State-owned power equipment maker BHEL today said it will create a diversified portfolio for its...
It’s 10 years since Apple Inc. unleashed a surge of innovation that upended the mobile phone industry. Electric cars, with a little help from ride-hailing and self-driving technology, could be about to pull the same trick on Big Oil. The rise of Tesla Inc. and its rivals could be turbo charged by complementary services from Uber Technologies Inc. and Alphabet Inc.’s Waymo unit, just as the iPhone rode the app economy and fast mobile internet to decimate mobile phone giants like Nokia Oyj. The culmination of these technologies — autonomous electric cars available on demand — could transform how people travel and confound predictions that battery-powered vehicles will have a limited impact on oil demand in the coming decades. “Electric cars on their own may not add up to much,” David Eyton, head of technology at London-based oil giant BP Plc, said in an interview. “But when you add in car sharing, ride pooling, the numbers can get significantly greater.” Most forecasters see the shift away from oil in transport as an incremental process guided by slow improvements in the cost and capacity of batteries and progressive tightening of emissions standards. But big economic shifts are rarely that straightforward, said Tim Harford, the economist behind a book and BBC radio series on historic innovations that disrupted the economy.
“These things are a lot more complicated,” he said. Rather than electric motors gradually replacing internal combustion engines within the existing model, there’s probably going to be “some degree of systemic change.” That’s what happened ten years ago. The iPhone didn’t just offer people a new way to make phone calls; it created an entirely new economy for multibillion-dollar companies like Angry Birds maker Rovio Entertainment Oy or WhatsApp Inc. The fundamental nature of the mobile phone business changed and incumbents like Nokia and BlackBerry Ltd. were replaced by Apple and makers of Android handsets like Samsung Electronics Co. Ltd.
Today, as Elon Musk’s Tesla and established automakers like General Motors Co. are striving to make their electric cars desirable consumer products, companies like Uber and Lyft Inc. are turning transport into an on-demand service and Waymo is testing fully autonomous vehicles on the streets of California and Arizona. Combine all three, for example through an Alphabet investment in Lyft, and you have a new model of transport as a service that would be a cheap compelling alternative to traditional car ownership, according to RethinkX, a think tank that analyzes technology-driven disruption.
One key advantage of electric cars is the lack of mechanical complexity, which makes them more suitable for the heavy use allowed by driverless technology, Francesco Starace, chief executive officer of Enel SpA, Italy’s largest utility, said in an interview. After disassembling General Motors’s Chevrolet Bolt, UBS Group AG concluded it required almost no maintenance, with the electric motor having just three moving parts compared with 133 in a four-cylinder internal combustion engine.
“Competitiveness very much depends on the utilization of the car,” Laszlo Varro, chief economist at the International Energy Agency, said in an interview. The average Uber vehicle covers a third more distance than the typical middle-class family car in Europe, amplifying the benefit of lower running costs to the point that “the oil price at which it makes sense to switch to electric is $30 per barrel lower,” he said.
Uber on Steroids
The total cost of ownership of electric and oil-fueled vehicles will reach parity in 2020 for shared-mobility fleets, five years earlier than for individually-owned vehicles, according to Bloomberg New Energy Finance. Already in London, Uber plans for its UberX service to be hybrid or fully electric by the end of 2019. Its rival Lyft aims to provide at least 1 billion rides a year in autonomous electric vehicles by 2025, saying they can be used much more efficiently than gasoline-powered cars. This combination would be “the Uber model on steroids,” Steven Martin, chief digital officer and vice president of General Electric Co.’s Energy Connections unit, said in an interview. “Once you have complete autonomous operation of a vehicle, then my desire to own one is going to go down and I’ll be more willing to sign up to a subscription service.”
The transition to fully autonomous fleets may not match the speed of the smartphone revolution because of the many regulatory, legal, ethical and behavioral hurdles. Self-driving technology should become available in the 2020s, but won’t be widely adopted until 2030, BNEF says. Even so, the shift to electric cars could displace about 8 million barrels a day of oil demand by 2040, more than the 7 million barrels a day Saudi Arabia exports today, the London-based researcher says. That could have a significant impact on oil prices—a drop of 1.7 million barrels a day in global consumption during the 2008-2009 financial crisis caused prices to slump from $146 a barrel to $36.
That doesn’t mean oil giants like BP or Exxon Mobil Corp. are heading for an inevitable Nokia-style downfall. While transport fuels account for the majority of their sales, they also have huge businesses turning crude into chemicals used for everything from plastics to fertilizer. They also pump large volumes of natural gas and generate renewable energy, both of which could benefit from increased electricity demand.
Even if electric vehicles do grow as rapidly as BNEF forecasts, the world currently consumes 95 million barrels a day and other sources of demand will keep growing, said Spencer Dale, BP’s chief economist. The London-based energy giant expects battery-powered cars to reduce oil demand by just 1 million barrels a day by 2035, while also acknowledging the potential for a much larger impact if the industry has an iPhone moment.
The sheer breadth of the potential disruption makes it hard to predict what will happen. When Steve Jobs unveiled the iPhone, few people anticipated that it meant trouble for makers of everything from cameras to chewing gum. “The smartphone and its apps made new business models possible,” said Tony Seba, a Stanford University economist and one of the founders of RethinkX. “The mix of sharing, electric and driverless cars could disrupt everything from parking to insurance, oil demand and retail.”
Mahindra Group has started getting a sense that the electric vehicle (EV)...
French utility giant Engie said on Wednesday it has partnered with Dubai-based Abraaj Group to build more than 1,000 MW of wind power projects in India. According to industry estimates, this would require investment of around Rs 6,000 crore. This would be Abraaj’s second investment in the clean energy sector in India. In 2015, Abraaj had partnered with the Aditya Birla Group to build a 1 GW solar energy platform. It also has a majority stake in a 50 MW wind power project in Pakistan. It has invested over $1 billion in 10 projects globally. Engie currently has about 800 MW of solar projects in various stages of developments across India. The group is the largest independent electricity producer in the world with 112.7 GW of installed capacity, of which 20% is from renewables. To achieve the target of 60,000 MW of wind energy by 2022, the country needs to add more than 6,000 MW of wind generation capacity annually on an average. Currently, the wind capacity in the country is about 32,500 MW.
Sev Vettivetpillai, managing partner at the Abraaj Group, said the company expects that demand for power across the country will continue to rise. The joint press statement said power consumption in India is expected to grow at 9% year-on-year until 2020. The Central Electricity Authority recently said electricity consumption (demand) in the country will grow at 7.1% (CAGR) between FY17 and FY22 and then slow to 6% in the subsequent five years. Demand for electricity had grown at a much lower pace than projected by the CEA in the last five years primarily because of tepid industrial production growth.
India spends $100 billion annually on the import of fossil fuels. The transportation sector (including railways) accounts for 70% of diesel consumption—and 40% of diesel consumption can be attributed to commercial vehicles. It is easy to understand India’s drive to join countries like Sweden, Germany, France and Norway to eliminate vehicles powered by fossil fuel in foreseeable future. We, at Volvo Buses, have adopted a proactive strategy towards green fuels. Since 2008, we have sold more than 3,500 hybrids and electric buses globally. The India journey began with the delivery of two hybrid buses to the Navi Mumbai Municipal Corporation—these have performed to expectations, delivering 35% reduction in fuel consumption and emissions, without the need for investment in incremental infrastructure. The government has been supportive in releasing considerable subsidy under FAME scheme. It is welcome news that as the second phase is being formulated, the first phase of FAME has been extended to March 31, 2018.
Hybrid buses represent the most optimal intermediate phase as we migrate towards full electric vehicles. One needs to emphasise on the word ‘gradual’. The introduction of full electric buses must be seen as a turnkey project that involves policy-makers, manufacturers, operators, infrastructure providers, financiers, charging systems specialists, utilities and academia, among others. A case in point is Route 55 in Gothenburg, Sweden. As many as 15 stakeholders have come together to set up a dedicated line for hybrid and full electric buses. Operational since June 2015, the 10 electrified buses have carried more than 1.5 million passengers.
What would it take to replicate this success story in India?
In a nutshell, we require (1) economies of scale, and (2) standardisation of technology and interoperability. Economies of scale: Any capital-intensive venture has to grapple with the chicken and egg story. Will assured demand result in lowering of costs or is it the other way round? To solve this puzzle, we must adopt the ‘and’ approach. Economies of scale can be realised if demand and supply can be simultaneously triggered. Across important cities, we need green zones that mandate assured procurement and deployment of electrified buses. Supporting infrastructure in the shape of dedicated corridors, unhindered access to electricity and charging infrastructure is called for. This green public transport ecosystem needs to be accorded infrastructure status so that it may receive priority funding.
Congestion and entry taxes on personal vehicles can complement. Correspondingly, users must be incentivised to opt for greener buses. Against this backdrop, manufacturers, battery makers, charging system providers can embark on localisation. Buses, battery management, set-up and access to charging stations as well as finance may be offered as a bundled offering to customers. Such an approach will prevent electric vehicles from being overly dependent on subsidies.
Standardisation of technology and interoperability: The promotion of common open standards, data interoperability and efficient data exchange is closely correlated with promoting sustainability and realisation of economies of scale. Standardisation needs to happen in areas of battery technology, charging infrastructure, vehicle propulsion technologies. Specific protocols need to be in place to ensure high standards of performance, safety, reliability and emission benefits. For electric vehicle propulsion, we have a many battery technology options such as lithium-nickel-cobalt-aluminium, lithium-nickel-manganese-cobalt, lithium-manganese-spinel, silver-zinc batteries, metal-air batteries, etc. Each of these battery types has trade-offs in terms of safety, life, cost, performance, power, energy and availability. For instance, lithium-nickel-manganese-cobalt batteries are safer than lithium-nickel-cobalt-aluminium batteries, but the reverse is true for their respective lifetimes. Each of these technologies will evolve. Hence, standardisation must be undertaken to account for current and future applications.
Standardisation of charging infrastructure is one of the most challenging aspects of a budding electro-mobility programme. A number of country-specific AC and DC fast-charging systems are in existence. These systems have issues with interoperability, mainly in terms of standard connectors and voltage compatibility. We have been championing OPPCharge, which is a fast DC charging system developed as an open industry standard in partnership with European electric bus makers, as well as charging solution providers ABB and Siemens. The primary objective is to ensure open interface for charging infrastructure that will enable buses from various suppliers and allow for interoperability in terms of charging. The system is fully automated and Wi-Fi communication enables buses to connect with chargers precisely and safely. OppCharge is flexible and versatile—with charging rails positioned over the front axle, it can also be used to charge electric double-decker buses and trucks. Electro-mobility must be a part of holistic urban planning and multi-modal transport framework. The objective is to offer green public transport solutions without compromise on flexibility and reliability so that citizens have a desirable alternative to personal modes of transport.
Different approaches to electro-mobility call for correspondingly varied infrastructure. For instance, an overnight-charged electric bus will require assured power supply at night when the load on the power grid is low. Such a bus must also carry larger batteries to account for extended charging intervals. This scenario is reversed for electric vehicles that rely on fast opportunity charging. Batteries are smaller and thus more passengers can be carried. In this case, the imperative is that the charging infrastructure at bus stops and depots must be flexible and extensive. Buses depending on battery swaps do not have to worry about charging, but battery size and, by implication, passenger carrying capacity will depend on access to battery swap stations. Irrespective of which electric vehicle technology a city opts for, there must be a system to change old batteries and dispose those that have reached the end of life. Given the complex considerations, a city must decide clearly which technology approach is best suited to its needs.
Finally, clean energy is thus far the missing block in the electro-mobility Lego game. Coal-based thermal energy powering electric vehicles is a paradox. But this situation is poised to change for good. The MNRE targets to quadruple renewable energy generation—from 43GW in 2016 to 173GW in 2022. The electro-mobility journey is a marathon at the moment. We need to be prepared for the sprint.
The author is MD, Volvo Buses, South Asia
Hindustan Coca-Cola Beverages (HCCB) has said 40% of its energy requirement will be sourced from renewable and clean energy fuel from 2018. The company, which inaugurated a CNG-based boiler system and a solar power unit at its Bidadi plant on the outskirts of Bengaluru on Wednesday, will be opening another greenfield facility in December in Gujarat. HCCB has partnered with Atria Solar Power to procure 30 million units of solar power per annum for its two factories in the Bidadi Industrial Area. With this agreement, the factories will now meet 85% of their electricity requirements through solar power, off the grid. The newly inaugurated boiler will get its CNG (compressed natural gas) supply from GAIL pipelines in Bidadi. GAIL is the largest state-owned natural gas processing and distribution company in India.
Christina Ruggiero, CEO of HCCB, said the company currently has 20 products in the testing stages. These products will be launched in due course, he added. The Perfect Fruit project, which is a dessert made from a blend of local frozen fruits, is in the pilot stage now. “We are advancing our commitment on sourcing of renewable and clean energy by a couple of years — from 2020 to 2018. We are inspired by India’s ingenuity and the government’s vision of achieving 40% cumulative electric power capacity from non-fossil fuel-based energy resources by 2030. I want to thank our partners GAIL and Atria Solar Power for providing leadership and helping us navigate the way,” said Christina. Christina also claimed that the company has regained its lost momentum and is now growing. Sales of carbonated soft drinks have seen a 5-6% increase since July. Aerated drinks now form 60% of total sales with non-aerated being 40%.
State-run power giant NTPC will add 32 GW of clean energy by 2032, in addition to its plan to create 15 GW of solar capacity under National Solar Mission, a top company official said today. The power giant is also creating electric vehicle charging infrastructure in the country. NTPC has been a traditional thermal power player with a large number coal based plants.
Presently, the NTPC Group’s total installed capacity stands at 51,698 MW, which includes 800 MW of hydro, 870 MW of solar and 40 MW of wind capacities. The company plans to create space for itself in clean energy segment.
“Renewable Energy is an area of immense opportunities as well as challenge for your company. It has the long term target to add 32 GW of RE capacity by 2032. This is in addition to the 15 GW of solar capacity that your company is helping the country to achieve, through National Solar Mission,” NTPC Chairman and MD Gurdeep Singh said in his speech at annual general meeting of the company held today.
However, Singh expressed concerns saying that rapid addition and the plummeting tariffs of solar power will present challenges in terms of lower PLFs (plant load factor) of thermal power plants.
Elaborating further, he said the integration of increasing renewable energy into the grid will entail flexible operation of thermal power plants, which will have bearing on energy rates as well as plant life.
On the other hand, he said the NTPC’s large portfolio with flexible generation capabilities will open up opportunities in providing ancillary services. Talking about the government’s thrust on electric vehicles, he said it will also go a long way in presenting opportunities for NTPC.
“It (electric vehicles) will not only reduce oil imports, and urban pollution, but also increase power demand. Your company is planning to have a strong presence in the electric vehicle charging infrastructure market,” he added.
The steps taken to use coal efficiently helped NTPC to reduce per unit cost by nearly 40 paise in 2016-17 as compared to 2014-15, which resulted into savings of more than Rs 8,000 crore to the states over these two years.
Singh also told shareholders that by fully transitioning to Goods and Services Tax, while helping its vendors and suppliers to adopt it, the company reduced the energy tariff by over 5 paise per unit of electricity.
Industry body Assocham today urged the Uttar Pradesh government to prepare three special...