penalties decreased per unit deviation (as the grid matures). This last point needs an incentives-based framework that encourages grid flexibility. If one is talking about an RPO (renewable purchase obligation, also called renewable portfolio obligation), perhaps one needs to recognise not just direct RE generation, but enabling solutions in things like storage. As an example, we have a few adjacent states in India rich in hydro or RE, but not both. Investments into each in silos may not be optimal compared to a system that rewards both in tandem.

Current status – steps taken, but need consistency It’s all about the risk Forecasting is just one part of the puzzle – “what next” is the key issue. If you deviate from the forecast, should you be penalised, and by how much? These are key issues. There is inherently a limit to perfection in forecasting. On the other hand, tools are improving, so not only are average errors decreasing, the time-periods of confidence are improving as well. But at some point, policies will need to reflect a fundamental difference between solar and wind, where the time constants of change vary greatly. Solar is relatively predictable by time of day, but there can be very sharp and sudden changes due to a cloud cover. This is exacerbated in India due to the disproportional share of massive gridscale solar parks instead of rooftop solar (as of now). This means in a minute, hundreds of MW of supply (there are 2000 MW-sized solar parks coming up) can be lost from just one location. In contrast, wind is often seasonal and more unpredictable, but has lesser changes per minute or even per five minutes, especially when aggregated over multiple wind zones.

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State Electricity Regulatory Commissions (SERCs) across India have begun notifying RE forecasting norms. These state-level efforts need to be compiled if not coordinated. RE developers used to complain that contracting in India was like dealing with 29 different countries. Luckily, there are now drafts for standardised bidding documents and even standardised RE PPAs (power purchase agreements). We need something similar for RE forecasting. It is a separate discussion whether the technical specifications of accuracy and penalties have to be identical. As an example, Karnataka has notified a band tighter than 30 per cent as tolerance. However, frameworks, assumptions, and methodologies need consistency. Improved forecasting can even reduce pollution, as alternative generation can be best utilised, including from coal plants which have to flex their output. Such scheduling is not merely for generators in aggregate, but at a location-specific level. Locational issues become paramount when we consider finite transmission capabilities and costs for the same. In fact, transmission costs for RE are a separate challenge, as RE has a low capacity utilisation factor, aka plant

load factor (PLF). Thus, it inherently has higher transmission costs than the average. There are several levels at which a state load despatch centre (SLDC) could ask for an output prediction. These could be at turbine, wind farm, pooling station, DisCom, state or country levels. It is obvious that asking for predictions at extreme granularity (per turbine) is expensive. On the other hand, aggregation across wider areas naturally leads to smoothening out, which obscures the inherent variability challenges at local and zonal levels. What is the right balance of information and cost/complexity? Too much granularity isn’t actually helpful as the grid doesn’t know or care which turbine in a wind farm is producing the power being fed in. Most (transmission) grid operators want to know predictions of supply and demand at each grid node, i.e., the pooling station (sub-station) level. This is because transmission lines can often be congested, and are at the level of system control (in some ways they are the bridge between supply and demand). Unfortunately, one state in India has chosen to allow predictions aggregated at the state level. If suddenly a state finds that its western areas see an increase of 500 MW wind, and its eastern area sees a simultaneous drop of 500 MW wind, then at the state level there is no new generation required on paper. BUT, this is only true in a theoretical world with infinite transmission capability. The grid is best helped by forecasts at the pooling station level. This is the norm followed by most states in India. It remains the choice of the wind farm how to operationalize that down to individual turbines, which may have multiple owners, technologies, vintages, expectations, etc. This note only highlights some of the challenges and tradeoffs in forecasting – it has a cost, but one that should be worthwhile. Policy norms should be designed to be achievable, but with effort. Discussions with technologists indicate that pooling station level forecasts are doable - and state-level aggregations are inherently easier. If the latter also don’t help the grid operator (transmission company), then maybe it’s time to have a minimum granularity requirement for forecasting. A useful exercise would be for multiple stakeholders to share what different state norms are and also what works and what doesn’t. With the right incentives, one would be surprised how quickly even “tight” RE prediction norms can be met.

December 2017

RESEARCH & ANALYSIS

India’s Clean Energy Push Could Create New Jobs & Reduce Poverty

ndia’s growing renewable energy sector is expected to generate more than 330,000 new jobs over the next five years (2017-2022). The report finds that these opportunities can support India’s rural poor by offering an alternative to subsistence farming. More than 270 million Indians live in extreme poverty, and another 240 million lack basic electricity services today.

India’s push to generate 160 gigawatts of wind and solar power by 2022 will improve energy security, enhance energy access and help mitigate climate change. A new World Resources Institute (WRI) report Can Renewable Energy Jobs Help Reduce Poverty in India? finds that India’s clean energy initiatives can also help address poverty in rural communities by providing steady incomes, healthcare benefits and skill-building opportunities to unskilled and semi-skilled workers.

“Wind and solar growth can be a winwin opportunity for India, helping the country secure a clean energy future while tackling poverty,” said Bharath Jairaj, Director of WRI India’s energy program and lead author of the report. “But unless decision-makers act, this growth will leave the rural poor behind, unable to attain the thousands of new jobs created. Now is the time for leaders in business and government to build a clean energy sector that delivers electricity and employment to poor communities across India.”

The report also finds that unskilled and semi-skilled workers in rural areas face entry barriers to clean energy employment. Training programs have failed to mitigate these issues. For instance: •

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December 2017

Renewable energy employers interviewed for the study said that unskilled workers lack the technical and soft skills needed to succeed in full-time positions. Most training institutes refuse to admit applicants without a secondary school education, locking out the 60 percent of poor Indians who are either illiterate or received just a primary school education. Many training programs are in urban centers, far from rural communities where most of India’s poor families live. Women face unique, additional gendered challenges. Household duties, childcare obligations and gender norms make it nearly impossible for them to participate in training programs.

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RESEARCH & ANALYSIS

Based on its findings, the study makes recommendations for government officials, private sector leaders and training institutes to maximize poverty reduction impacts by creating full-time, good-quality jobs in rural communities.

Private sector leaders should : •

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Build the capacity of unskilled and semi-skilled workers to ensure the sustainability of renewable energy projects. Give rural communities a sense of ownership in off-grid projects, thereby motivating local workers to maintain the programs and invest in their growth.

Government officials should: •

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Create public training programs that prepare the poor and less educated people — those typically shut out from training institutes and full-time positions – for employment in the clean energy sector. Embed poverty impact assessments into project designs, allowing policymakers to collect data and assess the impact of clean energy jobs on poverty reduction.

Training institutes and civil society organization leaders should: •

•

“Even when poor Indians overcome obstacles to attend training programs, the institutes’ curricula don’t often align with industry needs, making it difficult for graduates to secure goodquality jobs,” added Pamli Deka, Manager of WRI’s Electricity Governance Initiative and co-author of the report. “In fact, we found that many clean energy employers prefer to train people they hire, because they believe that the training institutes fail to provide the required and relevant skills.”

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Target women and tailor skillbuilding programs to their specific needs, including location, hours, safety and sanitation. Align institutes’ curricula with industry needs and strengthen connections with clean energy enterprises to help graduates secure employment. Apart from creating new jobs in the sector, India’s clean energy push can improve energy access in India’s poorest, rural communities, thereby allowing more time for children to study after school, greater productivity and income for families, and improved health outcomes.

December 2017

RESEARCH & ANALYSIS

Mexico’s Energy Auction Just Logged The Lowest Solar Power Price On The Planet Preliminary results show Enel bid two solar projects at just $17.70 per megawatt-hour. Wind power also hit a record-low price point in Mexico. Preliminary results from Mexico’s latest energy auction have broken the lower boundary for solar costs, following a trend seen in other auctions around the world.

he Mexican government this month announced the average price achieved in its third long-term auction of 2017 was $20.57 per megawatt-hour, which it said is “one of the lowest prices achieved internationally.” A breakdown of the winning bids, published by Electrek, shows Italian developer Enel pitching two solar lots at $17.70 per megawatt-hour, or just 1.77 cents per kilowatt-hour — the lowest bid achieved anywhere in the world so far. Two years ago, the U.S. solar sector was cheering projects priced below 4 cents per kilowatthour. The record-low rate comes hot on the heels of an auction in Chile that saw Enel bidding $21.48 per

megawatt-hour of solar power on one sub-block of capacity. It was the lowest price for solar in the whole of Latin America, but not quite as cheap as bids achieved in the Middle East not long before. In October, a tender for 300 megawatts of solar power in Saudi Arabia saw Abu Dhabi developer Masdar offering a price of $17.86 per megawatt-hour, the lowest cost on the planet up until Mexico’s results this month. The price was almost half of the lowest bid for wind energy in Mexico last year, belonging to Enel, which MAKE attributed to a combination of low project internal rates of return, a low landed cost of turbines, and extremely low operational expenses. To make this year’s wind costs work, said Shreve, Engie would

Wind power also hit an eye-poppingly low price point in Mexico, coming in at $22 per megawatt-hour for a 118-megawatt project proposed by Engie Wind. “Wind energy’s race to the bottom may have just ended in Mexico,” observed MAKE Consulting partner Dan Shreve in a blog post.

need to gain access to new turbine technology at a favorable price and expect to be able to run it for at least 25 or 30 years instead of the more typical 20. This leaves Engie exposed to significant risks, however. First, there is no guarantee that newer turbines will be able to last longer. Second, the power-purchase agreements (PPAs) on offer are only for a term of 15 years, although Shreve noted that a transition to higher-priced wholesale markets might actually help project economics after the PPAs run out. Despite this, Engie will probably be looking at a project internal rate of return of around 5 percent, compared to the 7.5 percent that Enel might have been able to make from its market-leading pitch last year. “It means only the biggest players stand a chance in these new auction systems,” Shreve concluded. “In order to take on both market and technical risks, the company must have substantial capital and credit.” GTM Research Americas solar analyst Manan Parikh confirmed the same pattern for solar. “Most of the developers that are in there are major developers,” he said. “We’ve seen them before, either in Mexico or in the broader region. I don’t think there are any surprises in who is winning.” Mexico’s National Energy Control Center (Centro Nacional de Control de Energía) is due to confirm the auction results this week. For now, the government is claiming the exercise will attract almost $2.4 billion in investment. Mexico auctioned off 5.49 million megawatt-hours of energy, 593 megawatts a year of power capacity, and 5.95 million clean energy certificates. Solar was the big winner, taking 55.4 percent of the energy and 58.3 percent of the certificates on offer. Solar and wind also took around 2 percent and 14 percent, respectively, of the power capacity being auctioned, with the rest going to gas. The average energy pricing represents an almost 66 percent savings on the maximum price of $60 per megawatt-hour set by the three offtakers in the auction: the stateowned Federal Electricity Commission (Comisión Federal de Electricidad or CFE), Iberdrola and Cemex. “The clean energy acquired in this auction is equal to approximately 1.78 percent of the annual electricity generation in Mexico,” said the government. “This result is an important addition toward meeting the aim of generating 35 percent of electrical energy in Mexico from clean sources by the year 2024. Source: greentechmedia

December 2017

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Energy Storage

INDIA’S ENERGY STORAGE MISSION: A Make-in-India Opportunity for Globally Competitive Battery Manufacturing

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n line with its aspiration to achieve 100 percent electric vehicle (EV) sales by 2030, India can rise among the top countries in the world in manufacturing batteries. To do so, however, will require a strategy designed to overcome India’s relatively weak initial position in battery manufacturing while claiming an increasing share of total battery value over time. India’s market for EV batteries alone could be worth as much as $300 billion from 2017 to 2030.i India could represent more than one-third of global EV battery demand by 2030 if the country meets its goals for a rapid transition to shared, con-

nected, and electric mobility (Figure 1). Since the battery today accounts for about one-third of the total purchase price of an EV, driving down battery costs through rapidly scaling production and standardizing battery components could be a key element of long-term success for India’s automotive sector. India's EV mission could drive down global better prices by as much as 16 percent to $60 per KWh. Given the projected scale of its domestic market, India could support global-scale manufacturing facilities and eventually become an export hub for battery production.

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Energy Storage

We suggest that the development of India’s battery manufacturing industry can proceed in three stages, with progressively larger economic value capture at each stage, as follows: STAGE ONE – • Developing battery pack manufacturing capacity and establishing a multistakeholder research and development consortium. »»

FIGURE 1: ANNUAL AND CUMULATIVE BATTERY REQUIREMENTS TO MEET INDIA’S EV AMBITIONS

nalysis by NITI Aayog and Rocky Mountain Institute (RMI) indicates that domestic battery manufacturing to supply the transition to EVs is an important market opportunity for the Indian economy. It would bring economic and social benefits from reduced oil imports, improved public health, and increased integration of renewable energy supplies into the electric grid. This analysis estimates that 25–40 percent of the total economic opportunity represented by battery manufacturing for India’s EV ambitions can be captured in India even under the least favorable scenario, where India imports all lithium-ion cells and

assembles these cells into battery packs. As India’s battery manufacturing capabilities mature and supply chains are established, India will have the opportunity to produce both battery cells and packs, while importing only the cathode or its raw materials from mineral-rich regions. In this scenario, India stands to capture nearly 80 percent of the total economic opportunity. Figure 2 shows the value contribution of different battery components from Tesla’s gigafactory in the United States and the stages by which India could advance a make-in-India strategy for batteries that would capture progressively more value over time.

India’s cumulative EV battery requirements between 2017 and 2020 will be at least 120 GWh on a trajectory to 100 percent EV sales by 2030.ii Assuming that India will be manufacturing primarily battery packs from imported cells during this period, India stands to capture 25–40 percent of the economic opportunity from battery sales, an economic value of between INR 0.4 lakh crore and INR 0.5 lakh crore.

STAGE TWO – • Scaling supply chain, capitalizing on research and development, and realizing the benefits of the consortium-led approach to set strategy and planning for battery cell manufacture. »»

India’s cumulative EV battery requirements between 2021 and 2025 will be at least 970 GWh. Assuming that India will still be manufacturing only packs in this period, India continues to capture 25–40 percent of the total economic opportunity, an economic value of INR 2.0–2.9 lakh crore. If battery cell manufacturing scales too, this value will increase.

STAGE THREE – • Scaling end-to-end manufacturing capacity for batteries, particularlyfocusing on battery cell capacity. »»

FIGURE 2: BATTERY COST BREAKDOWN AND OPPORTUNITIES FOR VALUE CAPTURE

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India’s cumulative battery requirements between 2026 and 2030 will be at least 2,410 GWh. Assuming that India will be manufacturing both cells and packs while importing only cathodes (depending on technology used), India stands to capture nearly 80 percent of the total economic opportunity, an economic value of INR 9.3–13.7 lakh crore.

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Energy Storage

TABLE 1: ECONOMIC OPPORTUNITY FROM BATTERY MANUFACTURING TO MEET INDIA'S EV AMBITIONS IN DIFFERENT STAGES

hile these stages reflect progressively more challenging levels of manufacturing prowess and greater value capture, they could overlap in practice as India’s battery manufacturers pursue different strategies. Some Indian manufacturers might move relatively quickly to full-scale battery production through partnerships with today’s leading lithium-ion battery manufacturers, while others could adopt a more gradual approach, including developing new battery chemistries and production methods. By developing battery manufacturing expertise and scaling its domestic production capacity, India can build durable economic advantage in this key sector. While securing raw materials will be critically important to India’s battery manufacturing supply chain, recent analyses indicate that for most key constituents, sufficient supplies should be available to meet projected increases in demand. For example, a recent study by BNEF found no long-term issues with global supply of lithium. Under optimistic projections for lithium demand, only a very small share of extractable reserves of lithium will be required for global EV battery production through 2030. The lithium requirement to meet projected demand for EV batteries in 2030 is about 60,000 metric tons— just 0.7 percent of known global reserves.1 Temporary raw material supply shortages that may emerge as the industry ramps up could be addressed by opening new mines or expanding production by building additional evaporation poolsto extract lithium from brine. 2 While India is not rich in domestic reserves of minerals such as lithium, manganese, and cobalt that many of today’s common EV batteries require, India can build manufacturing capabilities that capture a significant por-

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tion of the value chain in this sector, as other countries are doing.3 But what might be the overall impact on India’s balance of trade? Even though India’s electric mobility policies are likely to necessitate significant imports of batteries, battery components, and/or raw materials as India scales up its domestic battery manufacturing capacity in the years ahead, the reduction in oil import costs is likely to more than offset the costs of these imports. Under a business-as-usual scenario, India would need nearly 1.6 billion metric tons of oil equivalent of petrol and diesel to fuel its passenger mobility sector from 2017–2030. At a conservative crude-oil price estimate of $52/bbl (lower than today’s prices), this oil import demand would cost nearly $670 billion or INR 44 lakh crore over the period 2017–2030.iii Assuming India continues to import 80 percent of its oil, this could represent a total import bill of roughly $550 billion or INR 36 lakh crore. In contrast, meeting India’s EV ambitions through 100 percent domestic manufacturing of batter-

ies ould require at least 3,500 GWh of batteries at a wholesale cost of $300 billion (INR 20 lakh crore) iv from 2017–2030—less than half the cost of the avoided oil imports. In addition, battery manufacturers could seize 25-40 percent of the market’s value at the onset by assembling battery packs in India and importing only battery cells. In this case, India’s total value of imports for EVs would be between $180–225 billion or INR 12–15 lakh crore. Noting that India may still be consuming nearly INR 17 lakh crore worth of petrol and diesel, this would still represent an import saving opportunity of INR 4 lakh crore for Indiav (see Figure 3). Batteries are a one-time upfront investment for EVs, serving as an asset (with potential for additional revenue streams through secondary use in stationary applications in India) and contrast with ongoing operating expenses for fuel needed for petrol or diesel vehicles. Every battery purchased will reduce oil imports for many years to come, improving future years’ trade balance and reducing India’s exposure to oil price shocks.

FIGURE 3: NET IMPACT ON INDIA’S BALANCE OF TRADE OF ELECTRIC MOBILITY STRATEGY. THE RANGE OF BATTERY IMPORTS DEPENDS ON INDIA’S CAPABILITIES TO CAPTURE VALUE IN THE BATTERY SUPPLY CHAIN. MINIMUM BATTERY IMPORTS CORRESPOND TO THE SCENARIO WHERE INDIA WILL BE MANUFACTURING BOTH CELLS AND PACKS WHILE IMPORTING ONLY CATHODES, WHILE THE MAXIMUM BATTERY IMPORTS CORRESPOND TO THE SCENARIO WHERE INDIA WILL ONLY ASSEMBLE BATTERY PACKS FROM IMPORTED CELLS.

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Energy Storage To advance Make in India, shifting to electric vehicles and batteries allows India to become its own supplier of energy for transportation (electricity produced in India) and a leading manufacturer of the batteries used to store and transport that energy.

GLOBAL CONTEXT AND IMPACT

ndia’s target of 100 percent EV sales by 2030 is a game changer and its achievement could drive down costs and build production scale faster than anticipated in existing projections. Despite their relatively small share of global vehicle stocks, EV sales are experiencing extraordinary growth. In 2016, the EV market passed the threshold of two million electric cars operating worldwide with 750,000 units sold in a single year—a 60 percent increase in stock compared to 2016.4 Of 2016 global sales, 45 percent were in China, and 21 percent were in the U.S. China in 2016 sold more EVs than the world had sold two years earlier, on pace to a tenfold expansion from 2015–2020. Going forward, industry experts estimate that 7 percent of the global automotive (4-wheeler) fleet will be EVs by 2030, up from 0.2 percent currently. As India’s EV ambitions, including EV 2-wheelers, autorickshaws, 4-wheelers and buses, become more widely known, they will help influence other countries to follow India’s lead. External industry experts predict that the initial purchase price of an electric car will be equivalent to that of a petrol car by 2025—a tipping point that will dramatically accelerate adoption. On a totalcost-per-km basis, this parity has already been reached for high-kilometer vehicles in some markets due to the favorable economics of high-utilization EVs and the steep learning curve and subsequent price reductions associated with EV batteries. Batteries account for approximately one-third of the total purchase price of EVs today, and those battery packs’ price fell by more than 70 percent over the last six years. Continuous innovation in battery technology and increased production scale are driving a steep ongoing decline in prices. Experts predict that prices could fall to $109 per kWh by 2025 and $73/ kWh by 2030, from about $240 per kWh today, vi based on a 19 percent

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learning rate for current EV battery technology. If recent ambitions from countries including France, the UK (which aims to ban all petrol and diesel vehicles by 2040), Norway (which plans to do the same by 2025), China (which has targeted 7 million EV sales by 2025), and India, the aim of which to shift to an all-electric system continues to gain momentum, prices may fall even faster than current projections.5 Based on global EV projections (predating India’s ambitions to achieve 100 percent EV sales by 2030), the global demand for EV batteries will require nearly 30 gigafactories by 2030, representing a $125 billion (INR 8 lakh crore) investment for battery manufacturing alone. A gigafactory is a factory that is representative of Tesla’s battery manufacturing facility in Nevada, USA that will have a total manufacturing capacity of 35 GWh per annum and required an investment around $5 billion (INR 0.3 crore). Social and economic factors, such as equity and public health needs, support the proliferation of shared electric mobility services. On-demand services are growing in market share, unlocking higher utilization of public transit. High utilization of shared vehicles, as just noted, quickly makes electrification of fleets cost-effective. Integrated data platforms can seamlessly connect multimodal transit options. Car-sharing networks could provide transport four to ten times more cheaply than can driving individually owned cars. This trend, in turn, will drive rapid adoption of electric vehicles in high-usage service fleets. Already, mobility service providers around the world are testing EV solutions in pilot programs in anticipation of wider-scale deployment. For example, Uber deployed 50 EVs on the streets of London in the summer of 2016, working with OEMs Nissan and BYD to offer leasing options for Leafs and E6s to its drivers at below-market rates. Uber expects to increase this number and expand to other geographies in 2017, encouraging drivers to take advantage of EVs’ low operating costs, which offset their capital cost premium and can produce over $1,000 in annual savings per 4-wheeler by 2018 and over $4,000 by 2030. The US, China, and Europe have introduced fuel economy standards that favor EVs, and policy frameworks are becoming more ambitious

as EV technology becomes more mainstream. Norway has introduced extensive nonfiscal incentives, including road-toll exemption and bus-lane access, and offers incentives for company-owned EVs. These, along with other measures, have raise adoption to over 32 percent of sales in 2016. Additionally, Norway has established a target to phase out gasoline cars by 2025. India has announced that all new sales of cars will be electric by 2030, while Britain and France have announced plans to ban the sale of new gasoline and diesel cars by 2040.

India is poised to lead the world in the deployment of a shared, electric, and connected mobility system. The transportation sector is ready for disruption that can relieve many current constraints and create large and lasting national benefits. Current situation: More than 80 percent of India’s petroleum is imported. India spent $112 billion on crude oil imports in 2014–2015, and $64 billion in 2015–2016. Of India’s 2008 national average mode share, 66 percent was nonmotorized transit— walking, biking, and public transit. This value was higher in Category 6 cities (>8 million people), where public transit, walking, and cycling made up 74 percent of the mode share (44 percent, 22 percent, and 8 percent respectively). India’s per capita car ownership is quite low, with fewer than 20 vehicles per 1,000 citizens (as compared to 800 per 1,000 in the US and 85 per 1,000 in China). India’s personal car ownership, however, is rising rapidly: vehicle registration has risen 10 percent annually for the past decade, with more than 60,000 new motor vehicles registered per day.6 Opportunity to leapfrog: India will need substantial upgrades and investments to provide transportation to its citizens in any scenario. Today, India has an opportunity to leapfrog ahead of the legacy model of individually owned, internal combustion engine (ICE) vehicles that are typically in use only about 5 percent of the time. India can avoid the “lockin” effects of a system characterized by high costs, heavy pollution, inequitable access, and inefficiency.

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Energy Storage India’s low per capita car ownership affords it the chance to pursue a different model. While other countries struggle to retire internal combustion engine vehicles and replace them with EVs, India’s low share of vehicles (especially 4-wheelers) per capita can be turned to advantage, as India need not strand assets or prematurely retire a large fleet. Instead, India can design now a system that makes personal mobility accessible, affordable, clean, safe, quiet, and efficient in use of time and resources. Emphasis on shared, electric, and connected transportation: Shared services are already ubiquitous in India, but could be enhanced to support greater adoption and even more effective access. Increased mobility is a positive economic force—citizens on the move enhance commerce and drive the economy. With 80 percent of all trips below 10 km in cities like Mumbai and Hyderabad, electric fleet vehicles and public buses can reduce private vehicle growth and emissions. Shared services can harness capital investments more productively, and could reduce the number of vehicles on the road in 2030 by 10 percent, relieving traffic congestion, bolstering economic growth, and reversing the rise of local air pollution.7 As battery costs continue to fall, total cost of ownership (a calculation of the costs of buying and using a vehicle over a period of time) of a privately operated electric car in India will be lower than that of an equivalent petrol car in 2020, a tipping point that will dramatically accelerate adoption. The economics of a shared EV sedan, on the other hand, are already favorable in comparison to a shared ICE vehicle. Ola’s pilot in collaboration with Mahindra Electric in Nagpur, consistent with the global interest of transportation network companies in shifting their fleets to EVs, affirms increasing momentum towards a shared and electric mobility future. These compelling economics are conservative, as they do not account for India’s contribution to making global battery markets larger and hence driving battery prices lower. Though economics for shared or service EVs (2-wheelers, 3-wheelers, and 4-wheelers) are already favorable on a per-km basis, policy

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support in the near- to mid-term will ensure that the balance is tilted unambiguously towards shared and electric mobility. Coordinated action and support from central and state governments, including targeted fiscal and nonfiscal incentives, will also be critical in increasing adoption. Increasing demand for electric vehicles will initiate self-reinforcing loops that can help to drive down costs as global manufacturing scale

in 2030.8 Currently, only 2 percent of passenger kilometers travelled (PKT) are in shared vehicles. By 2030, this could grow to 23 percent of total PKT. Despite numbering fewer vehicles on the road, the high utilization and high turnover of service vehicles drive an increase in total vehicle sales in this transformative scenario. For instance, sales of buses in 2030 nearly double vs. business-as-usual. Global battery

TABLE 2: ANNUAL VEHICLE SALES BY VEHICLE TYPE IN A SHARED, ELECTRIC, AND CONNECTED SCENARIO (2017–2030 AVERAGE GDP GROWTH RATE @ 6.7%)

increases, creating virtuous cycles similar to the ones that have driven Moore’s Law in the high-tech sector and plummeting solar power and LED costs in the electricity sector. A stable policy and regulatory environment, and sustained efforts by the private sector, will push ownership costs of electric vehicles to well below those of ICE vehicles, speeding adoption of shared and electric mobility services. In addition, electric mobility services can be integrated to complement public transportation options seamlessly, with simplified trip planning tools for customers and cashless payment systems. India can lead the world in development and deployment of these systems. While it is important to set electrification targets by share of vehicle sales, the share of electric vehicle kilometers travelled (eVKTs) must also increase—a metric more indicative of India’s progress towards shared and electrified mobility. Manufacturing opportunity: According to analysis by NITI Aayog and RMI, a transition to a shared, electric, and connected mobility future could deliver Indians the same access as a business-asusual scenario with nearly 6 crore fewer vehicles (a 10 percent decrease)

manufacturing capacity continues to soar, with many companies and nations announcing plans to build more Gigafactory-scale plants. Industry experts expect global battery manufacturing capacity to more than double from 2017–2021, rising from 119 GWh/y to 273 GWh/y over the period. India’s electric mobility ambitions could drive global battery demand and manufacturing capacity higher and prices even lower than has been projected in previous analyses. NITI Aayog and RMI estimate that India would require a minimum of 20 Gigafactory-scale battery manufacturing plants, collectively producing approximately 800 GWh of batteries per year by 2030 to support 100 percent EV sales across all types of personal vehicles. This transformation would significantly increase global installed battery manufacturing capacity. In fact, India’s 2030 requirement could represent 38 percent of global capacity by 2030. Given historic and projected learning rates for battery manufacturing, adding another 800 TWh/y could drive world battery prices down by 8–16 percent (relative to current forecasts that do not account for India’s ambitions) to approximately $60/kWh–$67/kWh (see Figure 3).

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Energy Storage

FIGURE 3: BNEF LI-ION BATTERY PRICE FORECASTS COMPARED TO NITI AAYOG AND RMI MODELING THAT ADDS BATTERY DEMAND FOR INDIA'S EV AMBITIONS. BOTH PRICE FORECASTS ARE BASED ON A 19% LEARNING RATE.vii

Domestic manufacturing of batteries and EV components could help India’s OEMs and technology companies to capitalize on the nation’s aggressive vehicle electrification goals, bolstering India’s competitiveness on the global stage. Indigenously developed electric vehicle platforms and solutions that are readily adaptable to Indian use-cases could be applicable in other developing economies. In the long run, Indian OEMs and battery manufacturers could eventually grow to serve not just the domestic market but also a significant share of the global EV and EV-component market.

KEY CHALLENGES TO SCALING INDIA’S BATTERY INDUSTRY India’s 100 percent EV goal calls for building a robust and competitive battery manufacturing supply chain. To do so, however, India must overcome four challenges.

A. Low Mineral Reserves

ndia has small reserves of key minerals required for lithium-ion (Liion) batteries. In Li-ion batteries, cathode materials vary, but common formulations include minerals such as lithium, aluminium, cobalt, manganese, and nickel, while the anode is made of graphite. India does not have reserves of some of the most important Li-ion components includ-

ing lithium, cobalt, nickel, nor, for that matter, of the copper used in conductors, cables, and busbars. (Figure 5 compares international declared reserves and production of the main relevant minerals.) Hence, reliable supply, not just of the raw materials but also of processed functional materials used in the anode and cathode, poses a challenge.

FIGURE 5: PRODUCTION AND RESERVES OF CRITICAL MATERIALS FOR NICKEL-MANGANESECOBALT LITHIUM-ION BATTERIES IN SELECTED COUNTRIES, 20159

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ortunately, global supplies of minerals for current battery chemistries are not considered to be resource constrained. A recent study led by researchers at MIT, University of California Berkeley, and Lawrence Berkeley National Laboratory concluded that supplies of most of the key constituent elements of the current generation of Li-ion batteries, including manganese, nickel, and natural graphite, are sufficient to meet the anticipated increase in demand.10 With respect to lithium, most studies indicate that supply can outpace demand based on significant reserves and a diversity of extraction technologies. Meeting all expected global battery needs through 2030 would require just 2 percent of currently recoverable lithium reserves.11 Finally, cobalt may pose the most significant materials risk in the short term for Li-ion battery production, given its geographic concentration in a few areas and the associated geopolitical risks. Extensive research is being undertaken to find replacements for this as a cathode. In order to achieve large-scale domestic production of EV batteries, India would likely need to forge international partnerships and ventures to secure access to key minerals in line with its battery technology and chemistry roadmap. Options for supply chain development will need to be considered based on assessments of battery chemistry and likely scaling of production.

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Energy Storage

Deployment of Wind Power in Denmark • Denmark is a pioneer in commercial wind power with 42 percent of total electricity consumption based on wind power. Danish wind turbine manufacturers, like Vestas Wind Systems and Siemens Wind Power (headquarters in Brande, Denmark), are the largest in the world with a presence in over 74 countries and a total installed capacity of >90 GW. • Denmark’s energy targets include 100 percent renewable energy by 2050 and 50 percent of electricity demand met by wind by 2020. 14 Both look on or ahead of schedule.

Key strategies for success:

B. Early-Stage Battery Manufacturing Industry

ndia has no major producers of EV batteries at present and lacks state-of-the-art facilities of both sufficient capacity and capability. Assembling battery packs from imported cells in India can reduce the cost and internalize more of the value of the battery, as well as build self-reliance to meet domestic pack demand as domestic cell manufacturing ramps up.12 India’s market for lithium-ion EV batteries is projected to grow at a CAGR of 33 percent by volume from 2017–2030.viii Responding to anticipated increases in demand, Indian

battery manufacturers and research institutes are gearing up to build domestic capacity. Indian Institute of Technology Madras has a research and development center devoted to new and advanced battery technology. Central Electrochemical Research Institute (CECRI) has also set up India’s first indigenous Li-ion fabrication facility for batteries used in defense, solar-powered devices, railways, and other high-end uses. Additional research and development capacity will be required to meet India’s rapidly growing battery market.13

C. Lack of Coordination Among Stakeholders

trong coordination between various stakeholder groups in cell manufacturing and battery assembly can support the development of a robust and competitive battery manufacturing supply chain in India. Key stakeholders in the attery manufacturing ecosystem include material suppliers, battery manufacturers, vehicle manufacturers, local and central governments, research

institutes, and think tanks. Coordination among these parties can help to define technology pathways, align investment strategies and timing, and guide policies to help achieve India’s 2030 EV target. The absence of this coordination amongst key stakeholder groups is a key barrier to streamlining efforts by different industries and organizations in building India’s battery manufacturing supply chain.

D. High perceived risk

ue to the uncoordinated efforts by different stakeholder groups and the relatively nascent stage of battery manufacturing in India, investment risks in this sector are considered to be high. Due in part to the absence of clear long-term policies for manufacturing and uncertainty around future battery technology,

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battery and vehicle manufacturers hesitate to make significant investments. Consistent and transparent policies can help address this barrier. The deployment of wind power in Denmark is an example of how longterm policy planning can enable the adoption of a new technology at a national scale.

• Citizen movements for the development of renewable energy resources in response to the oil crisis, and against nuclear power, started in 1974 and created favorable conditions for the growth of wind power15 • Taking advantage of this market opportunity, the Danish government provided 40 percent of the initial capital investment and offered tax incentives to Danish families for generating power. As a result of this effective policy, more and more windturbine cooperatives started investing in community-owned wind turbines,16 which in recent years raised 86 percent of the onshore wind capacity. • A fixed feed-in tariff was introduced in 1993 and decoupled the power purchase price from existing electricity prices. Meanwhile, by 2003 under the renewable portfolio standard, all wind generators were connected to the grid. • Denmark’s lack of major fuel reserves and industries reduced political pressure from incumbents to block windpower development as has occurred elsewhere. • Denmark has also used environment taxation to reduce air pollution—incentivizing clean and efficient energy by attaching a premium to polluting energy sources.

Implementation Considerations for India’s mobility vision • Effective and transparent policies, favorable pricing structures, and industrial deployment strategies along with a functional financing sector could jumpstart India’s battery manufacturing industry.

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Energy Storage

THREE-STAGE SOLUTION APPROACH Three integrated development stages can address barriers that exist to growing a competitive battery manufacturing industry in India: STAGE ONE – »» Incentivize and encourage direct investment in the growth of a battery pack assembly industry. »»

»»

Develop partnerships and a multistakeholder consortium for joint research, investment pooling, and development of battery technology and battery recycling. Form a consortium to serve as a resource to government and industry on future action plansfor recycling, battery standardization, and end-to-end strategy. Individual companies selectively pursue battery cell manufacturing where a business case exists.

STAGE TWO – »» Consortium leverages research results from battery cell research to advise and help develop cell manufacturing growth strategy. »»

Consortium establishes best-practice plans for end-to-end battery manufacturing (including cells) and recycling in India, considering investments in current and evolving battery chemistry.

»»

Development of supply chain connected to consortium battery manufacturing strategy.

STAGE THREE – »» Consortium-led coordination between battery manufacturing and countrywide infrastructure (charging, swapping, recycling, etc.). »»

Rapid scaling of battery cell manufacturing infrastructure through investment strategies, coordination with OEMs, incentives and policies, and coordination with existing battery assembly industry.

hese stages are pathways to support the development and build-out of manufacturing capability over time. Each stage represents a key aspect of India’s potential long-term battery manufacturing opportunity. Throughout these stages, government and industry actions will need to be coordinated to align strategic priorities, manage interconnections, and organize and prioritize research efforts for maximum benefit to India’s economy and society.

n contrast to China, India can incentivize growth through smart policy and planning, coordinated public/private research, and incentives to reduce risk for private industry and encourage rapid market growth. In doing so, India can develop a robust battery manufacturing industry not just capable of meeting the demands from the domestic market as it scales up to meet the 2030 100 percent electric vehicle goal, but eventually capable of competing and exporting on the world market.

FIGURE 6: PATHWAY TO GLOBAL-SCALE BATTERY MANUFACTURING

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Energy Storage

Expansion of Chinese Solar Manufacturing Overview • China now manufactures 70 percent of global solar panels—over 70 GW per year. • China is considered largely responsible for reducing the price of panels by 80 percent over the past decade due to growth in manufacturing volume.

Key Strategies For Success • Growth in solar-panel demand created market opportunity for China in 1999; government invested $47 billion over five years in land grants, loans, and tax incentives to rapidly develop solar manufacturing capability and capacity. • Government tax incentives, land grants, and loans to encourage rapid market growth. • Trade restrictions reducing solar panel export led China to create incentives for internal utilization, China now has 70 GW of solar installed and added 24 GW in the first half of 2017 • Large existing demand—either from external or internal market. • MIT-commissioned studies showed that, while China’s lower labor costs and tax breaks had an impact, scale of manufacturing was also important. The “Swanson Effect” was observed, wherein every doubling in cumulative solar panel-manufacturing volume tended to decrease the real price by more than 20 percent. Increasing manufacturing volumes, familiarity with technology and industrial scaling mechanisms drove down prices (2015 real dollars).

Implementation Considerations For India’s Mobility Vision • India does not have access to inexpensive capital or large sums of public funds.

• Export market for batteries is still limited—India would need to rely on internal demand initially.

• China created many state owned enterprises to handle demand, often having them coordinate and work with government to rapidly grow capacity. India does not have the same luxury.

• By investing in research and development of new and advanced battery technology, India can bbuild a sustainable battery manufacturing supply chain.

• India can take advantage of indirect subsidies offered by China to solar manufacturers as an example of supportive growth policies. Land grants, investment tax credits, streamlined permits, and foreign investment tax credits helped to rapidly develop the solar industry in China.

Stage One: Creating an Environment for Battery Manufacturing Growth

modern electric-vehicle battery has many components beyond its lithium-ion cells. The battery

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cells (materials plus manufacturing) represent only 60–75 percent of a battery pack’s total value, while the cells’

assembly into a battery pack ready to insert into a vehicle represents 25–40 percent of the total value. 17

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Energy Storage

FIGURE 7: COST ESTIMATES FOR BATTERY CELLS AND PACKS18

hile India does not have the capacity to begin mass-producing lithiumion cells in the short term, it could take advantage of its strengths in manufacturing assembly to capture significant value in the battery supply chain. Lithium-ion cells could be imported from competing vendors,

all subject to strict quality requirements to ensure durability and safety, while battery pack assembly and programming would take place domestically. Historically, cell value has decreased faster with volume than battery pack value, offering India a long-term, valuable industrial opportunity. Investment in pack

assembly would ensure that India develops domestic manufacturing capability for battery packs, which creates value for India regardless of whether cells are imported or created domestically. Individual companies can selectively pursue battery cell manufacturing as well where a business case exists.

demand during 2017–2020 would cost $24 billion in imported packs if a domestic industry were not developed, whereas assembling the packs in-country would require $15-18 billion in imported cells, while developing a $6–9 billion pack assembly industry in India. In many ways, Stage 1 is already underway, and a need exists to continue investments in battery pack manufacturing, while establishing the conditions for coordination and collaborative research. Already, foreign and domestic companies have begun to construct battery pack assembly plants in India. In Gujarat, the Suzuki Motor Company is investing $530 million in a production facility for battery packs for the Indian market. This joint venture between Suzuki, Denso, and Toshiba showcases the value of foreign partnerships in bringing manufacturing and intel-

lectual property to India.20 Multiple other companies and partnerships, including Reliance, Foxconn, and Octilon, have announced multibillion dollar investments towards domestic battery manufacturing over the next decade.21 In Karnataka, Mahindra & Mahindra is discussing construction of a battery pack assembly facility. Mahindra already has such a facility in Bengaluru, taking advantage of imported nickel-manganesecobalt (NMC) cells and assembling battery packs domestically.22 JSW Group has also announced a plan to build battery pack assembly facilities in Gujarat as part of the utility’s plan to diversify its holdings.23 Battery pack assembly is an area Indian companies are already moving into as an economic opportunity. Support from the government and coordination by industry will only help scale this sector faster.

Current Signs of Investment

arly electric vehicle contracts for India, like Tata’s electric buses, imported fully assembled battery packs from foreign countries.19 Yet companies have begun to recognize that importing a fully assembled battery pack is simply adding a “middle man” into the EV value chain. India has a very strong industrial labor market for technical assembly and programming—the two essential components of battery pack assembly. Importing a fully assembled battery pack (assumed at $200/kWh during initial stages) is forfeiting $50–80/ kWh that could have otherwise been kept in India. Importing the lithium-ion cells, in which India does not yet have market advantage, and then assembling packs domestically is the best way to maximize revenue and minimize costs during initial stages. The estimated 120 GWh of cumulative

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Energy Storage Preparing Capability

s India ramps up its manufacturing capabilities to support the 2030 100 percent EV goal, battery pack assembly will be a critical component in each stage. While domestic cell manufacture may not currently be a strong area for India compared to the global market, technology landscape, and resources constraints, battery assembly is well suited to India’s domestic strengths. During the initial stages of electric vehicle growth, as cells are imported to meet EV demand, battery pack assembly must accelerate as fast as EV manufacture, or internal value will be lost as India is forced to import fully assembled battery packs rather

than capturing 25–40 percent of value domestically. As battery cell manufacturing scales, these same battery pack assemblers can scale and diversify. Rapidly building out domestic battery pack assembly will allow India to pursue a unified strategy around battery cell manufacture to take advantage of bulk resource management of lithium and other necessary minerals. If the consortium finds it feasible to pursue other battery technologies than nickel-manganesecobalt, these should be explored as well. Part of the purpose of the consortium will be aligning Indian battery cell manufacturing behind a singular strategy to reduce costs through mass manufacture and

shared development, de-risking cell manufacturing investments and using market reconnaissance and alert R&D groups to guard against early factories’ becoming stranded assets if battery chemistries shift. No matter the cell technology used, the technology to monitor the battery pack and charge/discharge its energy can be retained. The battery pack assembly factories maintain value even as cell technology changes. As pack assembly is developed, these manufacturing groups can assist or help coordinate with EV and cell development in India to ensure cooperation and integrated manufacturing.

Consortium Building SEMATECH - A model for competitive cooperation for battery manufacturers

Overview :

SEMATECH – A U.S. government and industry partnership emerged in 1987 to help the U.S. reemerge as a leading manufacturer of semiconductors. SEMATECH was constituted as a nonprofit entity with a mandate to promote U.S. competitiveness in the semiconductor industry to help regain global leadership. Participating companies

included 14 of the largest semiconductor companies, such as IBM, Intel, Motorola, and Compaq. These private members invested in SEMATECH a combined total of $100 million per year, matched by the federal government. This entity comprised engineers and scientists from the companies. SEMATECH’s board also included

government- and private-sector executives. Over the years, SEMATECH played a role in helping the U.S. regain its share in the international market. Additionally, this collaboration enabled chipmakers to reduce R&D costs by nearly 30 percent for each subsequent generation of chips and reduce time to market from three to two years.

est in participation, and encouraged private-sector members to contribute with equal zest. The government, in return, was able to develop low-cost designs for advanced military circuitry. • By focusing on basic research, SEMATECH was able to address long-term opportunities too risky for private companies to pursue individually. Further, by collaborating on basic research, companies were able to avoid breach of antitrust rules and regulations that ensure fair competition. Lastly, since the benefits of basic research are universal, SEMATECH sought to benefit the whole industry and nation, not one company over another. • SEMATECH enabled open channels of communication on technology development and intellectual-property sharing between all

members. SEMATECH published and shared technology roadmaps that helped stakeholders—chipmakers, equipment manufacturers, and other vendors—by creating a forum where companies could openly communicate effectively about technological developments and share findings from joint R&D. • SEMATECH also created alliances with the equipment manufacturing industry and other vendors to help improve quality control and address management issues. This was important when dealing with smaller and newer firms without sufficient resources or expertise to address every issue. These efforts enabled the creation of an ecosystem of suppliers and vendors that saw SEMATECH and other chipmakers as partners in their growth.

Key strategies for success : • Identifying a common agenda for SEMATECH: Through an evolutionary process, participants focused on the largest challenges that were too costly or too difficult for a single entity to overcome. SEMATECH helped coordinate standards for the semiconductor industry, and by bringing together chip manufacturers, technology companies, and equipment suppliers, it was able to move the industry on a coordinated path beneficial for all participants. • Role of the government: Government participation was the critical catalyst in the creation of SEMATECH. Government involvement “provided a sense of both urgency and commitment, and made most of the companies feel as though they could not afford to be left out.” Financing from the U.S. government raised expectations from the consortium, increased inter-

Implementation: Considerations for India’s mobility vision • India, too, could establish a domestic battery manufacturers’ consortium or explore other international partnerships.

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• The role of the government will be key. The government could contribute monetary resources, or provide nonmonetary support such as land/labs/

personnel to host the consortium, or both. • The main objectives of this consortium in India could be:-

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Energy Storage

»»

Develop technological roadmaps for battery manufacturing in India. This should include detailed information on plans for the current state of R&D, battery technology evolution, and manufacturing processes relevant to OEMs and auto component manufacturers. Conduct R&D on new and advanced battery technologies, including those that leverage innovative manufacturing technologies and alternative chemistries. Members could pool R&D resources to focus on

ew battery technologies are currently under development and include solid-state lithium batteries, lithiumair batteries, sodiumion batteries, and silicon-based batteries. Solid-state polymer electrolytes are compatible with a wide range of chemistries ranging from inexpensive manganese-dioxide/aluminium to lightweight lithium-sulfur. Given that established battery manufacturing companies are aggressively pursuing research in these areas, a large-scale research and development-based consortium could succeed where individuals might fail, especially if it includes experts from government, industry, and academia, crosspollinating Indian talent with foreign innovations. Much as previous consortia

basic research to enable the Indian battery industry to remain at the cutting edge of innovation. »»

Drive adoption of locally manufactured batteries in many other uses, e.g., off-grid applications, telecom towers, home or village energy storage, etc.

»»

Conducting advanced research and pilot deployment on reusing and recycling batteries to reduce the need for scarce minerals to meet India’s mobility goals

built by the Technology Information Forecasting and Assessment Council (TIFAC) around vehicle lightweighting, vehicle system integration, and motor/power electronics helped speed and scale advances, this battery manufacturing consortium could look to pool resources and knowledge toward the advancement of an entire industrial sector in India. Other such consortia are emerging across the globe including one in the EU, 24 and a research consortium in the UK.25 As the United States used the Manhattan Project as a massive public/private collaborative exercise for military advancement, so too can India create a collaboration of its best companies, government experts, organizations, and individual technologists and entre-

preneurs to build durable economic advantage. This organization would be responsible not just for collaborative research, but for coordinating an integrated manufacturing plan and advising policy makers and private actors on future incentives and goals. Though battery packs are typically proprietary and OEM-specific, battery cells are generally fungible. An exception to this could be a standardized battery pack for swapping operations. By creating a unified strategy around cell manufacture, India will assure its manufacturing is competitive globally. Without cooperation around cell manufacture, entering the market and sustaining advantage against highvolume fast movers like China will be difficult.

especially for grid applications including peak shaving, demand response, and other ancillary services. Battery cell chemistry is a primary component of the forward-looking strategy. India will still be evaluating whether to pursue aggressive lithiumNMC build-out in the short term, while taking into consideration potential longer-term opportunities to be an innovator and leader in developing new electrolytes, battery chemistries, and morphologies (e.g., stacked, nanostructured, and thin-film formats). In order to achieve this goal, India must rapidly expand its knowledge of advanced battery technologies and be among the first actors to achieve the research base necessary for massscale deployment.

Battery recycling is a critical technology area for India due to the domestic shortage of certain scarce materials for today’s lithium batteries. To ensure a level of resilience, India must be capable of reusing the majority of its scarce battery materials and limiting imports of costly, volatile-price ingredients. This has the added advantage of establishing the first generation of battery imports as a domestic resource, as the cells imported could have a second use by future generations of Indian batteries. Before that, they can enjoy a profitable “afterlife” in the secondary market of stationary applications for which they are well suited even after losing perhaps a fifth of their capacity, making them less fit for mobile uses.

lessons. Viable and economic technologies can take years or decades to mature and scale as private firms slowly test a new marketplace. First movers can easily fall at unexpected hurdles. Creating an environment where these first movers are supported by policy, resources, and

incentives ensures there will be more first movers, they will be more likely to overcome difficulties and build a viable market, and others will follow to scale more quickly. As this report has pointed out, battery pack assembly is already starting to scale in India. But faster growth is

Research and Development

he most basic purpose of this consortium will be to coordinate research and development activities among battery manufacturers, governments, and other experts and to share information that could speed the development of battery technology. While the agenda and the role of the consortium should to be flexible to ensure that consortium members see sustained value in the face of evolving market needs and challenges, such a consortium could initially focus on battery cell chemistry and battery recycling, and could also include integrated IT, power electronics, and other battery applications, including those that could help monetize nonenergy benefits. The consortium could also conduct research on battery reuse,

De-risking for Success

oving first in a new, highly competitive industry carries inherent risks. This is why new industries develop so slowly: most firms prefer to wait on the sidelines and see what barriers the first movers encounter, then invest later with the advantage of others’ painfully learned

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Energy Storage needed to reach the levels required for anticipated electric vehicle demand, and to ensure that India is assembling all or most batteries domestically and capturing as domestic value at least 25â&#x20AC;&#x201C;40 percent of final battery cost in pack assembly. The following approach-

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es are options to help de-risk the system, encouraging investment and accelerating growth. Incentives and investments are most effective if transparent and explicit in their timing and support, with regard to both what they will incentivize and for how long, so firms can factor

them into strategy and derisk initial investments. These strategies could be pursued by a combination of state and central government actors, private companies, capital providers, and subject matter experts, but must be coordinated to deliver maximum impact.

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Stage Two: Scaling Supply Chain Strategies

he marketplace for the most common electric vehicle-battery cell technology, nickelmanganese-cobalt lithium-ion cells (lithium-NMC), is becoming increasingly crowded. As covered earlier in the report, companies like Tesla, Panasonic, and BYD have hundreds of gigawatt-hours in annual manufacturing capacity already planned or under construction. Industry experts expect battery manufacturing capacity to double by 2021 to 273 GWh/y, up from about 100 GWh/y now. By 2030, 1,300 GWh/y of total global capacity is anticipated.29 India must carefully consider how to enter this marketplace, and a large part of the battery manufacturing consortium’s role will be to advise on a collaborative strategy for development. This may involve direct entry into the NMC marketplace, a waiting period to pursue new battery technologies and seek a new-market advantage, or some combination of the two. India could invest early

and heavily to seek domination of the NMC market, or could import NMC batteries for longer while aggressively positioning itself as the primary manufacturer of battery packs and next-generation batteries. Many options are possible, but India should pursue a unified strategy to assure maximum effectiveness at least risk. India’s battery consortium, to be constituted in Stage 1, could help identify a least-risk strategy for battery investments. Stage 2 will use the consortium created in Stage 1, building on its successes and its planning as the battery supply chain scales further, to create research and internal capacity. The consortium would help recommend incentives for the scaling of Stage 3—development of battery cell manufacturing technology. The research and development begun in Stage 1 will be capitalized on in Stage 2—establishing a strategy and path forward based on India’s emerging knowledge and

capabilities. Additionally, Stage 2 could eventually see the battery pack assembly industry become fully developed and India could start to scale back or eliminate subsidies. In general, while Stage 1 will entail establishing the consortium, setting an initial task and research list, and beginning to build battery assembly capacity, Stage 2 will entail scaling these successes and the consortium’s advisory role to prepare for a battery cell capacity build-out in Stage 3. By the end of Stage 2, the consortium will have to capitalize on previous successes in infrastructure and research, and create a coordinated plan and set of stakeholders ready for moving into Stage 3. This is especially important for battery cell manufacture, as the technology could be standardized and could create economies of scale benefiting the entire ecosystem of Indian customers (pack manufacturers, OEMs, vendors and suppliers, etc.)

Capitalizing on Research and Development

he research and development investments launched in Stage 1 will deliver results in Stage 2. This will allow a greater understanding of the strategies India will pursue around battery chemistry,

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battery recycling, standardization, and electric-vehicle charging infrastructure deployment. The consortium will utilize this new knowledge in its advisory role to work out an action plan for developing an end-

to-end battery manufacturing industry, scaling battery cell manufacturing in Stage 3, and integrating the battery cell manufacturing industry with battery assembly and the rest of the supply chain in India.

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Energy Storage Consortium Coordination

s India scales up its battery manufacturing, it will be critical to ensure that battery charging/ swapping infrastructure is designed to capitalize on standardization and on the battery monitoring systems in common use across a wide range of companies. As the battery cell manufacturing industry expands, it will be important to coordinate among consortium members to ensure that battery cells, charging infrastructure, and other elements are standardized across the full range of partners. At the same time, OEMs could differentiate offerings at the pack level based on vehicle types and needs. This will

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not only ensure a coordinated, open, vibrant, and competitive marketplace (not forcing customers to lock into one brand of charging station by using a certain vehicle type, for example), but will allow future research and development to be focused along common goals and products. This places a premium on using thoughtful standards to build volume and commonality where appropriate, such as the mechanical package and the electrical and IT/ telecommunications connections of modular packs, while embracing rapid competitive evolution in chemistries and applications.Given that the battery process has many dynamic elements,

from mineral acquisition all the way to end-of life recycling (or disposalâ&#x20AC;&#x201D;ideally designed out, or at least minimal ), the consortium will also be in charge of logistical planning to make sure that India is prepared for each of these steps. In areas where the consortium has minimal power (such as mineral rights acquisition), it can recommend choices. The goal of the consortium will be to ensure a functioning system that maximizes domestic value capture and job creation in India while intelligently managing risk. It will provide advice and recommendations on standards, protocols, policy, and market interventions to that end.

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Stage Three: Scaling of Battery Cell Manufacturing

hile building battery packs in India can create substantial value, the crux of planning for India revolves around the ability to manufacture battery cells domestically. Otherwise India will depend on imports for a critical component of its transport infrastructure, just as it depends today on imported oil, with all the obvious risks such dependency entails. This scaling of battery cell manufacturing would be coordinated by the consortium, and would account for any battery cell manufacturing pursued independently by Indian companies. The consortium will recommend incentives for rapid growth of battery cell manufacture during Stage 2, and will continue to make additions or changes to those incentives as necessary. The consortium will also help to plan the future of India’s battery manufacturing sector after 2030.

Battery Cell Manufacturing Incentives

t is hard to estimate the incentive suite that would best promote the growth of battery cell manufacturing in five to seven years (ideally sooner if breakthroughs happen earlier). The future technology is unknown and the current technology is in rapid flux; the future state of both the world market and the Indian economy is uncertain. Part of the consortium’s work will be to assess the future situation and create a list of tailored drivers most likely to promote rapid growth of battery cell manufacturing in India—similar to the options described in stage 1 for battery pack assembly. Previous experience in India has shown that government target setting and economic liberalization can lead to rapid growth in a market, as was the case with the uptake of LED and mobile telephone technology. This will emulate major growth areas in India previously, such as the rapid shift to LEDs.

Expansion of Tesla Battery manufacturing

Overview : • Tesla invested in full vertical integration of the battery manufacturing process; combined with technology improvements, this led to an almost 80 percent decrease in its battery manufacturing costs from 2010 to 2016 ($1,000 to $227/kWh)

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• It is estimated that after the Gigafactory is complete, there will be a further 30–40 percent decrease in its costs to $120–130/kWh • Companies in China (e.g., BYD) building similar gigafactories are discussing similar costs

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Energy Storage

Key strategies for success : • Vertical integration

• Mass-scale production

• Natural resource control

Implementation Considerations for India’s mobility vision • India’s access to natural resources for Li-ion battery manufacture is limited • Massive scale-up is made difficult by limited previous battery manufacturing experience • Made in India initiative is already pushing for domestic energy growth • High-tech manufacturing industry within India is very well developed, also software

Moving Forward on Batteries

y 2030, India aims to hit its 100 percent electric vehicle sales mark and battery manufacturing will scale to support domestic demand. It is an ambitious goal, but an achievable one with a supportive government and an active and involved consortium. As domestic

battery manufacturing hits a critical point where subsidies are no longer required and it has met or exceeded the demand from the domestic EV market, the consortium’s duty will shift to thinking about the future. Will India continue expanding its battery manufacturing capacity and

become an exporter? Will other segments of the Indian market be addressed (freight, rail, stationary energy storage, etc.)? What incentives might make further growth and development possible? How will further research and development happen, and how coordinated will this be in the future?

These are just a few questions the consortium could address as India looks at the future of battery manufacturing after achieving this goal.

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Energy Storage

CONCLUSION AND NEXT STEPS

attery manufacturing represents a huge economic opportunity for India. Ambitious goals, concerted strategies, and a collaborative approach could help India meet its EV ambitions while avoiding import dependency for battery packs and cells. This could help

establish India as a hub for cuttingedge research and innovation, boost its manufacturing capabilities, create new jobs, and foster economic growth. India’s strengths in IT and manufacturing, its entrepreneurial and dynamic private sector, and its

visionary public and private sector leadership will be key factors in realizing these ambitions. Aggressive forward movement in battery manufacturing could cement India’s opportunity for radical economic and industrial transformation in a critical and fast-growing global market.

Our Analysis Of India’s Battery Manufacturing Opportunity Yields The Following Conclusions: 1. India’s demand for batteries to meet its mobility transformation goals will support globalscale production that could place India among the world’s leading battery manufacturers. By 2030, India could account for more than one-third of the global market for batteries for electric vehicles. 2. While India is starting from a relatively weak position in battery manufacturing globally, the scale of its market opportunity is attracting strong interest from leading companies in India and globally. Battery production in India could ramp quickly if manufacturers have confidence in future market growth. 3. Clear and stable policies to guide India’s transition to EVs are fundamental to support investment in vehicle and battery manufacturing capacity in India. 4. Coordination among industry stakeholders and government can help to define a pathway to growth and competitiveness by establishing a shared technology roadmap, creating common standards, and aligning policies. Building on the recommendation from India Leaps Ahead: Transformative Solutions for All for an “India Platform for Vehicle Manufacturing,” NITI Aayog and RMI recommend that India create a consortium of battery manufacturers, OEMs, government officials, and subject experts to inform and coordinate the deployment of capital and intellectual resources and advance to a position of global leadership in

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battery manufacturing. a. The government will play a key role in catalyzing, convening, and driving this consortium. The government’s active engagement will not just infuse urgency and purpose; it will create an opportunity for open dialogue on the policies around battery manufacturing and technology development. b. The consortium could include key global battery R&D and manufacturing partners to bring India up to speed with global innovations, avoid past failures, and invest resources in areas that can help India build competitive advantage in battery manufacturing. c. This consortium will help key stakeholders coordinate and collaborate on a technological pathway for battery manufacturing in India. By focusing on joint R&D on long-term, high-risk opportunities, the consortium will support continuous innovation across the whole supply chain. 5. While the agenda and the role of the consortium should to be flexible to ensure that consortium members see sustained value in the face of evolving market needs and challenges, some initial objectives of such a consortium could include:a. Developing a common technological roadmap for the battery manufacturing industry b. Coordinating R&D on new and advanced battery technologies, including those that leverage innovative manufacturing technolo-

gies and alternative chemistries c. Driving adoption of domestically manufactured batteries in multiple additional use cases d. Conducting advanced research on battery reuse and recycling to reduce need for imported minerals 6. This consortium approach can also be extended to the vehicle design and manufacturing process, as an increasing number of vehicles will be utilized for service provision as opposed to personal ownership in the future. In such a future, many common parts will be indistinguishable to the enduser customer/ rider, and many vehicles could share common components. Common design and manufacturing of such parts could further reduce overall manufacturing and design costs and improve delivered quality. 7. Start-up incentives can be used to de-risk early stage investments in battery manufacturing and accelerate the development of India’s domestic battery manufacturing industry. These incentives could include land grants, tax incentives, streamlined permitting, encouraging foreign investment, direct subsidies, and R&D support. 8. Scaling of battery production can be supported through supply chain coordination and debottlenecking, infrastructure development, and end-to-end planning and coordination.

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ELECTRIC VEHICLES

VALUING SOCIETY FIRST An Assessment of the Potential for a Feebate Policy in India The pace of India’s mobility transformation is astounding. Every day, India registers over 50,000 new vehicles. While India must strive to avoid pervasive private-vehicle ownership, ensuring that these new vehicles are efficient and clean is the country’s collective responsibility. Today India’s fleet is among the most fuel-efficient in the world. To maintain this competitive advantage, support a burgeoning auto sector, reduce India’s oil-import bill, and improve local air-quality, India should build on lessons learned from countries around the world. Amitabh Kant, Chief Executive Officer, NITI Aayog

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ELECTRIC VEHICLES

his paper explores the potential for the design and implementation of a national feebate policy to drive vehicle efficiency in India. A feebate is a policy by which inefficient or polluting vehicles incur a surcharge (fee-) while efficient ones receive a rebate (-bate). Austria, Denmark, France, the Netherlands, Norway, Ontario (Canada), and Singapore have introduced variations of feebates. Its advantages include its market-based design; its potential to be revenue neutral, size neutral, and technology agnostic; and its alignment of private interests with societal interests and

incentives. While there are significant challenges in designing and implementing a feebate, the policy can offer an advantageous alternative to fuel economy or greenhouse gas standards, which are static, soon become obsolete, and give no incentive to outperform. On the other hand, feebates drive continuous improvement and innovation. A feebate that is politically attractive and supports both customers’ and manufacturers’ transitions to more-efficient, cleaner vehicle technologies will require careful attention from and close collaboration among India’s public- and private-sector leadership. As the

Phase 1: Establish an independent professional body to guide the feebate’s research and design, and engage stakeholders to collaboratively develop a policy that best supports the transformation of India’s passenger mobility system. • Phase 2: Implement a revenue-neutral feebate, probably enacted at the point-of-sale and divided into several size-based categories. • Phase 3: Expand the policy to additional vehicle segments and potentially India’s used vehicle market, and introduce trials for feebates that relate fees and rebates to vehicle occupancy as a means of addressing the government’s goal to increase sharing.

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Government of India sets its sights on 100 percent electric vehicle adoption by 2030, an optimized feebate could effectively incentivize this adoption with little to no use of public funds. Case studies of Norway, France, and Ontario (Canada) offer insights into how India can build on the successes and steer clear of the shortcomings of these programs in designing its own feebate finetuned for India’s unique conditions. This paper proposes a set of design principles for a potential feebate program in India, without recommending a specific technical design, and suggests a phased approach to its implementation.

Phase 1 DISEGN

Phase 1 IMPLEMENT

Phase 1 Expansion & Evolution

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WHAT IS A FEEBATE?

feebate is a market-based policy combining fees with rebates to reward energy-efficient or environmentally friendly investments or practices and penalize inefficient and environmentallyharmful ones. The idea has been discussed since the 1970s, when Rocky Mountain Institute’s cofounder and chief scientist Amory Lovins, IBM’s chief scientist Richard Garwin, and Berkeley physicist and energy efficiency leader Art Rosenfeld all independently invented the concept.Feebates adhere to the “polluter pays” principle: the idea that polluters should be financially responsible for the externalized costs of the greenhouse gases and local air pollution that they produce, either directly or indirectly. This type of policy has a diverse range of applications, from waste management to electric utilities to vehicles. In the case of vehicles, a feebate works by levyng fees on relatively high-emitting new vehicles while remitting rebates to relatively low-emitting ones. This “bonusmalus” design, as it is known in Europe, simultaneously incentivizes clean vehicles and disincentives polluting ones. While the fees and rebates need not be directly connected for a program to be considered a “feebate,” such a connection generally creates a more politically attractive design because it enables self-financing: the fees pay for the rebates, with an annual true-up to ensure that balance. A feebate differs from a typical tax scheme because it need not entail a net revenue flow to the government’s treasury if it is designed to be self-financing; additionally, the fees are entirely avoidable by customers’ choice. iii Also, a feebate may have other applications in mobility beyond purchase incentives. For example, a part of the feebate or a separate feebate could have a design that promotes vehicle sharing or specific propulsion systems. A feebate typically influences auto-buying decisions at the point of purchase, appearing as a higher or lower purchase price for the vehicle rather than requiring a complex calculation about the potential present value of future fuel savings. In economic terms, a feebate enables a private auto buyer’s choices to reflect society’s long-term objectives and investment horizon. Typically, the buyer applies a high implicit consumer discount rate,3 counting only the first year or two of expected fuel savings. A feebate enables the auto buyer to consider the vehicle’s entire lifecycle fuel saving, better reflecting such national objectives as public health, national security, and climate stability. Thus, the feebate arbitrages the spread in discount rate between the private buyer and society, harmonizing their timelines by aligning their weighting of short- and longterm goals. A feebate applied to the purchase of new vehicles in India would help jumpstart both the manufacturing and consumer adoption of efficient vehicles, including EVs. Incentives for India’s automotive industry can create additional revenue for manufacturers as they evelop a diverse supply of high-quality, domestically manufactured EVs that would attract Indian consumers to shift from ICEs. To ensure this transition occurs across all vehicle segments, the feebate can apply to each segment, including two-wheelers, three-wheelers, and passenger cars. In the future, it could even extend to heavier vehicles, such as medium and heavy trucks.

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CHALLENGES AND BENEFITS OF A FEEBATE POLICY There are significant challenges in designing and implementing a feebate. It will take careful attention to detail to create a policy that is politically acceptable and supportive of the automotive industry’s transition to advanced vehicle technologies. Several proposed feebate policies in other countries have not been implemented due in part to opposition from the automotive industry. These proposals often failed to take into account automakers’ long product cycles and capital-intensive operations. Engaging all potential stakeholders can encourage the design of a feebate that is widely supported in India and capable of delivering benefits to as many parties as possible. While a feebate will probably require automakers to make significant capital investments in vehicle technology development, so would any other policy to achieve the government’s objectives of clean and efficient vehicles. A feebate policy would not create additional cost in the long run. Rather, it simply encourages automakers to accelerate the timeline of an inevitable future cost as the market transitions—guided by government policies already announced—to moreefficient vehicles. In select cases, the implementation of a feebate program has even correlated with increased vehicle sales.4

• Feebates are market-based: they provide a clear

price signal to consumers to buy moreefficient vehicles, harnessing market forces to achieve societal goals without limiting consumer choice. Feebates reward manufacturers for widening their product slates, thus expanding consumer choice.

• A feebate can be revenue neutral. Unlike a subsidy

program, a feebate need not require the use of public funds. Its adoption thus does not risk disturbing government budgeting.

• An optimized feebate drives continuous improve-

ment by creating continuous incentives. By contrast, fuel economy standards only motivate automakers to make marginal improvements to meet the standard. While such stan ards can remove some of the market’s most inefficient vehicles, standards give automakers, dealers, and consumers no incentive to exceed the standards.

• A feebate can be designed to be size-neutral, so

it rewards efficient choices of the type and size of vehicle one prefers rather than choosing a vehicle one does not prefer.

• Feebates can be technology agnostic. They

generally promote cleaner, more-efficient vehicles regardless of technology, allowing evaluation of all technologies on a level playing field that rewards or penalizes a technology based on its relative efficiency.

• By addressing consumers’ high discount rates, fee-

bates reduce the upfront purchase price of an efficient vehicle, incentivizing widespread adoption and making more-efficient, cleaner, cheaper-to-operate vehicles available across a far wider income range.

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ELECTRIC VEHICLES

STRUCTURE OF A FEEBATE

CASE STUDIES

This section provides an overview of the components that make up a feebate. For an in-depth analysis of these components and how they influence a feebate’s effectiveness, the authors recommend Bunch and Greene (2011).

umerous countries and regions around the world have implemented feebate and feebate-like programs, with a range of stringency and varying success. These policies differ in factors such as efficiency criterion, functional form, and whether they are selffinancing, depending on each program’s political conditions and goals. Each of these design decisions contributes to the political acceptance and effectiveness of the feebate.

FEEBATE COMPONENTS

GENERALLY, A FEEBATE INCLUDES THE FOLLOWING COMPONENTS, ILLUSTRATED GRAPHICALLY IN FIGURE 2:

An efficiency criterion defines how to compare vehicles. Common criteria include emissions, in grams carbon dioxide per kilometer (gCO2/km), and fuel consumption, in liters/km (L/100 km). A pivot point (sometimes called a benchmark) defines which vehicles pay fees and which ones receive rebates. This specific value uses the efficiency criterion’s units. A feebate can use a single pivot point or multiple, depending on its objectives. For example, different classes of vehicles, such as passenger vehicles and light-duty trucks, could have different pivot points to preserve a higher degree of consumer choice. This principle is discussed in more detail below. A functional form and rate parameter determines the magnitude of the fee or rebate for each incremental difference from the pivot point. Looking at a schematic of a feebate (see Figure 2), the functional form is the shape of the line (e.g., linear), and the rate parameter is slope. Some options for the functional form include a straight line (linear), a piecewise linear function (multiple line segments with different slopes), and a step function (fixed fees or rebates assigned to specific ranges of the criterion). A point and manner of transaction defines the party that will levy fees and remit rebates at one or more specific point(s) in the vehicle transaction process. Options include levying the fee or remitting the rebate at the point of sale or later in the vehicle ownership timeline, such as during the vehicle registration process. Fees and rebates can apply directly to the consumer or to another party, such as the dealership or manufacturer. If, for example, the feebates apply at the factory, then they are visible to the retail buyer as a higher or lower price. If they apply at the dealership, they could appear as an additional line on the vehicle price tag, analogous to the goods and services tax (GST) but having a positive or negative value.

Several European countries—including Denmark, France, the Netherlands, and Norway—have observed clear shifts in car purchasing decisions toward lower emission vehicles since implementing feebate-like policies over the past decade.6 It is important to note that it is difficult to isolate the effects of a feebate policy in countries with a portfolio of policies favoring alternative-fuel vehicles. What is clear from these examples, however, is that feebates are most successful when their designs complement and reinforce other policies and incentives. Public reaction to feebates has generally been positive. 7 In many cases, the largest source of opposition has come from automakers and car dealerships. This paper suggests that those cases reflect suboptimized feebate design, and that optimized design could make feebates advantageous to those parties. The following case studies of Norway, France, and Ontario (Canada) offer valuable insights into the successes and shortcomings of feebate design. These examples represent a range of feebate designs and shed light on design considerations for India. Each case study examines the policy’s design, political and public reactions to its implementation, and elements that could be improved or redesigned to increase effectiveness and attractiveness. Learning from these examples can help India design a feebate that builds on successful design choices and avoids common mistakes.

Figure 2: Example Feebate Diagram. In This Example, The Efficiency Criterion Is Gco2/Km And The Functional Form Is Linear.

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December 2017

ELECTRIC VEHICLES

NORWAY’S VEHICLE REGISTRATION TAX AND REBATE PROGRAM Policy description: Nowhere in the

world are EVs a higher share of passenger vehicle sales than Norway. Through September 2017, plug-in hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs) made up 36 percent of Norway’s passenger vehicle sales.8 A history of supportive policies and a comprehensive suite of fiscal and non-fiscal incentives have enabled Norway’s transition to hybrid and electric vehicle technologies by valuing externalities, like climate change caused by CO2 emissions, and creating a conducive driving environment.9 In 1991, Norway’s fuel tax was designed to include CO2 emissions. Norway also has a one-time vehicle registration tax—originally set according to vehicle mass, engine power, and engine size—that underwent two reforms to further address CO2 emissions. First, in 2007 Norway replaced the engine size parameter with CO2 intensity, establishing what many economists call a “CO2 differentiated tax.” Second, in 2009 Norway started offering rebates to less emitting vehicles, giving its program a feebate-like form (though technically it is not a feebate because the fee and rebate

components do not connect). The CO2 component’s portion of the tax has increased over time, while the other two components (vehicle mass and engine power) have declined, making CO2 the central focus. 10,11 Norway’s feebate program has a single pivot point of 120 gCO2/km, equal to the E.U.’s voluntary standard. Its functional form is four line segments, each of which has a different slope. The slope is much higher for less-efficient vehicles, so the fees are greater than the rebates. For example, the initial fee rate is kr277/gCO2-km (US$34 or INR2,206 per gCO2km), and it increases to a maximum rate of kr1,320/ gCO2-km (US$162 or INR10,511 per gCO2-km). The fee and rebate slopes have been revised over time, illustrated in Figure 3. As Figure 3 shows, BEVs are not only exempt from Norway’s vehicle registration tax; they also receive a rebate worth up to about US$12,000 or

₹775,000, which covers roughly a third of the upfront cost of a Tesla Model 3 at the time of publication. BEVs are not exempt from all taxes, however. For example, BEV owners have to pay an approximately kr3,310 (US$406 or ₹ 26,343) annual circulation (driving or road) tax. Together, the vehicle registration tax exemption and price difference between ICEs and BEVs created by their respective fees and rebates make BEVs financially attractive in Norway.

Policy overview

Efficiency Functional form criterion

Norway

Norway modified its registration tax in 2007 toinclude CO2 intensity. In 2009, Norway started offering rebates to lessemitting vehicles. Together, the fee and rebate create a feebate form.

Emissions intensity: gCO2/ km

Linear, with 4 segCould be designed to be revenue neutral ments, all with differand to use a single line and slope, rather ent slopes; the fees than four lines with different slopes. have higher lopes than rebates

France

France introduced rebates for loweremitting vehicles in December 2007. In January 2008, it introduced fees on higheremitting vehicles, rounding out France's bonus-malus or feebatestyle program.

Emissions intensity: gCO2/ km

Step function, with seven steps, including a discontinuity or “doughnuthole”

Ontario

Implemented originally in 1989 as a gas-guzzler tax and updated in 1991 to include a modest rebate, the policy was in effect, with no changes, through 2010. Fees and rebates are applied at the point of vehicle purchase. The program had little impact on consumer behavior.

Fuel efStep function, with ficiency: eight steps; in its final L/100 km form, only one fuel efficiency range out of eight received a rebate

Could be designed to be revenue neutral. A linear form, rather than a step function, with higher slopes and more frequent updates of the fees and reebates would better influence consumers’ decisions. A national, not regional, policy would more strongly influence automakers.

Denmark

Denmark introduced its feebate in June 2007. The fee is a form of a registration tax. Denmark’s feebate is close to a single-line, revenue-neutral feebate.

Emissions intensity: gCO2/ km

Linear, with two segments (one for fees, another for rebates), both with different slopes; rebates have higher slopes than fees

Could be designed to be revenue neutral and to use a single slope. Also, Denmark is backing off its feebate scheme, “moving to [a] more standard taxation scheme.”14

The Netherlands introduced its program in July 2006 and revised it in February 2008. It was updated again in January Netherlands 2010, to a registration tax based on an absolute CO2 emissions rate. Importers handle transactions and pass on fees or rebates

Emissions intensity: gCO2/ km

Originally a step function, with seven steps; updated to linear, with three segments

The program had difficulty maintaining revenue neutrality. Research into consumer behavior and market trends can help determine the optimal pivot point. Classbased benchmarks made the program too complex, especially for consumers

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Potential improvements

Could be designed to be revenue neutral. Choosing a linear form and eliminating the discontinuity would create more fairly distributed fees and rebates, and allow for complete coverage

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ELECTRIC VEHICLES REACTIONS TO THE POLICY

Norway is a small automotive market, both within the E.U. and globally. Therefore, while its introduction of a feebate program offers a useful case study in policy design, implementation, and effectiveness, its national policies have little to no impact on multinational automakers’ vehicle product lines or prices. Norway’s government has generally been highly supportive of ZEV adoption, declaring a goal of reaching 100 percent EVs, in terms of new vehicle sales, by 2025.

SHORTCOMINGS OF THE POLICY

Norway’s feebate program could potentially be improved in several ways. It is not revenue neutral by design, which is arguably a more sustainable policy choice. By contrast, it has multiple line segments with higher slopes for the fee lines than the rebate lines. A single line with a constant rate slope most easily achieves a revenue-neutral design, creates proportionate incentives that encourage continuous fuel improvement, and best preserves consumer choice.

OUTCOMES OF THE POLICY

The bonus-malus scheme helped reduce the sales-weighted average CO2 emissions per kilometer of France’s new vehicles by 6 percent in its first year of implementation, nearly twice the reduction observed in the rest of the E.U. in 2008. Average engine power and vehicle mass also decreased in 2008, with both attributes experiencing their largest reductions in over 25 years. The 2008 sales of relatively high-emission vehicles (i.e., 120–250 gCO2/km) declined, whereas lowemission vehicle sales increased dramatically, by about 80 percent. 23 Indeed, market share for the most efficient models nearly doubled, but for the least efficient fell by nearly two-thirds. In the first two years of the program, spanning both high and low gasoline prices, the rate of emissions intensity reduction was three times the previous trend. More recently, BEVs made up about 80 percent of France’s 2015 EV sales—probably a product of the roughly US$2,320 BEVs receive over PHEVs under the bonus-malus scheme’s rebate structure.

FRANCE’S BONUS-MALUS ECOLOGIQUE

France is one of the European Union’s largest passenger vehicle markets, accounting for about 15 percent of the E.U.’s annual sales volume.15 Plug-in hybrid electric vehicles (PHEVs) and batteryelectric vehicles (BEVs) made up more than 1 percent of France’s light duty vehicle (LDV) sales in 2015; BEVs accounted for about 80 percent of electric vehicle (EV) sales.16 The E.U.’s mandatory vehicle emissions standard was the impetus for the policymaking that helped establish France’s passenger vehicle market as one of the most efficient in the world. Many transportation experts credit France’s “bonus-malus écologique” as a driving force behind its passenger vehicle sector’s relatively strong average fuel economy.17 France’s bonus-malus scheme developed in two phases. First, France introduced a bonus-only scheme, offering rebates to efficient new vehicles purchased on or after December 5, 2007. Second, the French government introduced a fee on inefficient new vehicles registered after January 1, 2008.20 Together these bonus and malus components make up France’s feebate program. The program’s functional form is a step function with nine levels (Table 2). Its pivot point is a range (131–160 gCO2/km), as opposed to a single value. The literature refers to this range as a “discontinuity” or “doughnut hole” because vehicles falling within it are exempt from both fees and rebates.21,22 Table 2 shows the range of fees and rebates, with a maximum fee of US$2,600 and a maximum rebate of US$5,801. While there were no vehicle sales in the ≤60 gCO2/km step in 2007, today France’s top-selling BEV, the Nissan Leaf, would receive a rebate worth about 15 percent of its 2017 upfront price. Table 2 also highlights that a majority (45.4 percent) of France’s new passenger vehicle sales fall in the discontinuity’s range (131–160 gCO2/km).

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REACTIONS TO THE POLICY

The French feebate program affects both suppliers and consumers. The French government developed its feebate rate parameters in collaboration with automakers.24 Automakers’ acceptance of the program may have been higher in France than in other countries that have introduced feebatestyle programs because of this engagement. That said, this collaboration may have weakened the program’s price signals, as the auto sector could have contributed to the two most commonly cited shortcomings of the French feebate’s design: its nonlinear functional form and its doughnut-hole pivot point. Some consumers expressed concerns around the fairness of France’s single pivot point system. For example, large families were worried about incurring fees because they might require larger, less-efficient vehicles to meet their mobility needs. As a result, France created a subsidy to address this concern. Alternatively, the system could have met equity concerns with a design based on size classes.iv

SHORTCOMINGS OF THE POLICY

France’s bonus-malus scheme most closely resembles an idealized feebate when compared to other countries’ feebate-style programs. However, it deviates from this design in several ways. First, while some studies suggest a doughnut hole may bolster consumer acceptance, it also results in incomplete coverage and disproportionate incentives, leading to lower effectiveness.25,26 Second, while France considers step functions easier to understand than linear functions and doughnut holes easier to pass, both attributes reduce or even eliminate incentives. For example, vehicles outside the 60 gCO2/km and 250 gCO2/km steps, which represent the lower and upper bounds, respectively, have no incentive to reduce their emissions. Finally, the French program has struggled to achieve revenue neutrality.27

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ELECTRIC VEHICLES OUTCOMES OF THE POLICY

ONTARIO’S TAX AND CREDIT FOR FUEL CONSERVATION PROGRAM Policy description:

The feebate policy in Ontario (Canada’s largest provincial economy) went through three design iterations. It was first implemented in 1989 as a gas-guzzler tax on inefficient cars, with taxes levied on new vehicles based on their ighway fuel consumption rating in liters per hundred kilometers (L/100 km). Vehicles with a fuel consumption under 9.5 L/100 km were exempt from the tax; vehicles with higher fuel consumption were grouped into four ranges and charged a tax based on this step function. In 1990, the tax rates doubled, and the range of vehicles subject to taxation expanded so that only vehicles with fuel consumption below 8.0 L/100 km were exempt. Ontario updated the policy again in 1991, lowering the taxes on vehicles in the bottom two brackets and extending the policy to apply to more-efficient vehicles by instituting a rebate on vehicles with fuel consumption under 6.0 L/100 km. The policy update also included a wider range of vehicles, such as sport utility vehicles (SUVs), though passenger vans and pick-up trucks were exempt. Under this version of Ontario’s feebate, there was only ne level of rebate—a very low level, roughly US$100—and the maximum fee levied, for vehicles with a fuel consumption over 18.0 L/100 km, was roughly US$3,200. The fees and rebates applied at the point of vehicle purchase. This version of the tax and credit program did not change until 2010, when Ontario eliminated the feebate program during a largescale tax reform. 28 The policy was not revenue eutral; on average the taxes generated about US$30 million per year.29 The Ontario Government stated three objectives for the policy: environmental protection, energy conservation, and increased revenues.30

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Many experts consider Ontario’s feebate program unsuccessful in drastically changing consumer behavior. There were no significant shifts to smaller or more-efficient vehicles as a result of the program; indeed, the market share of large, luxury, and sporty vehicles increased over the lifetime of the program, 31 though arguably they might have increased even more without it. Ford actually redesigned the Mustang during the feebate’s active period to have a higher fuel consumption32— pushing it into a higher fee level between 2002 and 2009—which suggests that multinational automakers may not have been greatly influenced by the program. However, following the redesign, the Mustang’s market share in Ontario fell relative to the rest of Canada. The policy may have resulted in a small reduction in emissions, based on modeling by the University of Ottawa; this same model found that a revenue-neutral design would have more than doubled the emissions reductions relative to the enacted policy.33 A paper by Rivers and Schaufele of the University of Ottawa found that Ontario’s feebate program did have an economically meaningful and statistically significant effect on the vehicle mix, albeit small and not as large as it could have had it been designed to be revenue neutral. The report also found that there was an asymmetric response from consumers to fees and rebates in the case of the Ontario feebate, and posits a few potential reasons: dealers are more likely to emphasize subsidies during a vehicle test drive or sales pitch, and may attempt to lump fees with ther administrative costs of the vehicle so they are less visible to buyers.

REACTIONS TO THE POLICY

The Canadian car industry reacted negatively to the introduction of a new tax (in its original form, the policy was merely a tax and not a feebate), and argued that the policy was not the most effective way to reduce the environmental impact from vehicles.34 Canadian and Ontarian environmental groups, such as Friends of the Earth and the Environment and Taxation Working Group of the Fair Tax Commission, argued that the policy needed to be broadened and its rates increased for it to be effective. The 1990 update of the policy was controversial as well,35 with opposition primarily from manufacturers and the Canadian Auto Workers Union. The Ontario government revisited the policy again in 1991 as a result of lobbying and political pressure.

SHORTCOMINGS OF THE POLICY

Ontario’s feebate policy had several shortcomings that could be improved upon. First, the stepfunction design of the policy motivated manufacturers only to make small improvements in order for a car to qualify for a different class (the “edge effect”), rather than motivating continuous improvement. The values of fees and rebates also remained static between 1991 and 2010, limiting the policy’s effect on manufacturing habits; once a manufacturer reached whatever tax range seemed feasible for a particular vehicle, the manufacturer had no reason for further improvement so long as the vehicle continued to sell. A better option for the functional form may have been a linear model, adjusted on an annual basis, in order to evolve with technology changes and encourage constant improvement in the auto sector. Probably the most important factor limiting the Ontario program’s success was that the values for the fees and rebates were not large enough to change consumer behavior in the short run, let alone automaker product plans in the longer run. Ontario’s monetary incentives and disincentives were low relative to the cost of the car; because of political pressure, 90 percent of the market had a flat fee of about $75 USD.36 Additionally, few buyers were even aware of the program. The policy was asymmetric; there were far more fees levied than rebates given, resulting in a large net revenue for the program. Because of the asymmetric response to fees and rebates mentioned above—that is, consumers tended to respond more to rebates than to fees—the policy would have had greater success had it offered larger rebates on more-efficient vehicles. The model by the University of Ottawa found that the program would have been more successful in reducing emissions had it been designed to be revenue neutral.

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ELECTRIC VEHICLES

ONTARIO’S TAX AND CREDIT FOR FUEL CONSERVATION PROGRAM SUPPORTIVE FACTORS IN INDIA

India has a unique opportunity to make a global breakthrough in the implementation of a revenueneutral feebate program at a huge size and scale. With more than 30 lakh passenger vehicles sold from 2016 to 2017, private ownership of cars is booming in India. India is expected to overtake Germany to become the world’s fourth largest market, in terms of domestic car sales, by the end of 2017, according to IHS Markit.

SOME SUPPORTIVE FACTORS SPECIFIC TO INDIA INCLUDE:

• The Indian government has stated a goal of making

•

• •

the transition to efficient vehicles with little to no use of public funds,42 and a feebate can meet this objective more easily than other policy instruments. India has more than a billion biometrics on a universal identification platform (Aadhaar) and its Unified Payments Interface, a mobile payments system that mandatorily links bank accounts with biometric information. This system allows for rebates to be easily given directly to consumers, if that is the preferred manner of transaction. Private vehicle ownership is growing at a 10 percent compound annual growth rate in India. 43 While procurement of private vehicles will continue in India to a degree, vehicles sold for private and shared applications should be as efficient as possible to meet India’s ambitious national goals. India’s low rate of private vehicle ownership puts the country in an advantageous position to change the course of the vehicle market. The Indian automotive industry is world-class in its agility and ability to adapt to changing market and policy environments. Feebates can reinforce these capabilities and cultural tendencies to advance India’s overall global competitiveness and increase the market’s ability to move quickly and innovate. The Indian consumer base is highly price-sensitive, and will probably respond briskly to feebates’ price signal, driving both short- and long-term shifts in the market. Compared with some locations that have attempted to implement feebates, such as California, India has a relatively low number of clean vehicle policies that might complicate the implementation of feebates.

A successful feebate system that is able to reduce average emissions and significantly incentivize zeroemission vehicle ownership requires the right combination of practicality and accuracy, which together will bring long-term stability and public support. The evolution and design of such a system should be led by the central government and include all relevant stakeholders such as car manufacturers, ar dealerships, and residents affected by air pollution. The feebate should aim to move average emissions downward by a significant percentage over time and to exploit and further enhance Indian automakers’ and suppliers’ capacity for rapid innovation.

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CURRENT VEHICLE POLICY AND AUTOMOTIVE LANDSCAPE IN INDIA In 2012, the Department of Heavy Industry (DHI) promulgated a policy to promote electric mobility.The government subsequently ap proved a mission-mode approach to promote electric mobility and manufacturing of electric and hybrid vehicles (xEVs) in India under the title of “National Mission on Electric Mobility Mission Plan 2020” (NEMMP-2020). NEMMP-2020 launched in 2013 with an aim to achieve 5 to 7 million xEVs on Indian roads by 2020. One of the initiatives under NEMMP-2020 is the Faster Adoption and Manufacturing of Electric (and Hybrid) Vehicles (FAME), which offers direct fiscal subsidies to reduce the purchase price of xEVs. The program has had limited impact, as can be seen by the low number of vehicles that have benefitted from the program—a total of less than 150,000 vehicles from April 1, 2015 through June 30, 2017.44 A large portion of the number of xEVs on the road is made up of mild hybrids—which were originally subsidized by FAME, and consequently accounted for the majority of the program’s subsidies in the initial years—that have had limited impact on reduction in carbon emissions. In addition to air quality concerns, a major impetus for transitioning to advanced technology vehicles is India’s costly reliance on gasoline imports. Currently, more than 80 percent of India’s crude oil is imported, and the country spent INR 5 lakh crore (US$80.3 billion) on petroleum imports last financial year.45 While a large share of all trips (~66 percent in 200746) are still largely served by nonmotorized, public and commercial modes of transit, private vehicle ownership is expected to increase significantly,47 potentially driving up India’s already steep oil import bill. As vehicle ownership cycles in India have been hovering around the four-year mark48—and are expected to get shorter—the sales of used cars have burgeoned, and are poised to reach 66 lakh (6.6 million) units annually by 2021.49,50 Any proposed feebate scheme should consider a mechanism for introducing rebates and fees in the used car market as well. However, given that only 19 percent of the total used car market goes through organized dealers,51 it will be easiest to start with new car sales and consider expanding to used cars in the future. WHY IS A FEEBATE AN ADVANTAGEOUS ADDITION OR ALTERNATIVE TO INDIA’S CORPORATE AVERAGE FUEL CONSUMPTION NORMS? In April 2017 India adopted Corporate Average Fuel Consumption (CAFC) norms for lightduty vehicles under 3,500 g.52 The CAFC norms require automakers to reduce fuel consumption below 130 gCO2/km until 2022 and below 113 gCO2/km thereafter.53 The Ministry of Power, in collaboration with the Bureau of Energy Efficiency, set these standards after several years of discussions and debate. Despite India’s fleet being among the most fuel-efficient in the world, with a sales-weighted average of 136.6 gCO2/km in fiscal year 2012–2013, 54 its post-2022 CAFC target of 113 gCO2/km is 8–22 ercent lower than proposed targets from Japan, the E.U., the U.S., and Canada. Moreover, the CAFC norms do not offer any incentives for exceeding the standard, unlike feebates, and both government and industry reports suggest that their preparation has a high administrative burden. A revenue-neutral feebate with an annually adjusted pivot oint would better support continuous improvement in India’s increasingly efficient and growing passengercar fleet by roviding both consumers and manufacturers with incentives that the CAFC norms lack. A feebate policy could be implemented with the CAC norms still in place, to ensure a baseline level of fuel consumption improvements; ultimately, though, the feebate would likely cause the CAFC norms to become obsolete as the market is incentivized to improve far beyond the efficiency standards set by CAFC.

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ELECTRIC VEHICLES

CURRENT VEHICLE POLICY AND AUTOMOTIVE LANDSCAPE IN INDIA With the innumerable decisions that go into designing a feebate, there are countless potential designs possible, each with varying impact and benefit. There is much learning India can build on and improve upon. This section does not advocate for specific technical design decisions; rather, it aims to suggest several principles—based on common concerns and the takeaways from feebate case studies—which a number of different designs can satisfy. There are many valid concerns and challenges to be considered, and many of them can be addressed and minimized by a close attention to detail in feebate design. Some of the common concerns and opposition arguments include: • •

• •

The policy will adversely affect the auto industry by increasing administrative burden and requiring manufacturers to make huge capital investments. Automakers have long design cycle times; a feebate policy that is immediately introduced will negatively impact the auto industry for several years while companies rush to update their product offerings. The policy will favor particular types of automakers while disadvantaging others based on their primary product offerings. Feebates can be misinterpreted or criticized as a new tax.

To address these concerns and the lessons learned from past examples, a feebate design for India should take into account nine principles: Engage all relevant stakeholders in the design process. To design a

policy that is widely supported and helps strengthen the auto sector, it is necessary to consult the various stakeholders to understand their needs so that the policy can be designed to support them as well as possible. Feebates do not attempt to force a novel change; instead, they aim to support and accelerate, with maximal efficiency and opportunity, the transition to clean vehicles that has already been occurring around the world and in India and that is the clearly declared policy of the Government of India. The ideal outcome of the policy is for the government to help motivate and support both the auto sector and consumers in aking this transition.

Design the policy to be revenue neutral. Making the program selffinancing helps to avoid the misconception that it is purely a ax, and increases its level of political acceptance. The Indian government has stated that it aims to make the transition to EVs self-financing,55 and designing a feebate program to be revenue neutral would align with this goal. Additionally, as seen in the case of Canada, a revenue-positive program is not ideal because of the asymmetric way consumers respond more to rebates than to fees (see the Appendix for a more detailed explanation of the technical design that goes into revenue neutrality). Design feebates to encourage constant innovation and improvement. The functional form and slope should be chosen so that manufacturers are encouraged to continuously improve vehicle efficiency, rather than make small improvements to reach the next level of fee or rebate. This means avoiding a step function in favor of a different form such as a continuous linear function, with no “doughnut hole” in the middle that would allow vehicles to be exempt from the policy. The policy should avoid putting a financial cap on the rebates or fees, which would motivate manufacturers only to hit a certain mark. The pivot point should be regularly evaluated based on the changing market, which also ensures that the policy is self-financing. An efficiency criterion should be chosen so that all vehicle technology is included in the policy, to avoid limiting innovation to certain vehicle types. The policy should promote vehicle efficiency, not a particular type of technology, energy, vehicle, or design philosophy.

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Preserve consumer choice as much as possible. By accounting for inherent vehicle type differences through design choices such as defining vehicle classes with different pivot points, consumers are not pushed simply toward smaller cars, and manufacturers are not forced to serve different market segments, than they prefer. Differentiating vehicle classes also incentivizes efficiency across all vehicle types (see the Appendix for a more detailed explanation of the technical design that goes into preserving consumer choice).

Create a level playing field for manufacturers. The policy should avoid favoring manufacturers who produce a certain type of vehicle. As with preserving consumer choice, this can be done by designing the feebate to take vehicle size or function into account, such as dividing vehicles into classes with different pivot points (e.g., two-wheelers vs. threewheelers, or four-wheelers of different sizes). By comparing like-size vehicles, the policy would avoid the situation of manufacturers of smaller vehicles immediately having an advantage over manufacturers of larger, inherently lessefficient vehicles. Make the policy as simple as possible, within reason. While some intricacies are inherent to feebate design, unnecessary detail and complexity should be minimized as much as possible to keep the policy easy to understand and explain. Designing policies to be simple and understandable makes their value clearer to the consumer and makes implementation and enforcement easier. Avoid including electricity generation sources in the efficiency criterion. Because of the varied and rapidly changing

Indian electric grid, it would quickly become overly complicated and unfair to take into account electric vehicles’ electricity generation sources or their efficiencies. The generation mix varies across states, and consumers often do not have a choice in how their electricity is generated, so it would be unfair to compensate the buyer of an EV in a state with a cleaner grid with a higher rebate than the buyer of the same EV in a state with a dirtier grid. (If the electricity sector transforms in the future to allow for a higher level of consumer choice, this principle may be revisited.) Also, with India’s renewable energy goals, rapid market evolution, greater inter-state grid integration, and falling grid losses, the emissions associated with each delivered kWh will probably set to drop markedly in the coming decade; that would require the values for grid emissions to be recalculated frequently to keep the policy up-to-date and accurate. Instead, a national efficiency criterion independent of electricity generation source should be chosen—such as lower heating value for each fuel, using the simple conversion of 1 kWh of electricity equals 3.6 MJ or 3,412 Btu of energy content.

The feebate should be designed with attention to other policies already in place. It is important to consider how the fee-

bate would interact with existing clean vehicle and emissions policies, and how it can be designed to complement existing policies rather than complicate the regulatory landscape. Consideration could be given to whether the other policies would be necessary with a feebate in place, or if they could be phased out as the feebate phases in, in order to simplify and streamline clean vehicle regulations. This could reduce the administrative burden on both the government and the auto industry, by simplifying both enforcement and compliance.

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ELECTRIC VEHICLES

Include a transition or ramp-up period. The feebate policy should come into effect over time, so that manufacturers have ample lead-time to adjust their vehicle line-up to optimize the benefit or minimize the losses they will incur because of the policy. Typically, manufacturers need 2–5 years to make substantial changes to a vehicle,56 and implementing a full-strength feebate with little advance warning would put undue stress on the auto industry. Starting with a lower slope and increasing it over time would also minimize the financial risk of starting a policy without fully understanding how consumers will respond to it. However, subject to these legitimate industry needs, phase-in should proceed with due deliberate speed to capture major benefits as quickly as practical. Designing a feebate with these principles in mind will create a policy that is strong, flexible, impactful, and adaptable, as well as sensitive to the needs and concerns of the stakeholders involved. It would be a useful and necessary exercise to map out all stakeholders who will be impacted by the policy, in order to engage them in the design process and create a policy that best supports all parties. This task should be undertaken during the policy design process by the professional body described in section 6. A feebate policy can ideally minimize the negative impacts on the auto industry and aid in and reward the industry’s transition to cleaner, more-efficient vehicles. In some cases, the implementation of a feebate has correlated with increased vehicle sales.57 It is important to stress that a feebate policy does not attempt to force a change that is not already underway; it merely aims to support and accelerate a transition that has already begun. Therefore, while the implementation of a feebate will probably require automakers to make large capital investments, the policy is not adding an additional cost but rather encouraging automakers to accelerate the timeline on an inevitable future cost. Once the policy is developed, it will also be important to effectively educate the auto industry and the public about the program, so that they understand its benefits and avoid common misconceptions, such as equating it with a new tax. How This Program Might Evolve Over Time. One benefit of a feebate policy is that it is easily adaptable to a changing market. It is a framework, not a cage. The program could also be extended to include more transportation segments, such as heavy trucks and aviation. It is impossible to anticipate all of the ways that the policy may need to be updated in the years and decades following its implementation, so it will be important to regularly revisit the policy to ensure that it is still having the desired effect. It is not necessary to plan for the phase-out of feebates at the time of implementation, since the policy is designed to evolve over time. If India reaches the point where it no longer needs feebates to build a clean car industry and discourage backsliding, then the government can consider phasing them out. The value of a feebate program carries an implicit assumption that moreefficient vehicles cost more upfront. This reality will cease to be true in the future, especially as the costs of batteries and other technologies decline. Bloomberg New Energy Finance expects EVs to reach upfront cost parity with ICEs by 2025, and already high-mileage EVs have reached parity with ICEs on a total cost of ownership (TCO) basis.58 As each vehicle segment reaches TCO parity, the policy should be removed or redesigned to continue to encourage further-increased efficiency and clean technology.

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CONCLUSION : The launch of a thoughtfully designed and carefully implemented feebate program in India will help the country reach its goals of clean mobility and a prosperous economy. It will also set an example for the rest of the world. India has a unique opportunity to make a global breakthrough in the implementation of a revenue-neutral feebate at a huge size and scale, supported by the country’s growing automotive sector and cutting-edge technology resources. Unlike many policy options, a feebate program delivers societal value and prioritizes individuals’ well-being. India has a unique opportunity to implement the world’s first revenue-neutral feebate at a scale that is unmatched globally. This initiative can help the country reach its goal of a shared, electric, and connected mobility future. Doing so will require collaboration among the individuals behind India’s ambitious mobility vision and some of the nation’s most advanced industries. The first step in creating a national-level feebate program will be the creation of a professional body to research and develop the technical design of the policy. This process must include robust stakeholder engagement to ensure that the policy best addresses the needs of all affected parties. With many competing priorities, a feebate repre ents a simple, elegant solution capable of shifting consumers’ preferences and manufacturers’ offerings in a way that creates value for both parties as well as society. It aims to support the transition to more-efficient vehicles, a shift that has already begun in India and around the world; accelerating the pace of this change can help reduce harmful air pollution and costly oil imports. In addition to revenue neutrality, a carefully designed feebate can be technology agnostic, creates a level playing field for manufacturers, preserves and even enlarges consumer choice, and drives continuous improvement in vehicle efficiency. India’s successful implementation of a feebate can also set an influential example for the rest of the world. Such a market-based mechanism can allow the Government of India to ensure that the auto industry’s goals align with the best interests of Indian society—enabling the automotive sector to lead the transition to safer, healthier, more accessible, and more affordabl mobility system.

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Committee Report on Standardization of Public EV Chargers PUBLIC AC METERED OUTLETS AND PUBLIC DC FAST CHARGERS SPECIFICATIONS EV Charger

n EV charger, also called Electric Vehicle Supply Equipment (EVSE) is an element in EV infrastructure that supplies electric energy for recharging the electric vehicles. As proliferation of EVs depends on access to the charging infrastructure, the nation needs to follow common specifications and standards for the infrastructure be used for all categories of vehicles and help it scale seamlessly. This document details on the classification of EVSE and provides the detailed specification for AC and DC public chargers.

Charger Type : Private charger

he home private chargers are generally used with 230V/15A single phase plug which can deliver a maximum of up to about 2.5KW of power. Thus, the vehicles can be charged only up to this rate. The billing for the power is part of home-metering. This will be continued till a policy evolves to charge the home users differently for EV use, however, inclusion of RCD (Residual Current Devices) should be ensured. IEC 60309 Industrial connector to be used from both ends. The existing Indian safety guidelines should be followed.

Public charger

or charging outside the home premises: the electric power needs to be billed and payment needs to be collected. Further, the charges may depend on state of grid (whether it is power-surplus or is in power-deficit state). The power utilities may also want to manage power drawn by these chargers from time to time. This document will here-on deal with only Public Chargers

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Charger Classification

ith reference to the charger types discussed above, it is more appropriate to classify chargers based on power rating instead of the rate of charging vis-àvis “slow-chargers” or fast-chargers”. The definition of “slow chargers” and “fast chargers” is not sufficient, as the same charger should be acting as a slow charger or a fast charger depending upon the vehicle to be charged. For example, a 2.5KW charger will be slow charger for a 4-wheeler but could be a fast charger for a 2-wheeler.

AC Chargers

atteries are DC and needs DC power for charging it. If the public chargers (also known as offboard chargers) are DC chargers, the batteries / vehicles could be charged directly. For public outlets feeding AC supply to the EV, the chargers are on-board and these on-board chargers are supplied by vehicle manufacturer. The specifications here deals with only Public off-board chargers. The electric 2-wheeler, 3-wheeler and 4-wheeler vehicles in India do not have an on-board charger beyond 2.5kW or 3kW. This is to save or minimize costs in vehicle. This is likely to continue. 4-wheeler manufacturer may not even have a higher power on-board charger. In Europe, Vehicles have on board chargers with higher power ratings (for example Tesla have a 16KW charger).However, as India is unlikely to have on board chargers with higher rating in near future, definition and building of AC fast charger beyond 2.5 / 3kW is not taken up in this document. As and when one sees vehicles in India which have higherpower on-board chargers, higher power AC chargers can be defined. This document therefore defines specifications of AC Public off-board

Chargers up to a maximum charging rate of 2.5 kW or 3 kW. For such chargers, the charging point needs to be only 230V single phase. The detailed specifications are given in Chapter 2 These AC 2.5KW or 3KW Chargers could fast charge a 2-wheeler (for a battery capacity of 2.5KW if they have appropriate on-board charger) in an hour’s time; 4-wheeler or larger vehicles with batteries of 12 KWh or more will be charged in five to six hours.

DC Public off-board Chargers Depending on the nature of battery and vehicles used, different sizes of higher capacity DC fast chargers are required. Some basic variations in charging rate and voltage rating may bei. 10kKW/15kW/30kW/50kW or even higher capacity DC fast chargers ii. Voltage Rating at which charging has to be carried out: a. 48V/72V for 2W, 3W, small and medium 4W. b. Up to 750V or even higher for medium to high end 4W. iii. Costs associated with chargers of different voltages and powers are very different, iv. Cost of DC Chargers below 100V and charge rate of 10 kW to 15kW may be USD2000 to USD2500 in volumes. v. Above 100V and charge rate between 30kW to 50kW. The costs may be higher. They may be required in select places.

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ELECTRIC VEHICLES Therefore, DC Public off-board Chargers are classified as follows:

Level 1 DC Chargers Public off-board DC Chargers at output voltage of 48V / 72V, with power outputs of 10 kW / 15 kW with maximum current of up to 200A. These will be called Level 1 DC Chargers. The specifications of Level I DC Chargers are defined in detail in Chapter 3

Level 2 DC Chargers Public off-board DC Chargers at output voltage up to 1000V, with power outputs of 30 kW / 150 kW. These will be called Level 2 DC Chargers. The specifications for Level II DC chargers will be specified in due course.

Requirements for DC Public Chargers The architecture for the whole EV infrastructure as shown in Fig. 1. All public chargers should be as follows:

Communication for Chargers, also called EV Supply Equipment (EVSE) i. EVSE needs to communicate with BMS of battery pack in EV, to enable it to charge at right rate for maintaining SOH of batteries. Physical layer for this communication will be CAN, as it is commonly used by vehicle manufacturers in India. ii. Communication between EVSE and Central management system (CMS) located at power utility company, so as toa. Enable maximum charging rate to be controlled depending upon the rates of grid supply b. This will also enable metering at different rates. This is critical as whenever vehicles consume large currents and grid should be able to supply it c. This will also enable reservation of chargers by users. For all Public off-board chargers, the communication protocol used will be OCPP. This will be carried on Internet, using wired media or wireless (Wi Fi or GPRS or 3g/4g wireless). iii. Communication between CMS and user / charging operator mobiles.

Billing and Payment The customers need to be billed for the charging and payment needs to be made. There are multiple options, including debiting the user’s account based on VIN (vehicle identification number). Direct debiting the funds to user’s equipment based on VIN will be adopted. Alternately a mobile application to be defined, which allows a user to charge using BHIM or Bharat QR

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Figure : Architecture for EV and Charging Infrastructure

code or other digital payment schemes specified by Indian Government, to be used both for AC as well as DC chargers. I. Displays and keypads should be kept to minimum to minimize costs. Communication with mobiles is encouraged. II. EVSE should have right safety systems built-in and environmental protection.

Economic Models for Public Chargers (EVSE) A preliminary economic model for AC Chargers and for DC L1-Chargers has been carried out. As volume prices fall, the chargers can be stand-alone business. Besides the capital costs of chargers and cost of provision of electrical line, space cost-sharing and manpower costs dominate. If the number of vehicles being charged per day falls, the business is dicey. The computation shows that it may be best to enter into revenue sharing arrangement with space providers and with those who supervise.

CHAPTER 2: Bharat EV AC Charger (BEVC-AC001) This chapter presents the specifications of a Public metered AC outlet (PMAO) which is to provide AC input to the vehicle which has on-board chargers. This document applies to electric road vehicles for charging at 230V standard single phase AC supply with a maximum output of 15A and at a maximum output power of 3.3kW. PMAO is a slow charger for low-power vehicles.

General Requirements The EV shall be connected to PMAO for conductive energy transfer function. The system will have following general specifications:

i. PMAO is supplied with three phase AC power and outputs single phase AC power. ii. Energy Transfer Mode is Conductive. iii. Each outlet will have up to three independent charging sockets. iv. The PMAO has built-in metering, safety & monitoring. v. PMAO and Central Management System communicate with each other to serve purposes of firmware, reservation, cancellation, addition and deletion of PMAOs etc.

Input Requirements i. A.C. Supply System is 3 phase, 5 wire AC system (3 phases + N + PE) ii. Nominal Input Voltage is 415V (+6% and -10%)as per IS 12360 iii. Input Frequency is 50Hz ± 1.5 Hz iv. Input Supply Failure back-up: Battery backup for minimum 1 hour for the control system and billing unit. Data logs should be synchronized with CMS during back up time, in case battery drains out.

Output Requirements i. Number of Outputs: 3 ii. Type of each output: A.C., 230V (+6% and -10%) single phase as per IS 12360 iii. Output Details: 3 Independent charging sockets as per IEC 60309, given in Annex A. Female connector to be used on the PMAO Side iv. Output Current: Three vehicles charging simultaneously, each at 15A current v. Output Connector Compatibility: IEC 60309 Industrial Blue connectors to be used. vi. Connector Mounting: Angled connector mounted looking downwards for outdoor use. vii. Double-pole breaking RCD (IEC

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60309 Blue connector) of less than 30mA (As per section 7.4 of AIS 138 Part 1) is recommended. viii. Limiting Output Current: Circuit breaker for each outlet limited to 15A current output. Breaker should be reset to resume operation. ix. Output selection: the breaker inside to be energized in sequence - one round of all three phases before the second round. x. Socket readiness: An LED to indicate that the socket is ready. xi. Isolation: Input and outputs should be isolated. Outputs should be isolated from each other to avoid cross talk (insulation as defined in AIS 138 Part 1, clause 3.3.1).

User Interface and Display requirements i. Visual Indicator: Error indication, Presence of input supply indication, Charge process indication and other relevant information. ii. Display Messages: PMAO should display appropriate messages for user during the various charging stages like iii. Vehicle plugged in / Vehicle plugged out iv. Duration since start of charge, Time to charge, kWh v. Authorization status vi. Idle / Charging in progress: SOC vii. Fault conditions viii. ON- OFF (Start-Stop) switches are simple push button type ix. Emergency Stop Switch is mushroom headed push button type (Red color) x. Display and Touch Screen Size is minimum 6 inches with720x480 pixels xi. User Authentication is by using mobile application or user interface (OCPP gives only a field mandate, media to be used is open). xii. Metering Information: Consumption Units

Billing and Payment Requirements i. Metering - metering as per units consumed for charging the battery of each vehicle as per Indian standards. ii. Billing – Grid Responsive Billing iii. Payment – BHIM complaint mobile application payment

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Protection and Safety Requirements Safety Parameters Safety and protection to be ensured for India specific environment (As per AIS 138 Part1).2.6.2.

Start of Charging The outlet will be locked and covered, the connector will be exposed to charging only after user authentication using user interface or mobile application. Only when the lock opens and connector is properly connected, the switch/ relay will turn ON to feed power to EV. i. Lock will be opened only after full charging and authentication by user or the operator ii. Once disconnected, the charging session terminates.

Power failure If there is a power failure, user is indicatedi. If the user wants to terminate the session, the user can shut-off the switch and remove the plug ii. If user does not remove the plug, the charging resumes when power comes back.

Interruption of Charging i. Connector terminals to be mounted with temperature sensors to avoid burning of connectors. Safety mechanism to trigger switching off of the charging >80°C. In such situation, an appropriate signal will be sent to turn the switch/relay OFF in order to stop the charging. Once disconnected, the charging session terminates. ii. If plug is taken out (for more than 2 seconds) and then reinserted for charging, the charging-session will disconnect. A new session will be required to continue charging. iii. These shall ensure that no one can remove a vehicle being charged and insert their own cable and use the infrastructure without paying or at someone else’s account

Mechanical Requirements Suggested Cable Security PMAO should have locking mechanism for the connector while charging. i. The vehicle may also have locking mechanism during charging to ensure the safety of the cable (Suggestion to OEM to have shutter lock for security purpose of the cable during charging session).

Mechanical Stability i. Shall not be damaged by mechanical impact energy: 20 J (5 kg at 0.4 m) (Section 11.11.2.2. of AIS 138 Part 1). ii. IP Ratings: IP 54 (Section 11.11.2.4. of AIS 138 Part 1). iii. Cooling: Air cooled or forced air cooled to protect the equipment against temperature hazards.

Environment Requirements i. Ambient Temperature Range: 0 to 55°C ii. Ambient Humidity: 5 to 95% as per AIS 138 Part 1 section 11.2 iii. Ambient Pressure: 86 kpa to 106 kpa as per AIS 138 Part 1 section 11.11.2.4 iv. Storage temperature: 0 to 60°C

Communication Requirements i. Communication between PMAO and Central Management System: Open Charge Point Protocol (OCPP) 1.5 protocol. a. Should be upgradable to next version of OCPP whenever it is released b. Should enable handshaking between PMAO and CMS for discovery. c. It should authorize the operation, before electric vehicle can start or stop charging d. PMAO should respond to CMS for various queries and commands like reservation, cancellation and other functions specified on OCPP. ii. Metering: Grid responsive metering as per units consumption of each vehicle iii. Interface between charger and central management system(CMS): Reliable Internet Connectivity

AC001 Specification Summary The specifications discussed in Chapter 2 are summarized in Table 1.

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ELECTRIC VEHICLES TABLE 1: SUMMARY OF AC001 SPECIFICATIONS

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CHAPTER 3: Bharat EV DC Charger (BEVC-DC001) This chapter prescribes the definition, requirements and specifications for low voltage DC electric vehicle (EV) charging stations in India, herein also referred to as "DC charger", for conductive connection to the vehicle, with an AC input voltage of 3-phase, 415 V. It also specifies the requirements for digital communication between DC EV charging station and electric vehicle for control of DC charging.

General Requirements The method for charging an EV is to use an off-board charger for delivering direct current. The EV shall be connected to the EVSE so that in normal conditions of use, the conductive energy transfer function operates safelyi. Energy transfer mode: Conductive ii. EVSE type: Dual-connector DC EVSE iii. No. of outputs: 2 iv. Charging mode: Mode 4 – DC Charging [DC charging is defined as Mode 4 as per IEC61851-1 section6.2]

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System Structure The System requirement parameters are derived from Table D1 of Annex DD of IEC 61851-23. i. Regulation: Regulated DC EV Charging station with combination of the modes: controlled voltage charging (CVC) and controlled current charging (CCC) ii. Isolation: Isolated DC EV charging station, according to the type of insulation between input and output: a) Basic insulation b) Reinforced insulation, c) Double insulation Each DC output should be isolated from each other [Section 7.5.101 of IEC 61851-23]. iii. Environmental conditions: Outdoor use. EVSEs classified for outdoor use can be used for indoor use, provided ventilation requirements are satisfied. iv. Power supply: AC mains to DCEV charging station v. DC output voltage rating: Up to and including 100 V vi. Charge control communication: Communicate by digital and analog signals vii. Output Current: 200A viii. Interface Inter-operability: Interoperable with any EV (non-dedicated, can be used by any consumer). ix. Operator: Operated by a trained operator or EV owner

Input Requirements Rating of the AC supply voltage I. The AC supply system would be 3-Phase, 5 Wire AC system (3Ph+N+E) Nominal Input Voltage is 415V (+6% and -10%) as per IS 12360 II. The Rated value of the frequency is 50 Hz ± 1.5Hz.

Battery back-up The Input supply system to have a battery backup for minimum 1 hour for control and billing unit. The data logs should be synched with CMS during back-up time, in case battery drains out.

Output Requirements The Charger can provide two DC outputs suitable for 48V and 72V vehicle battery configurations. There can be two categories of chargers based on the limit on output power of the chargers as shown in Figure 2 below.

Figure 2: a) Charger with Power Limited to 10kW (Type 1)

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Figure 2: b) Charger with Power limited to 15kW (Type 2)

The chargers should allow charging of one vehicle with maximum power (10 kW or 15 kW) or 2W vehicle with limited power (3.3 kW at 48V only) as per the output configurations types given in Section Charger Configuration Typesi. DC Output voltage: 48V or 72 V ii. Output current: limited to 200A iii. Converter Efficiency: > 92% at nominal output power iv. Power factor: > 0.90 (Full Load) The service life of coupler and breaking capacity of the coupler as defined in Section 9 of IEC 61851-23.

Charger Configuration Types i. Type 1: Single vehicle charging at 48V or 72V with a maximum of 10kW power, or a 2W vehicle charging at 48V with maximum power of 3.3 kW. ii. Type 2: Single vehicle charging at 48V with a maximum of 10kW power or 72V with a maximum of 15 kW power or a 2W vehicle charging at 48V with maximum power of 3.3 kW.

Output Connector Requirements i. Number of Outputs: 2 outputs ii. Output 1: to be used for 10 kW or 15 kW charging, Connector is GB/ T20234.3. The Connector details are provided in Annex B1 iii. Output 2: connector to be used for 3.3 kW charging will be defined in due course of time.

Cable Requirements i. Charging Cable Assembly: As per Section 10 of AIS 138 Part 1, except the functional characteristics defined as below a. Functional characteristics: The maximum cord length will be 5 meter, straight cable ii. Cable Connection Type: supply cable will be with EVSE as per Case C defined in section 6.3.1 of IEC61851-1. iii. Cord Extension Set: No extension cord to be used, as per Section 6.3.1.

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of AIS 138 Part 1 iv. Adaptors: No adapters to be used as per Section 6.3.2 of AIS 138 Part 1 v. Storage means of the cable assembly and vehicle connector: EVSE should have storage for cable and connector when not in use, at a height between 0.4m to 1.5m above ground level, as per IEC 61851-23 Section 101.1.3

Environmental Requirements i. Ambient Temperature Range: 0°C to 55°C as per 11.11.1.2 of AIS 138 Part 1 ii. Ambient Humidity: 5% to 95% as defined in Section 11.2 of AIS 138 Part 1 iii. Ambient Pressure: 86 kpa to 106 kpa as defined in Section 11.11.2.4. of AIS 138 Part 1 iv. Storage Temperature:0°C to 60°C

Mechanical Requirements i. Ingress Protection: The minimum IP degrees for ingress of objects is IP 54 ii. Mechanical Impact: As per IEC 61851-1 Section 11.11.2 iii. Mechanical Stability: As per section 11.11.2.2. of AIS 138 Part iv. Cooling: Air cooled or forced cool for protection and safety of equipment from any fire hazards

In case of normal condition, DCFC should be able to reduce the descending current at a rate of 100A per second or more as per Section 101.2.1.4 IEC 61851-23. iii. Load dump: In any case of load dump, voltage overshoot shall not exceed 110% of the maximum voltage limit of the battery systems, as per Annex BB 3.8.3 of IEC61851-23.

Functional Requirements The functional requirements should be as per Section 6.4.3 of IEC 618511 and Section 6.4.3 of IEC 61851-23 except for the following functions, to be implemented as follows. i. Measuring current and voltage: The accuracy of output measurement of system B shall be within the following values: l Voltage measurement: ± 0,5% l Current measurement: ±1 A if the actual current is less than or equal to (≤) 50 A ii. Protection against overvoltage at the battery: The DC EV charging station shall reduce the DC output current to less than 5 A within 2 s, to prevent overvoltage at the battery, if the output voltage exceeds the maximum voltage limit of the battery system for 1 s

Protection Requirements i. Protection against Electric Shock: As per AIS 138 Part 1, Section 7.0 ii. Effective earth continuity between the enclosure and the external protective circuit, as per AIS 138 Part 1 Section 6.4.1.2

Specific Requirements DC FC shall have provision of emergency switching, protection against uncontrolled reverse power flow from vehicle, Output current regulation in CCC, Output voltage regulation in CVC, Controlled delay of charging current in CCC, limited periodic and random deviation (current ripple) and limited periodic and random deviation (voltage ripple in CVC), as per Section 102.2 of IEC 61851-23. The specific requirements defined in Section 102.2 of IEC 61851-23 except for the functions provided with descriptions: i. Rated outputs and maximum output power: The clause from Section 101.2.1.1 of IEC 61851- 23 is applicable except for the ambient temperature range to be 0 °C to 55 °C for Indian climatic conditions. ii. Descending rate of charging current:

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Communication Requirements

User Interface and Display Requirements

EV – EVSE Communication A dedicated CAN communication is used for digital communication between a DC EV charging station and an EV for control of DC charging. The physical layer shall be CAN bus over twisted pair cable and should comply with requirements defined in ISO 11898 -2:2003. The communication shall use the CAN framing format at a rate of 250 kbps, using 29-bit identifier of CAN extended frame. The CAN specifications and framing details are provided in Annex B2. The system definition for communication between DC EV charging station and electric vehicle shall follow IEC61851-24B. The application layer for this pair of communication is derived from GB/T 27930 protocol. The amendments in messages for control of DC charging are as below. Below parameter specified as optional parameters in GB/T 27930 protocol should be made mandatory 1. Vehicle Identification Number (VIN) Additional changes are as given in Annex B3

Summary of BEVC-DC001 Specification The specifications given in chapter 3 are summarized in Table 2.

TABLE 2: BEVC-DC001 SPECIFICATIONS SUMMARY

EVSE – CMS Communication The EVSE should be able to communicate with CMS using Open Charge Point Protocol (OCPP) 1.5. i. Communication interface: Reliable Internet connectivity ii. Should enable handshaking between EVSE and CMS for its discovery, firmware version, vendor Version, vendor etc. It should authorize the operation, before electric vehicle can start or stop charging. EVSE should respond to CMS for the queried parameters. Reservation, cancellation addition and deletion of EVSE should be possible from CMS. iii. Metering: Grid responsive metering as per units consumption of the vehicle iv. Should be upgradable to next version of OCPP whenever it is released.

Billing and Payment Requirements i. Billing: Based on grid responsive metering ii. Payment: BHIM compliant mobile payment iii. Metering: As per Indian metering standard

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