Electrifying India’s buses: Big opportunity, bigger challenges

Going green
Last Updated : 19 September 2022, 09:32 IST

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If you thought India’s attempt to electrify its bus fleets would be a smooth ride, think again.

Financing concerns, supply chain bottlenecks, e-bus driving range issues, lack of grid and charging infrastructure, and the need to train a lot of people are some of the obstacles standing in the way of its dream of tackling pollution and congestion by deploying electric buses, experts told DH.

Despite the plethora of challenges, the world’s fourth-largest automobile market has to find a way to make it work as it is home to 18 of the 20 cities with the most severe increase in PM2.5 pollution from 2010 to 2019, as per the Air Quality and Health in Cities, A State of Global Air report. This is despite the country having just about 22 cars per 1,000 people in contrast to 980 and 850 in the US and UK respectively.

“Today, we need to discourage the use of personal vehicles and promote maximum use of public transport modes,” Union Transport Minister Nitin Gadkari said at the INSIGHT 2022 summit last week.

He pointed out the many problems on Indian roads including “traffic congestion”, “delays”, “air pollution” “parking issues” and the need to move away from fossil fuel.

“We have to abolish petrol and diesel because this is economically and environmentally a big problem.”

And the solution, experts agreed, is the electrification of public transport.

“Electrifying the public bus fleet is one of the important parts of India’s ‘Net Zero’ goals,” said Mustafa Wajid, Chair of Steering Committee, IET Future of Mobility and Transport Panel.

Convergence Energy Services Limited (CESL), which organised the two-day summit, had said in May it would deploy 50,000 electric buses in the country by 2030 in partnership with the State Transport Undertakings (STUs) in a bid to drastically cut down emissions.

With CESL already having rolled out tenders for as many as 5,450 electric buses, the electrification of public transport has taken off in the country.

Bus makers expected the initiative to speed up in years to come.

“From an EV penetration rate of 0.1% in FY19 to 7.3% in FY22, the electrification of the bus segment is certainly in the right direction,” said Switch Mobility India Chief Executive Officer Mahesh Babu.

The company, which expects the growth to double in the next year and become 10x in the next five years, recently launched an electric version of the famous double-decker bus in Mumbai.

Tata Motors, which won the tender for a whopping 5,000 out of the 5,450 e-buses, said it was seeing a lot of interest from potential customers.

“An increasing number of STUs and even private organisations (are) coming forth to adopt sustainable mass mobility solutions,” said Rohit Srivastava, Vice President, Product Line – Buses, Tata Motors. Both manufacturers have started deploying many of these electric buses in cities such as Mumbai, Kolkata and Bengaluru.

In a country, which has over 320,000 buses run by both public and private players in a “ramshackled” state, urban mobility has to be driven by public transport, former NITI Aayog CEO Amitabh Kant said at the summit. “Huge opportunities exist in transforming these.”

But the opportunity lies beyond electrifying just the intra-city public transport, said N Mohan, the head of electric vehicle charging infrastructure (EVCI) at CESL. “We also see interest coming from STUs for intercity travel.”

Challenges aplenty

“Over 1 lakh e-buses can be expected to be operationalised by 2030. It is important to consider the operational challenges and be prepared to tackle them,” IET’s Wajid added.

Financing this gargantuan investment remains one of the biggest challenges.

“The ambitious target of rolling out 50,000 buses requires around $10 billion to procure and operate the buses,” Shakti Foundation CEO Anshu Bharadwaj said at the summit.

While these buses have high upfront capital costs – two to three times that of fossil-fuel-run buses – “the good news is that the operating costs are much lower”, Bharadwaj added.

Along with financing upfront costs, there are other issues including the repayment capabilities of STUs and recovery of investments through revenues. “STUs are financially very weak, hence the credit risk of STUs is very important to be considered by the OEMs operating these buses,” said Kant.

Industry insiders agreed.

Tata Motors’ Srivastava said there were two key challenges for large scalability.

“First, is the project financing, which is in its nascent stage. Second, is the necessity of a matured payment security mechanism for sustained operations as per the contracts.”

Others expected the issues to persist.

“Mobilising investments to finance OEMs, battery manufacturers, charging stations, and end consumers will require shifts in financial structuring,” Switch’s Babu said, adding that financial institutions’ lack of experience in lending for these kinds of projects will bring in high-risk.

“Hence, financing for long-term contracts for 10-15 years is looking difficult,” Babu said.

Also, India needs to ensure that the energy used to charge these buses is from renewable sources to not let the exercise become a zero-sum game.

While solely relying on solar energy is very difficult at the depot level, efforts are on to purchase renewable sources to charge these buses, said CESL’s Mohan.

Published 18 September 2022, 16:36 IST

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