Environment in 2030: The Role of Clean Energy & Electric Vehicles
Environment in 2030: The Role of Clean Energy & Electric Vehicles
Shruti Mahajan Deorah
Aug 30, 2021

A day in December 2030: it is winter season in Delhi and the AQI meters aren’t sounding ‘hazardous air’ alarms. The economy has grown 7% year over year, doubling over the decade. Electric cars and buses in urban areas provide silent, pollution-free transportation. Electric trucks are becoming a common sight. More than half of the electricity produced for the nation comes from clean sources of power, saving consumers money and many trips to the hospital.

Before you think of this as a utopian vision, let me enlist a few of the many reasons that make this a practical possibility.

India has achieved one of the lowest costs of electricity from renewable sources such as solar, dropping purchase prices by 85% over the last 10 years. Over the same time period, the cost of storing electricity in Lithium-ion batteries has dropped by 90%, and is further expected to halve over this decade. Between 2020 and 2030, the combined installed RE capacity in the United States, the EU and China is expected to triple from the current 1,080 gigawatts (GW) to over 3,000 GW. India’s demand for electricity is expected to almost double between Fiscal Year (FY) 2020 and FY 2030. If India achieves deployment of 450 GW of renewables-based generation capacity by 2030 as the Government of India (GoI) has announced, its power grid will be supplying 50% clean power by then.

Catalyzed by demand from electric vehicles (EVs), Li-ion battery manufacturing is expected to explode. From the current manufacturing capacity of about 500 GWh in China, Europe and US combined, it is projected to scale 4x by 2025. EV sales in the EU have seen a compound annual growth rate of 60% from 2016 to 2020, and over 50% of cars sold in Norway in 2020 were battery-electric. In China, with the world’s largest stock of EVs (over 4.5 M), 100% of buses sold - about 100,000 a year - are now electric. 

Closer home, the GoI launched a USD 1.5 billion subsidy scheme for EVs in 2019, with the goal of deploying 7000 e-Buses, 5 lakh e-3 Wheelers, 55,000 electric Cars and 10 lakh e-2 Wheelers by 2022. It seems Covid-19 has slowed down progress, but the allocation of over 40% of the budget to electric buses has been prudent. Given that buses and trucks account for 70% of oil consumption in road transport in India, it is imperative that these heavy-duty vehicles (HDVs) are the focus of electrification. They are also the most economical to electrify first as they cover the largest number of kilometres. 

What does it mean for India?

India imports ~90% of its oil at over USD 100 billion a year, so this impending transition to EVs offers more than air pollution and climate benefits. Impact on energy security would be immense, though there is cynicism over substituting oil imports with solar panels or batteries. 

Critics argue that India missed the bus on manufacturing solar panels, and predict a similar scenario for batteries. Although the concern on huge imports for clean technologies is justified, it is not an apples-to-apples comparison. Oil is a consumptive good, while batteries are assets that last for 8-10 years. India cannot manufacture oil, but given the expertise of an expanding skilled workforce, solar panels and batteries can be manufactured domestically. Leading wind turbine OEMs already have manufacturing facilities in India, with up to 10 GW production capacity. 

Earlier this year, the GoI announced an INR 4500-crore production-linked incentive (PLI) scheme for manufacturing solar cells and panels in India. The scheme is well structured to incentivise efficiency and higher domestic content and streamline infrastructure requirements of the industry. Several companies have since announced plans to expand manufacturing capacity by 20 GW, while more recently, Reliance announced plans for building four gigafactories at an investment of INR 75,000 crores. 

Besides reducing carbon emissions, EVs charged by a cleaner grid will offer several environmental and health co-benefits. It’s unfortunate that India currently is home to 14 out of the 20 most polluted cities in the world. Many studies point to the role of power generation and road transportation in urban ambient pollution. 

For example, in 2017, air pollution from power plants is estimated to have resulted in ~120,000 premature deaths in India. And as per an assessment done by the Central Pollution Control Board, transportation accounts for 30-50% of ambient particulate matter (PM) pollution in the six populous cities, viz., Delhi, Kanpur, Bangalore, Pune, Chennai, and Mumbai. Thus, India would accrue enormous health benefits by transitioning to renewable energy and electrified road transport. 

What would it take?

Policy measures would be essential for propelling the country down this path. To achieve its ambitious RE targets, the GoI has rolled out a slew of policy and regulatory changes over the last few years. However, we would need broader power sector reforms in markets, planning and procurement practices in the states, too. 

For accelerating adoption of EVs, demand side incentives such as an upfront subsidy are important. Additionally, a ZEV (zero-emission-vehicle) mandate could catalyze domestic manufacturing through guaranteed domestic demand. The country will have to invest in creating a charging infrastructure network for allaying consumer concerns. Shorter distances traveled in Indian cities would mean that smaller (and cheaper) batteries could suffice for urban passenger vehicles. 

The startup ecosystem could play a catalyst role in this transition. Currently, the renewable industry is dominated by independent power producers. While power generation is capital intensive, the evolving ecosystem of data and algorithm-based markets and services would be crucial for an efficient and robust grid. Investment in R&D for clean technologies as well as indigenous manufacturing needs to be prioritized. Electrified road transport offers several opportunities for innovation across the value chain- from manufacturing of vehicles, to installing/managing charging stations, to vehicle financing and leasing. Early movers and learners would have an advantage as India and the world move towards electric mobility. 

A clean modern power system and electrified transportation will lay the foundation for healthy cities and economic growth. Collectively, we must strive to realize this vision.

Author is Sr. Energy Policy Specialist at UC Berkeley, USA and Environment Advisor at Enzia Ventures. Views are personal.

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