Electric vehicle shift would be disruptive for diesel, petrol market: Sanjay Aggarwal, MD, Fortum India
Finland-based energy company Fortum which claims to have 1,400 connected electric vehicle chargers serving to clients in 11 countries now plans to foray into India’s electric vehicle charging market. The company’s Indian arm aims to build a charging infrastructure in the country with setting up electric charging stations on a pilot basis. In an interview with ETEnergyworld, Fortum India’s managing director Sanjay Aggarwal talks about the company’s electric charging station plan, the state of existing e-vehicles infrastructure and the possibility of anti-dumping duty being levied on Chinese modules.
How many charging stations are you planning to begin with?
We want to figure out the landscape first. So, the idea is that in cities like New Delhi, Mumbai, Bangalore, Nagpur, Pune, and Chandigarh we want to test the market area. The plans include developing charging infrastructure along with the cloud based system SAAS over the next four months. With the pilot beginning in October, Fortum plans to roll out more than 150 charging stations over a period of 12-18 months. These chargers shall be both AC and DC fast type. There are not enough e-vehicles in the country but we would still like to take that step and we aim to create a charging infrastructure. To begin with, I feel around 100-150 charging stations should be enough to figure out the market.
What kind of investment are you putting into this plan?
We are at a very nascent stage; it is very difficult to put a number to it. We would start putting up charging stations from as soon as October onwards. As of now, there are no charging stations except for very rudimentary charging stations which are manufactured outside and therefore I don’t want to hazard a guess. They would be expensive to begin with but once they begin manufacturing in India the cost would go down. We are still discussing the investment. Initially, we will be importing them and there is still some sort of confusion on what the import duty is on these charging stations. So, we need to figure all that out.
Is there enough clarity on the growth of the electric vehicle market?
We have many companies which are keen to get into electric vehicles segment. There is at least one big company which has said that by 2020 or so they will only produce e-vehicles and they are very clear in their mind in terms of the shift towards e-vehicles. I think a lot of discussions are going on but there is no concrete proposal as of now and people are still debating and struggling to figure out what the market would be like. There are apprehensions over electric vehicles; of course, charging stations need to come first but what happens if the charging stations come and the electric vehicles don’t, where would they source lithium ion batteries from, is it feasible to set up large lithium ion plants in India? The broad trajectory is very clear that in the next 10-15 years we will migrate to electric vehicles. But at present it is still very opaque, in the sense that a lot of things can change as we move forward.
What is your view on policy clarity from the government’s side?
The e-vehicles market would be disruptive for the petrol and diesel cars market just as the solar market was for the thermal power sector. Till some time back people who were putting up coal based plants never thought that solar power would gain such a traction. They were under the impression that it would remain a very niche market when suddenly it became disruptive. I think that the car manufacturers are in that stage. I think that would get repeated in the case of electric vehicles as well. I would say that the trajectory is very clear; e-vehicles will come far more sooner and it would be disruptive for the conventional fuel market and we need to be prepared for that. Currently a lot of discussions are going on and a direction is coming up but it will still take some time before the ecosystem changes.
Do you also think the government needs to increase subsidies and incentives for investors, like it did with the solar sector?
My view is that a certain amount of push needs to be given in the initial phase to gain some traction and then the market will move at its own velocity just like the solar market. Four years back, nobody could have imagined that we would set up 10,000 MW of solar energy in a year.
Firstly, I think just as there was a provision of Renewable Power Obligation (RPO) for the renewable energy sector, as a policy step the government could start off with saying that every manufacturer needs to have a certain percentage of e-vehicles just as they said that every discom needs to buy a certain amount of renewable energy. This push from the government will also give a sense to the car manufacturers that everyone is serious about it. In the initial phase this push is required otherwise nobody would start doing it. Four years back, nobody could have imagined that we would set up 10,000 MW of solar energy.
Second, the biggest thing that happened with the solar sector was that the government left it to the market forces, they didn’t bring in any licensing hurdles and encouraged competitiveness in the market. Similarly, the government should ensure that the market remains unlicensed. Charging infrastructure should be freed from the discoms because we are in a free market and one can not have a mix of both.
Also, let’s not bring in a feed-in-tariff system or a distribution licensing regime into this. Make it unlicensed, make it competitive and let the market decide. For example, in Europe it is charged on the bases of per minute charge or it could be converted into per km charge so we should let the market decide that. The government should also work on standardising the infrastructure. We need to figure out whether to follow the Japanese, US or European specifications.
How feasible do you think is the government’s plans of moving to all electric vehicles by 2030?
We need to realize the fact that whenever a disruptive technology comes, it always comes with geometric progression. It is never an arithmetic progression. I would again give the example of the solar market. Five years before putting up 200 MW per year was considered to be great and tariffs were around Rs. 17-18 per unit and this year we would end up putting about 10,000 MW with tariffs around Rs. 3-4 per unit, even with GST. This progress happened just over a period of five years so these changes will come with such ferocity. If you see the general global trend, practically around 70 percent of the cars which will be sold by around 2040 would be electric vehicles so everybody is moving towards that.
With respect to the solar sector, is there still confusion over certain components which do not come under the 5 percent tax rate?
There was initially confusion over the components which are under higher tax brackets. MNRE had however clarified that it will be under 5 percent. However, the view from MNRE needs to be translated into a document from the finance ministry. Once that is done, the confusion would settle down. There should be clarity on the account for all the projects which are under construction on how would this GST be compensated? So there should be a very simple way of tariff adjustment with this increase. As things stand today, it seems like it will go to Central Electricity Regulatory Commission (CERC) to decide.
How do you think the DGAD anti-dumping investigation on solar modules is going to impact the sector?
There are two ways of looking at it; one is that we need to understand what is the purpose of anti-dumping. If you want to promote Make In India and promote local manufacturers, at present India might have around 3-3.5 GW of panel manufacturing capacity but as far as cells are concerned it is only 1 GW. So they might put an anti-dumping duty over them. Would it have any impact whatsoever with respect to the Chinese modules coming? No. In a sense that your tariffs should go up because obviously the developers cannot absorb the duty. Would it promote Indian manufacturers to produce more? I don’t think so as anti-dumping duty world over has never been productive. There should be a holistic policy on how to promote local manufacturers. I am not getting into the debate on whether anti-dumping should be levied or not. But from a developer’s perspective there should be a very clear message from the government on all the projects which are currently using the modules, if anti-dumping duty is levied, those projects should be exempted from the duty. Second, it must be made clear in all the future biddings that till the anti-dumping duty comes in, it would not be applicable to them because it would be utterly unfair to ask the developers to take a call on anti-dumping duty.
Source:EnergyWorld
