Building An Electric Bus Ecosystem In Indian Cities


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BUILDING AN ELECTRIC BUS ECOSYSTEM IN INDIAN CITIES
KY MOUN INSTITUTE

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KY MOUN
INSTITUTE
ABOUT DEPARTMENT OF HEAVY INDUSTRY
Department of Heavy Industry (DHI) under the Ministry of Heavy Industries and Public Enterprises, Government of India strives to bolster profit-making public sector enterprises as well as restructure and revive the loss-making ones under its administrative control. DHI seeks to achieve its vision of global automotive excellence through creation of state-of-the-art research and testing infrastructure through the National Automotive Testing and R&D Infrastructure Project (NATRIP). DHI seeks to achieve its vision by providing necessary support to the auto, heavy engineering, heavy electrical, and capital goods sectors.
ABOUT ROCKY MOUNTAIN INSTITUTE (RMI)
Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. RMI has been supporting India’s mobility and energy transformation since 2016.
ABOUT RMI INDIA
RMI India is an independent nonprofit organization. RMI India takes inspiration from and collaborates with Rocky Mountain Institute, a 40-year-old non-governmental organization. RMI India’s mission is to accelerate India’s transition to a clean, prosperous and inclusive energy future.

BUILDING AN ELECTRIC BUS ECOSYSTEM IN INDIAN CITIES

AUTHORS & ACKNOWLEDGMENTS

AUTHORS
DEPARTMENT OF HEAVY INDUSTRY Pravin Agrawal AK Singh
ROCKY MOUNTAIN INSTITUTE Ryan Laemel Clay Stranger
RMI INDIA Akshima Ghate Ashpreet Sethi
Authors listed alphabetically
CONTACTS
For more information, please contact: [email protected] [email protected]
SUGGESTED CITATION
Department of Heavy Industry and Rocky Mountain Institute. Building an Electric Bus Ecosystem in Indian Cities. https://rmi.org/insight/building-an-electric-busecosystem-in-indian-cities
EDITORIAL AND DESIGN
Project Manager: Vindhya Tripathi Design Director: Antima Nahar
Images courtesy of iStock / Shutterstock unless otherwise noted.

ACKNOWLEDGMENTS
Rocky Mountain Institute would like to thank the John D. and Catherine T. MacArthur Foundation for its generous support that made this work and report possible.
The authors would like to thank Anup Bhandivadekar and Megha Kumar from the International Council on Clean Transport (ICCT) for their review of the report.

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TABLE OF CONTENTS
FORWARD.................................................................................................................................................... 03 01. EXECUTIVE SUMMARY.................................................................................................................... 04 02. CONTEXT AND OPPORTUNITY................................................................................................... 07 03. WORKSHOP OVERVIEW................................................................................................................. 10 04. THEMATIC SUMMARIES AND SOLUTIONS PROPOSED BY STAKEHOLDERS......... 11
Overview of Themes and Summary of Key Takeaways ................................................................................................................... 11 Tendering, contracting, procurement, and financing ......................................................................................................................... 13 Depot and Route Selection and Operations ........................................................................................................................................ 16 Charging Infrastructure and Electricity Supply .................................................................................................................................... 18 Products and Supply Chain ....................................................................................................................................................................... 20
05. PATH FORWARD................................................................................................................................ 23 06. END NOTES......................................................................................................................................... 24
TABLE OF CONTENTS | 02

FORWARD

On behalf of the DHI and RMI, it is our pleasure to introduce this report, Building an Electric Bus Ecosystem in Indian Cities, a summary of insights that were generated at a workshop hosted by DHI and RMI on November 21, 2019, in New Delhi.
India’s economic growth and the build-out of its urban infrastructure are coinciding with dramatic cost reductions in clean energy technologies—creating an opportunity for India to leapfrog energy and mobility development pathways that other nations have pursued.
In the public transport sector, meeting the mobility needs of citizens with clean passenger kilometers must be among the highest priorities for India. As demand for public transport rises in this decade, a significant opportunity exists to electrify this new demand.
By pursuing this opportunity, India will become one of the largest electric bus (e-bus) markets in the world. As it has done before
Sincerely,

with other technologies, India can leverage the size of its markets to drive down costs and shape supply chains. The 5,595 e-buses that have been sanctioned for subsidy under the FAME II scheme represent a significant step in the right direction.
While adoption of e-buses at scale will not be without challenges, certainly, the health, economic, and environmental benefits that these buses can deliver to India’s cities are worth the effort. Early success will require collaboration and experimentation, a commitment to learning, and steadfast persistence.
We would like to express our gratitude to all those stakeholders who generously contributed their time and expertise to the workshop and look forward to working together to continue building India’s e-bus ecosystem.

Pravin Aggarwal Clay Stranger

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EXECUTIVE SUMMARY

ABOUT THIS REPORT
E-buses offer many value propositions to Indian cities: they are more efficient, cleaner, quieter, and increasingly cost-competitive.1 By 2030, if four out of 10 buses sold in India are electric, the country could emerge as the second largest e-bus market in the world after China. The increasing priority and support for e-buses from the central government and active response from states, cities and industry, as being witnessed under FAME II, are encouraging India to achieve this adoption path.2
The recent sanctioning of subsidies for 5,595 e-buses across 64 cities and State Transport Undertakings (STUs) by the DHI under the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME) Scheme, Phase II, represents a major milestone in India’s electric vehicle (EV) transition. Over their lifetime, these buses will run nearly 3 billion kilometers (km) without tailpipe emissions, produce oil import savings of 55 lakh barrels equivalent to ₹3,600 crore (about $500 million), and avoid 12 lakh (1.2 million) tons of carbon dioxide (CO2) emissions. Yet many challenges must be overcome by Indian cities and industry players to successfully deploy these buses and ensure robust processes and planning for their tendering, contracting, and operations.

In an effort to support early success and learning related to e-bus adoption in Indian cities, DHI and RMI convened stakeholders involved in the electrification of city bus services for a workshop on November 21, 2019, in New Delhi. The intention of the workshop was to support the efficient rollout and operation of the 5,595 e-buses sanctioned by DHI and prepare for the next round of tenders by collecting and sharing the lessons learned.
Over 30 cities and more than 100 senior leaders from public and private sectors and civil society participated, representing all levels of the government, transport and power sectors, and a range of geographies. They made valuable connections, generated insights to inform and advance the work, and shared suggestions for ways to further support the ecosystem moving forward. This report is a reflection of the discussions that took place at the workshop. It aims to capture insights generated during the workshop by sharing common challenges and solutions proposed by stakeholders working on early stage e-bus implementation in Indian cities. DHI and RMI hope it can help inform the actions of stakeholders across the e-bus ecosystem in India and beyond.

EXECUTIVE SUMMARY | 04

SUMMARY OF KEY DISCUSSION POINTS
The workshop demonstrated that there is high interest and considerable momentum in the electrification of city bus services in India. Key discussion points from the workshop included:
> How to address city-specific needs in tenders and contracts: As authorities issue tenders and execute contracts with Original Equipment Manufacturers (OEMs) and operators under FAME II, how can these documents address certain city-specific needs?
> How to take a long-term planning approach to fleet electrification and demand creation: As cities prepare to implement e-buses on the Gross Cost Contract (GCC) model4 today and potentially on other models moving forward, how can the planning process emphasize long-term fleet conversions and demand creation that OEMs require to make large-scale investments in manufacturing capacity?

> How to treat charging standards and electric grid upgrades: As the ecosystem adds EV loads to the grid, how can distribution companies, operators, equipment suppliers, and government actors work together to develop charging standards and plans for charging infrastructure and electric grid upgrades?
> How to build technical and operational capacity within government bodies: As city STUs procure e-buses under the GCC model, how can training programs and resources support officials with their transition to a new technology and business models?
> How to support a process for capturing and sharing successes and learnings: As this emerging market grows, how can the ecosystem support peer learning and leverage valuable insights to improve contracts, operations, products, and more?

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PATH FORWARD
As India’s e-bus market evolves, opportunities exist for government, industry, and civil-society actors to support efficient rollout and operation.

Government
For the public sector, opportunities exist to address city-specific needs through tendering and contracting terms and negotiations. For example, modifications to the Model Concession Agreement (MCA)5 can offer greater flexibility to cities while making contracts more bankable for financial institutions. Central, state, and city government actors can also work together on long-term fleet and infrastructure planning and targets to create the demand and market growth. Several participants indicated 5,000 units per OEM per year as a critical threshold for the industry to scale up investments in domestic manufacturing capacity.

Civil society
For transport experts and civil society organizations, many cities stand to benefit from the guidance and support related to e-bus procurement under the GCC model. Civil society can develop peer learning and training programs, tools, and resources that help build technical capacity of officials, especially on the topics of depot and route selection and charging infrastructure planning. In addition, consultants can provide valuable tendering and contracting services to ULBs.
Streamlining tenders and contracts, ensuring efficient rollout and operation, training and capacity building and long-term fleet and infrastructure planning in the context of e-buses will require collaboration and learning. Working together towards these outcomes has the potential to accelerate India’s transition to clean public transport.

Industry
For the private sector, there is potential to make reasonable contract adjustments that can create greater buy-in from cities without causing significant business disadvantages. In addition, the industry can work with Urban Local Bodies (ULBs) and STUs on capacity-building programs related to e-buses, as city officials can benefit from greater access to technical and financial knowledge, as well as operational best practices. There may also be opportunities for the industry to inform the design of new policy measures to support long-term demand creation.

EXECUTIVE SUMMARY | 06

CONTEXT AND OPPORTUNITY

India has gained global recognition for its efforts towards a clean energy and mobility future. As the country undergoes rapid urbanization, policymakers and business leaders have been working on ambitious plans to reduce emissions in the power and transport sectors, which together contribute over 65% of India’s annual CO2 emissions.6 These plans include the mass adoption of EVs in cities to improve local air quality and reduce CO2 emissions. According to India’s Economic Survey for 2018–2019, EVs represent the next generation of sustainable mobility.7 One of the use cases with the greatest potential for electrification is buses operated by STUs for intra and intercity operations, which cater to 70 million passengers per day with nearly 170,000 buses.8
The country’s EV initiatives started with the launch of the National Mission for Electric Mobility, followed by the National Electric Mobility Mission Plan 2020 (NEMMP) in 2013. To incentivize EV adoption, the DHI created the FAME scheme in 2015. According to the National Automotive Board’s data, 280,988 EVs have been sold under the FAME I scheme in four years.9

FAME II SCHEME
With an aim to support the electrification of passenger kilometers, India announced the second phase of the FAME Scheme starting April 2019, with a significant focus on public transport.10 The government has allocated ₹10,000 crore ($1.4 billion) for demand incentives and charging infrastructure. Around ₹3,545 crore (about $500 million USD) has been allocated for supporting adoption of 7,090 e-buses by STUs. In August 2019, DHI invited an Expression of Interest (EOI) under FAME II for electric city bus services on an operating expense (Opex) basis, also known as the GCC.11 DHI received 86 proposals from 26 states and Union Territories and sanctioned 5,595 e-buses to 64 cities on September 15, 2019.12
Following the sanction, authorities have issued Requests for Proposals (RFPs). States and cities have started commissioning e-buses after a thorough evaluation of proposals by OEMs.

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Building An Electric Bus Ecosystem In Indian Cities