India's efforts in the past to make necessary infrastructure Part-II

PART II

HOW EFFICIENT BATTERY RECYCLING HELPS REDUCE COSTS AND EMISSIONS

We are preparing a vision for a Sustainable Battery Value Chain in 2030. Battery Waste Management Rules, 2020 (Draft) On February 2020, the Ministry of Environment, Forest, and Climate Change issued a draft rule on Battery Waste Management, superseding Batteries (Management and Handling) Rules, 2001. The draft rule aimed to create an ecosystem for the handling and disposal of batteries in India and ensure the safety of the public as well as of the environment. It covers all types of batteries (rechargeable and non-rechargeable) along with the appliances where batteries are used. The rule laid guidelines on recycling of batteries through formal channels in a safe manner and seek accountability from every value chain player including central/ state pollution control boards. The amendment mentioned the development of a computerized system for keeping track of all the activities such as the sale, distribution, collection auction, processing, etc. of batteries in the country. The rule also mandated manufacturers, importers, assemblers, and re-conditioner to set up collection centers (either individually or jointly) at various places for the collection of used batteries from consumers or dealers. The rule has directed State Pollution Control Boards (SPCBs) to periodically monitor battery recycling facilities. It also directed Central Pollution Control Boards (CPCB) to prepare guidelines/ SOPs for battery recycling facilities, standardization of technologies for all types of battery recycling, and establishment of R&D cells for battery recycling. A business model concept on battery subscription is prepared by Climate Finance Lab (“The Lab”) where barriers such as high upfront costs of electric buses and lack of access to suitable financing were tried to address.75 E-buses are 1.5 to 2 times more expensive than conventional diesel buses In the proposed subscription-based business model, the battery subscription facility will be set up as a third-party battery service provider, which purchases the battery, and provides them to the bus owners while charging on a daily or per kilometer basis. To lease the battery, the subscription facility and the bus operator will jointly purchase the battery and eBus from the manufacturer. The ownership of the battery will remain with the subscription facility, and ownership of the bus will be with the bus operator. The agreement between the subscription facility and the bus operator was custom designed to ensure viability for both parties. Sample design of a battery subscription service arrangement from this business model, the subscription facility will obtain ensured revenue, whereas the bus operator will enjoy a low cost of operation against fluctuating diesel/CNG prices. The battery subscription model supports the adoption of EVs by reducing the upfront cost of EV acquisition. On 12th August 2020, the Ministry of Road and Transport Highways allowed the sale and registration of electric vehicles without batteries to delink the cost of batteries with the EVs.

?Battery-as-a-Service (BaaS)

Battery-as-a-Service (BaaS) is an effective business model to maximize the value of a battery. As per a report by Ronald Berger, Battery-as-a-Service (BaaS) make use of the circular economy model in order to maximize asset utilization, and at the same time connects the transport and energy sector. Manufactured batteries (new) are leased to end-users such as vehicle owners, energy storage projects, etc. for usage. Once the battery reaches its end-of-life (EoL), the BaaS service provider either refurbishes the batteries and makes them suitable to be used in applications such as energy storage or behind-the-meter usage; or, recycles the batteries by extracting the raw material from them to manufacture new batteries. The process is as per the Integrated value chain - BaaS Battery leasing Refurbishment, Energy storage systems Recycling, Battery leasing option on a monthly fee, Battery returns to OEM after leasing, Refurbish used batteries by replacing modules with insufficient capacity, Integrate used batteries in industrial and residential energy storage systems, Recycle batteries to extract raw materials as well as precursor material Source.?Nio launches Battery-as-a-Service (BaaS) with CATL Infrastructure Lack of public charging infrastructure has been one of the key barriers to large-scale adoption of electric mobility in India. Therefore, it is important for India to have a robust backbone of charging infrastructure, across the length and breadth of the country with due consideration to traffic and population density. We will assess players responsible for setting up charging stations and the business models adopted by them. EV charging infrastructure With the growth in the adoption of EVs, the charging business has also evolved, globally. International experience suggests that various stakeholders/institutions have engaged themselves in the planning and development of EV charging infrastructure.

?Nio—Battery-as-a-Service (BaaS) with CATL In 2020, Nio, a Chinese car manufacturer partnered with CATL, a leading battery manufacturer, targets to separate the costs of batteries from the purchase price of its vehicles through “Battery as a Service (BaaS)” business model. The Baas enabled Nio to reduce its vehicle prices by 70,000 yuan (~ 8,530 euros). To implement the Battery-as-a-Service, Nio, CATL, and two other partners, founded a Battery Asset Company. Each partner had invested 200 million yuan (~ 25 million euros) in the company. The Battery Asset Company is proposed to purchase the batteries and lease those using concepts of the BaaS business model, with CATL supplying the cells.

??Players involved in the charging infrastructure business among all players charging infrastructure manufacturers and charging station operators have the most important role in developing and operating EV charging stations.?The major revenue of a charging infrastructure manufacturer is generated from manufacturing and selling EV charging equipment. These players provide EV infra hardware solutions in two ways: first, standalone delivery – to install at home, workplace or for public charging; and, second, in partnership with vehicle manufacturers, offering the hardware as a part of the vehicle The charging infrastructure manufacturer provides complete charging points solution for public and private charging and including the hardware and software installation. These players also provide services such as maintenance of the hardware as well as additional support services. Some of the major charging infrastructure manufacturers are i. Alfen is an Electrical & Electronic Manufacturing company that offers a range of 3.7-22KW smart charge points for home, work, and public areas. Along with the product, the company also provides services around your charging points, ranging from smart charging to back-end management and remote control of charge points.?EV charging with renewable energy; intelligent charging solutions.

?Key partnerships:

?Innovators: supplying smart charging equipment to Vandebron, a company that is working on an EV blockchain project.?Governments & municipalities: delivering equipment to the European Commission in Brussels and hundreds of municipalities. Key resources: Skilled employees: retention and attraction to keep up with growth.?In-house production: resulting in maximum flexibility and rapid adaption to a highly innovative and potentially disruptive EV market. Key processes: ? Charging station management ? R&D: Grid system and EV charging equipment development are key to maintaining the strong market position Alfen has in the EV market. Story/ Channel for communicating value: ? Social media ? Company website Cost structure: ? Scalable factories: as rapid growth is anticipated, investments to keep up with future demand are made. ? Material cost: cost of c.a. 68% of revenues in 2017, the material cost has a large impact on profits. Revenue stream: ? Individual charging equipment sale: offering smart and connected EV chargers for use at home, office, and public locations. ? Projects: Offering turnkey solutions. Example: The Hague stadium; Alfen delivered a fully integrated energy solution for the stadium consisting of an EV charging hub, energy storage system, and local smart grid. Distribution channels: ? Alfen has authorized dealers; customers can find the nearest dealer to install the charging station b) Charging station operators (CSO) generate revenue by operating a network of chargers. They provide a variety of services such as EV charging, customer support, network solution (standalone or in partnership with a Network Service Provider), etc. The CSO adopts pricing mechanisms such as Time-based fees, Energy-based fees, fixed fees, Membership fees, etc. to charge EV users. The CSO sometimes partner with NSPs that provides services such as software solution, user interface, user solution, etc. The CSO offers different solutions for home charging, workplace charging, and public charging. Some of the companies working as CSO are i. Fastned Founded in 2012, Fastned is a Dutch company that owns and operates EV charging stations in the Netherlands, Germany, and the United Kingdom.?Payment software; Country presence (Netherlands); Tesla compatibility Key partnerships: ? Albert Heijn: a large supermarket chain that agreed to cooperate with Fastned to place chargers in front of their stores.

?Governments & Municipalities: to bring down air pollution in cities and to decrease CO2 emissions, they have granted subsidies and “cheap” land to promote EVs including scalable high-traffic locations: to be able to scale up when EV sales increase, without having to reinvest in property in the same area. ?Property: strategic plots of land are key to further expanding the charging network. ??Creating a European network that allows for fast charging for both commercial and professional usage, like trucks and taxis.

Story/ Channel for communicating value: ?social media, Mobile App, Company website. ?Acquiring new plots of land: mostly near cities and busy highways making it costly. ?Developing software: new charging and payment software development requires substantial investments. Revenue stream: ?Guests: individual payments, no additional services (€0.59 per kWh). ? Members: with registration, plus extra service, like auto charge and charge history (€0.59 per kWh) ? Gold members: with registration and subscription (€0.35 per kWh & €11.99 per month). Distribution channels: ? Drivers to navigate and reach to the nearest Fastned charging station to charge their vehicles Customer segments: ? Households; Real estate; EV owners; Fleet operators In India, EESL is one of the prominent players in EV charging development. The company acts as an aggregator and partners with multiple value chain players to develop EV charging infrastructure.

?EESL (Energy Efficiency Services Limited) EESL is the largest EV charging station aggregator in India. To date, the company has installed 92 public charging stations along with 488 captive chargers across India. The company also deployed India’s first public charging plaza at Chelmsford Club, New Delhi. EESL works on a demand aggregation model where it purchases EV chargers in bulk through open competitive bidding. The selected contractor/vendor is responsible for providing end-to-end support (from planning to commissioning) for the charging station. The vendor is also responsible for operation and maintenance of the charging station for a definite period. ?Large network, low system cost. In partnership with multiple municipalities, DISCOMs, Metro Corporations, Government departments, and EV charging stations. ?EESL selects implementing partner for the installation of chargers through open competitive bidding The implementing partner will be responsible for operating the charging station EESL selects a partner for enabling payment mechanism EESL selects a Network service provider for providing cloud/data service for the day-to-day operation of the station.

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Fixed payment in case of ESCo model and payment from EV charging service Distribution channels: Customer needs to locate EESL public charging station to charge their vehicle Customer segments: ?Government organizations, EV users.??To understand the feasibility of charging infrastructure business in India, financial analysis on a single charger project is done for 10-year project life. Project assumptions, outputs, and sensitivity is based on the route of deployment of EV charging station, business models in EV infrastructure business can be classified into four categories: ?Business models in deployment and operation of EV infrastructure independent model. Private players set up EVSE by taking licenses from governments or municipalities. They may appoint EV service providers for charging operations and payment settlements who ensure a certain level of interoperability amongst different NSE network owners. Major countries which are using this model are UK and Netherlands. Utility Installations - Own & through PPP. ?In China, the State Grid Corporation of China and China Southern Power Grid in partnership with many OEMS have opened charging stations, largely limiting their role to power supply only. In Germany, power companies, including RWE, Vattenfall, EON, and EnBW, account for of all public charging Stations (Hall and 2017) Integrated Model. The utility owns the EV Charging infrastructure and operates it either Owned or through their third-party Contractors. ?EVSE assets form part of the assets of utility, which are responsible for the distribution of as well as operation and maintenance of the EVSE. A major country that runs this model is Canada. ?The advantage of the model is that utilities need not to worry about the low volume of business in Starting phase, as assets are created under-regulated capex route. Charging infrastructure as a secondary business. By own installations, Tesla has built a network of fast-charging Superchargers along highways throughout North America, Europe, and Asia, which Roadster, Model S, and Model X owners for free. In addition, the company has built over 9,000 destination charging connectors like Tesla Wall Connectors. 400 kWh supercharger credits are awarded annually to the car owners, after which they are charged based on either per kWh or per minute.

Business Models in electric mobility

?The leading automobile companies viz. BMW, Daimler, Ford, Volkswagen have created a JV to develop ultra-fast, high-power charging stations in Europe. The JV sets an initial target of ~400 charging stations by partnering with service providers, for e.g. BMW partnered with ChargePoint, to allow its users to access ChargePoint’s network through a smart card. Similarly, Nissan partnered with EVGo to provide two years of complimentary access to its vehicle to participating stations of EVGo for public DC fast and Level 2 charging. Business models in EV charging infrastructure segments are limited. However, with growth in the industry, more business models in the EV charging space are expected to evolve. Details about potential future business models in electric mobility are substantial. The commercial development phase of the EV charging industry can be segregated into three phases: the introductory phase, the growth phase, and the maturity phase. Business innovation in EV charging vis-à-vis market development stages FSR - charging up India’s Electric vehicles. ?The introductory stage is the initial stage of the product (here “charging infrastructure”) when it is deployed in the market. The product during the introductory stage is under continuous R&D while the market/ customers are still gaining awareness/ knowledge about it. During this stage, the sales/ deployment of the charging infrastructure is slow, and the players invest significant capital to bring the product to the market (particularly with the interest to take first-mover advantage). The next stage is the growth stage when the market is fully aware and is adopting the product rapidly. During this stage, the market share of the products starts to grow, and several new players start entering the market. Profits/ margins of the product in this stage are very high as compared to the introductory phase. Players with strong market share in the introductory phase enjoy early entrant advantage and earn high profits. At the maturity stage, the rate of adoption of technology starts to become either stagnant or declining. The market share of the company stabilizes. There are very few innovations took place during this stage and companies target to earn constant revenue from the product. India’s EV charging market is currently in an introductory phase where limited players with limited business models are serving the market. The existing state of India’s EV industry, business models, players, etc. However, as the electric mobility industry grows, there will be changes in existing business processes to adapt to concurrent changes in the EV landscape. The expected changes in the electric mobility industry and its probable impact on EV charging businesses when it transitions from the introductory phase to the growth or maturity stage. Introductory stage Growth stage Mature stage Adoption rate of technology.

Shape of the EV charging industry

Present and future Present Future (2025 & beyond) Business impact Low EV Penetration High EV penetration More charging stations; need for fast charging Less competition High competition Innovative business model to retain customer, cost competitive business model, bundled model – product with services Focus on urban areas EV charging expanding to Tier 2 & Tier 3 cities Suitable business model for price sensitive customers in semi-urban and local areas, high volume and low prices based business models, roaming More focus on product Service will be key in attracting customer Need for innovative services, collocated charging, bundled services Short range vehicle/ less distance travel Long range vehicle/ long distance capable batteries Need for fast charging facility; charging zone Conventional vehicles Smart, autonomous, connected vehicles Need for smart charging “Charging” is the only service Energy feed back to the grid during from vehicle during unused hours Need for Vehicle-to-Grid (V2G) facility, participation in demand response, Virtual power plants No managed charging facility Active and passive managed charging in place Increased role of DISCOMs and third party service providers in managing the grid, smart charging Less cyber threat High cyber threat More investment in data security, secure data communication Single business-led Partnership-led Win-win partnership collaboration, co-located charging stations, charging zones with public amenities such as food zone, recreational activities With the change in the market dynamics, business models will transform when we proceed to the growth stage. For the purpose of this business models that may evolve at the maturity stage are not covered as it would be too early to predict the market forces that may shape up the business models as the maturity stage. The likely business models that may evolve in the growth stage in response to change in the operating business environment are to be highlighted. ?Details about business innovations in the growth stage is mentioned below: Introductory stage Growth stage Mature stage Adoption rate of technology Time Innovative subscription offering Service innovation to gain new customers Customer-centric Business innovations Win-win partnership with value chain players Adoption of technologies supporting Smart Charging Innovative business models to utilize V2G charging.???????Smart charging is considered a charging technology that along with charging the vehicle, communicates with external entities such as utilities, charging operators, etc.

This technology will help in actively managed charging by utilities. ?V2G charging will allow feeding power back to the grid from the EV battery. This will help in providing power to the grid in case of shortage and allow EV owners to earn revenue by selling the EV power. A business model with increased access. As the electric mobility industry is growing, charging infrastructure will expand to Tier-2 & Tier-3 cities. Operators will need to ensure that EV users have access to charging even in places outside their home network. Business models around e-roaming systems will be key for providing access to the EV user. New partnership with value chain players. ?As electric mobility grows, it will not be possible for a single business to maintain a competitive edge. Partnerships with other players in the value chain will help offer a complete solution to the consumer. Innovative subscription offering. To overcome the acquisition cost hurdle, a new form of subscription model may evolve, offering electrical vehicle ownership by paying monthly rentals. Tata Motor for its Nexon model has already launched such an offer to generate volume for business by reducing price barriers. Similarly, battery subscription models would also be evolved with the standardization of technical standards and battery parameters compatible with a wide range of electric vehicles. During the growth stage, as the competition will increase, the profit margin would shrink. The focus would shift from product offering to service offering as a bundle of products and services. It could be lifetime free maintenance, unlimited/limited battery changes, free access to a range of charging stations, etc. Revolt a Gurugram-based start-up has already launched such a scheme at nominal additional prices for a limited time period. ?With the increase in electric vehicles on the road, new business concepts would evolve as a response to problems that may emerge with an increase in vehicle volume. For example, to avoid waiting time at charging stations concept of anywhere-charging may evolve. Ubitricity in the UK is offering smart cable and smart meters to enable the consumer to charge from electricity poles of any DSO and send the monthly bill as an energy charge with a nominal subscription fee. Energy A private vehicle stands idle for an estimated 95% of its lifetime. The premise for energy as a value area comes from the above-stated fact on the level of underutilization of private vehicles for transportation purposes. The battery in EVs stores electricity, and when not in use for commuting, EV owners can trade/ sell/ utilize the stored power and can earn additional revenues. It is to be understood how energy stored in the EV batteries can provide value to its owner, and areas where business can evolve in utilizing power from EV batteries. Interconnection of EVs with the grid is conducted using two main technologies: V1G and V2G. Vehicle-to-Grid (V1G) is also known as smart charging or managed charging technology. This type of charging provides features such as dynamic modification of the charge rate or the charge time of the vehicle. V1G is highly effective with grids that follow Time-of-use (ToU) tariffs. Modification in charging rate and time allows power utilities to decrease peak loads or smooth frequency deviations. Other than V1G, there are other advanced interconnection technologies for the transfer of power.

?Moving Forward Together

?Enabling Shared Mobility in India a step further than V1G, in a Vehicle-to-Grid (V2G) system, additional power in the vehicle can be fed back to the grid (bidirectional). With V2G technology, it is possible to control the time, magnitude, and direction of charging/ discharging power. Using this technology, an electric vehicle can feed power to the home (V2H) or building (V2B) as well. V2G technology helps in applications such as short-term storage for renewables, higher capacity for frequency regulation, and for off-grid applications. Vehicle-to-home (V2H) and Vehicle-to-building (V2B) are the subsets of V2G and operate in a similar manner. However, it is to note that V2H caters to a home power need, whereas V2B operates at a much larger scale such as for buildings or commercial places. In both technologies, the home owner or building owner uses the bi-directional power flow capability in order to optimize energy consumption in the home or building, provide emergency backup power or supplement grid electricity supply in extreme cases. The key difference between V2G and V2H or V2B technologies is that utility may not be directly involved in the bidirectional electricity flow in the case of V2H/ V2B. Vehicle-to-Load (V2L) is used to provide emergency backup in the event of an electricity outage or power to rural areas with limited energy availability. V2L is also used in providing energy to critical equipment in hospitals, research centers, etc. Virtual Power Plant (VPP) A virtual power plant is a cloud-based distributed power plant that aggregates the capacities of heterogeneous distributed energy resources (DER) such as solar power equipment, batteries, EVs, etc., illustrates a basic outline of a virtual power plant aggregating powers of electric vehicles.

The virtual power plant for aggregating power from EVs. Virtual Power Plant (TOPMOST) - Durham University (access here) Virtual power plant provides an efficient way of utilizing power from electric vehicles in grid balancing or trading in the electricity market (at peak time for energy arbitrage). This concept has opened up a new avenue for revenue generation for fleet operators, bus operators, etc. that can play a role in VPP architecture. Vehicle-to-Everything (V2X) Vehicle-to-Grid (V2G) Vehicle-to-Home (V2H) Vehicle-to-Building (V2B) Vehicle-to-Load (V2L) VPP Platform Energy Market System operation Consumer services Communication networks Status quo analysis of various segments of electric mobility and low carbon passenger road transport in India | Review of Services and Business Models in electric mobility 191 Virtual power plant, however, will require a power network integrated with a secured communication network, protocols for data sharing and cyber security, etc. to operate, which, with reference to India, could be possible in a medium to long term horizon.

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?Promoting Virtual Power Plants (VPPs) Using Electric Vehicles (EVs) While Adding Value to EV Ownership

?Procurement model for E-buses Procurement and operation of buses in India is largely done through PPP (Public Private Partnership) framework. There are multiple models available under the PPP framework that differs in terms of the degree of operational control, allocation of risk, and investment contribution. For procurement of conventional buses, Gross Cost Contracts (GCC) and Net Cost Contract (NCC) has been commonly adopted by several Indian cities. Ahmedabad (AMTS and BRTS bus services), Surat (BRTS bus services) Delhi (DIMTS bus services)79 have adopted GCC contracting, whereas Rajkot, Vadodara, Indore, and Delhi Metro Feeder Buses operate their buses on an NCC basis. For e-buses also, the similar approach of GCC and NCC has been widely adopted. In addition to these models, hybrid GCC and hybrid NCC contracts are also used in several countries to address the shortcomings of conventional GCC & NCC contracts. PPP models in city bus private operations.

Gross Cost Contract v/s Net Cost Contract: What should Indian cities opt for? Toyota Tsusho – Nuvve – Virtual Power Plant Partnership In 2017, Toyota appointed Nuvve to support an expansion of the virtual power plant (VPP). Nuvve operates a V2G system that controls the charge and discharge of the batteries in EVs connected to charging stations based on the electrical supply-and-demand balance of electrical grids. “The V2G technology that Nuvve offers allows parked EVs to become part of an electric grid while connected to the charger. Depending on the supply-demand balance in the grid, the company's platform can control the charge and discharge of multiple parked EVs - becoming a virtual power plant.” Gross Cost Contract (GCC) In GCC contractual structure, the authority takes a major role in managing the network whereas the operations & maintenance are carried out by the private player (bus operator). The authority makes payments to the bus operator on kilometer age cost, minimum cost or cost per passenger cost. In GCC, the authority carries the revenue risk, plans overall services, manages the contract for the level of service and quality, and is responsible for customer service, whereas, the operator only carries the operational risk. The operator, however, holds the responsibility for service frequency (no missed trips) and compliance with quality and safety standards (bus quality, cleanliness, driver behavior, safety, etc.).

?Gross Cost Contract v/s Net Cost Contract: What should Indian cities opt for? ?PPP arrangements in urban transport (access here); Guidelines for participation by private operators in the provision of city bus transport services. ?Public Private Partnership Models for the Development of Sustainable Urban Transport Systems contract is suitable if the authority wishes to take a dominant role, undertake service planning, and assume the revenue risk. A city that has low ridership/routes and where the operator may perceive higher revenue risk would be suitable for the adoption of such a model. In GCC, authority holds greater control as it sets overall Minimum Service Levels (MSL)/Key Performance Indicators (KPIs) for the operator and conducts close monitoring of these parameters. The GCC model has several advantages and disadvantages for the authority and bus operators. Distance travelled between two points Payment as per quoted cost of operation (per bus kilometers/ per bus/ per service hour etc.) Authority Bus operator: Collection from commuters, Planning Implementation, O&M Monitoring, ?Demand assessment, ?Route planning, Setting service standards, ?Operation planning, ?Tariff fixation/ structuring/ revision Investment planning and funding deciding length of the contract,?procurement of fleet and permits Setup control room Marketing and branding Service quality monitoring Operation of buses Revenue collection Operation of control room Bus fleet maintenance A C T I V I T Y Authority Operator Either entity LEGENDS. ?Deloitte's analysis explains though widely adopted in Indian cities, GCC holds several disadvantages for both, authority as well as bus operators. To overcome this, a hybrid model was introduced in several cities across the globe including London, Santiago (Chile), etc. ?Hybrid GCC In GCC, whilst the authority has full control of the services, the bus operator tends to maximize operational distance with the least focus on improving the consumer services, causing revenue loss to the authority. In order to provide a safeguard against such losses, the Hybrid GCC model has been innovated. Under a hybrid contract, the agency still carries the responsibility for passenger service outcomes and sets overall Minimum Service Levels (MSL)/Key Performance Indicators (KPIs) but incentivizes the operator through additional payment for ridership growth. This model, thus, enables risk sharing between the agency and the operator. The model also incentivizes the operator for garnering additional ridership through improvement in service levels. The authority provides fixed payments (per km fee) along with bonuses, which are linked with growth in ridership. The operator needs to quote its cost of operation (fixed per-km fee) and the variable fee per passenger for additional ridership over base figures. ?No incentive on providing quality service Payment as per quoted cost of operation along with performance-based incentives for ridership growth, investment planning, and funding, deciding length of the contract, procurement of fleet and permits, setup control room Marketing and branding Service quality monitoring, ?Operation of buses, Revenue collection, and operation of control room Bus fleet maintenance A C T I V I T Y Authority Operator Either entity LEGENDS.

?In Hybrid GCC, the bonus payment acts as additional revenue for the operator and does not hurt its target revenue, which is assured by the authority. This increases the chances of improved customer service. This contracting model finds its suitability for cities that require the characteristics of GCC (Authority/STU in a dominant role) as well as where the city authority would want to share the revenue risk with the Operator (with the intention to improve customer services). However, the model still holds some advantages and disadvantages for both the authority and the operator. ?A Hybrid GCC suits situations where the operators are more skilled and experienced in the bus service business. Under NCC, the authority permits the private operator to carry out business through designated routes or service areas in return for a monthly fee or payment of a grant (VGF). In this case, the authority performs a more regulatory role, and the operator carries the entire revenue risk. In NCC, service planning is mostly done by the operator, although an MSL and Quality KPIs are set as conditions for awarding the NCC. The operator cross-subsidies non-profitable routes with profitable ones. However, this business model has an inherent risk of reduced control by the authority of the operator which may lead to a drop in the quality of customer service provided by the bus operator.

??The NCC option is preferable where the authority wishes to be involved minimally and relies more on the private bus operator to deliver services. In cities such as Surat and Delhi which had earlier adopted the NCC model, the quality of services provided by the bus operator significantly deteriorated. This decline in service quality included a lack of adherence to schedule, minimal or no attention to the maintenance of buses, etc. In India, it is difficult to project revenues under NCC as the public buses, sometimes, tend to operate at socially relevant but uneconomical routes, causing revenue and opportunity loss for the bus operators. It is in this context that private bus operators have shown less interest in responding to NCC contracts. As observed in NCC, bus operators may need to provide service in uneconomical but socially relevant routes resulting in loss of revenue and opportunity cost. To support bus operators in such situations, a Hybrid NCC model has been developed. In Hybrid Net Cost Contract, the authority supports non-commercial and unprofitable routes where service on the routes needs to be provided as a public service obligation (PSO). The hybrid NCC requires a higher level of involvement by the authority (as against the NCC model) in service planning as the model involves financial support on selected non-commercial routes. The authority sets the overall Minimum Service Levels (MSL)/Key Performance Indicators (KPIs) along with being involved in the continuous monitoring of these parameters. The level of control by the Authority, in this model, is still less than in GCC contracts.

Shenzhen Bus Company in China has converted its entire fleet into e-bus from the grant and subsidy support of the National and local governments. Shenzhen Bus Company, World’s first fully electric bus fleet company presents the case study of Shenzhen Bus Company highlighting the extent of grant and subsidy support provided by the Chinese Government. The precise amount of subsidy offered by the Local Government is though not available, the literature review suggests that the Local Governments match the subsidy amount received from Central Government. FAME scheme utilizes the same principle in India. ?Shenzhen's silent revolution: the world's first fully electric bus fleet quietens Chinese megacity. ?Creation of a dedicated Urban Transport Fund (UTF) at both the state and the city level for utilizing the same for funding urban transport initiatives. Similar innovative initiatives could also be explored to make the purchase of e-buses viable for the state authorities. A case study on Rajasthan Transport Infrastructure Development Fund (RTIDF) is provided below to highlight its feature and area of support in developing urban transport in Rajasthan.

?Final Operations Document for Urban Transport Fund in Jaipur; Rajasthan Transport Infrastructure Development Fund (RTIDF) (access here); Scheme for Utilization of Urban Transport Fund (access here) The State and Central Government may extend the utilization of such funds created under JnNURM to provide support through either grant or concessional loan for procurement of e-buses by the State or City Transport Authorities. ?Case Study – Shenzhen Bus Company, World’s first fully electric bus fleet company The Shenzhen Bus Company, in China, is a state-owned bus operator. The company receive financial support from the public budget for converting its fleet to e-buses. The company has transformed its entire fleet of 16,000 buses in Shenzhen into e-buses. More than half of the cost of the bus is subsidized by the government as capital subsidy. In terms of operation, there is another subsidy: if the company runs buses for a distance of more than 60,000 km they receive approximately 500,000 yuan [￡58,000] from the local government. This subsidy is put towards reducing the cost of the bus fares. To keep Shenzhen’s electric vehicle fleet running, the city has built around 40,000 charging piles. Shenzhen Bus Company has 180 depots with their own charging facilities installed. Most of the buses we charge overnight for two hours and then they can run their entire service, as the range of the bus is 200km per charge.

?Case Study - Rajasthan Transport Infrastructure Development Fund (RTIDF) Government of Rajasthan created RTIDF in 2012, with the objective of providing organized, safe public transport. Its main aim was to fund the viability gap in operations and to provide loans to assist local bodies in the creation of better transport systems in urban cities, among multiple other objectives. The main sources of funding for RTIDF include a cess on motorized vehicles, green tax and cess on stamp duty, funds received from industries to carry out social Responsibilities, apart from funds from the Central and State Governments. RTIDF is managed by a fund management committee under the chairmanship of the Chief Secretary of the State. The funds have been utilized in the following initiatives to improve urban transportation: Jaipur City Transport Services Limited (JCTSL) and Ajmer City Transport Services Limited (ACTSL) are provided with capital subsidy support towards the purchase cost of buses (30% to JCTSL and 10% to ACTSL). The funds for the construction of 100 Bus-Que-Shelters in Jaipur city worth Rs. 9 Crore have been provided to JCTSL. The funds of Rs. 12 Crore have been provided for the creation of two Depots for the maintenance and parking of buses of JCTSL. Fund Rs. 20cr. provided from RTIDF for the purchase of Buses to improve the public transport system in Kota and Jodhpur

?Debt Financing Debt financing can be utilized by State Transport Utilities or bus operators to pay for the high up-front costs of e-buses. However, purchasing entirely on a debt-financing basis is still not widely used for electric buses. However, other mechanisms such as concessional loans, municipal bonds, and green bonds do exist for such purposes. With the growing maturity of EV technology in the future, debt financing may, however, become common. Soft loans or Concessional loans are provided by a financial institution at favorable lending conditions, including lower interest rates and/ or longer repayment schedules. International development funds or multilateral development banks under their development mission can potentially offer such financial instruments to lower the financing cost of e-buses. In September 2020, KfW granted a loan of Rs. 1,580 Crore to the Government of Tamil Nadu State to acquire 2,213 new BS- VI buses and 500 electric buses. The State Government has a plan to take a total loan of Rs. 5, 890 Crore from KfW to purchase 12,000 new BS-VI buses and another 2,000 electric buses. ?Technological transformation program for Bogota’s Integrated Public Transport System (SITP) In 2010 Colombia presented its investment plan to the Clean Technology Fund (CTF) to obtain support for transformational projects that will lower carbon emissions. In this plan, US$40 million were assigned to the Integrated Public Transportation System (SITP) of Bogotá, to be implemented by the IADB The main objective of SITP was to improve public transportation in Bogotá. To fund the purchase of clean technology buses (hybrid and e-bus) under SITP, the Inter-American Development Bank (IADB) offered $40 million concessional loan to Banco de Comercio Exterior de Colombia S.A. (Bancóldex – Colombia’s National Development Bank) at an interest rate of 0.25% with a grace period of 10 years and the amortization period of 30 years. The Republic of Columbia was the guarantor for the loan amount. Under this concessional loan program, Bancóldex has extended the loan provided by IADB to the local financial institutions (IFL), which in turn had directly financed SITP concessionaires’ firms through credit lines. Under this program, Bancóldex and the IFLs had co-finance each one of the vehicles in equal parts. This means that the US$40 million of this program had leverage an equal amount, for a total of US$80 million. The loan was offered with attractive financial conditions and contributed to compensate for the price difference regarding the starting cost of clean technologies.

Green bonds are often identical in structure, risk, and return to traditional bonds, except that the capital raised from a green bond funds clean energy, energy efficiency, low carbon transport, smart grid, agriculture & forestry, natural resource mitigation, or similar projects/ initiatives/ programs. Green bonds are marketed as “green” at the time of issuance. Green bonds share all the same financial features as other bonds, however as an internationally accepted practice, at least 95% of green bond proceeds are linked to green assets or projects. (Climate Bonds Initiative 2018). Nobina, the Nordic region’s largest operator of public bus transport services issued a green bond of SEK 500 million (~ $ 57 million) in February 2019 to arrange funds for procurement of electric buses, bio-fuel buses, and development of charging infrastructure. ?Nobina Green Bond (SEK 500 million, Feb 2019)) presents a case study of Nobina’s Green Bonds. Similarly, the city of Umea, in northern Sweden, has invested in the development of a sustainable system for local transport, based on ultra rapidly-charged electric buses (10 min. charging – 30 min. driving). The city issued SEK 77 million (~ $ 8.8 million) in green bonds in January 2012 to purchase electrical buses. In April 2016, the city had 9 electric buses and two fast charging stations built from the proceeds of the green bond.

?Municipal bonds Similar to green bonds, globally Municipal bonds are also being used by municipalities and transit agencies to fund large capital costs involved in the purchase of electric buses. Dallas Area Rapid Transit (DART) in Texas issued a bond for the purchase of electric buses in 2016. The bond was issued at an interest rate of 5.0% in China's green bond market in 2018 supporting local government climate action through Green Loans & Green Bonds.

Legal arrangements, although not a pure financing mechanism for e-bus procurement, offer legal solutions, through contracting, to reduce the upfront cost of the electric bus and associated infrastructure. It apportions the financial obligation on multiple interested parties thereby reducing the risk associated with the adoption of new technology. Leasing is the most prominent legal arrangement to arrange financing for electric buses, batteries, and charging infrastructure. Leasing arrangements have multiple variants such as component leasing (e.g., batteries), operation leasing, etc. Under a leasing arrangement, typically a third party (who is not the operator) owns some or all of the legal rights over the assets and assumes some of the risks associated with the investment. The third party could be a bus manufacturer, a service provider, or a specialized financial services company. Globally, leasing has emerged as an important model for managing the investment costs and risks involved with electric and hybrid-electric bus investments for both public and private operators. This is because leasing reduces the financial burden for the operator and transfers technology and/or credit risk onto the third party. ?Component leases (battery leases), the e-buses are sold without batteries in order to reduce the upfront cost of the bus. The batteries are owned by the manufacturer (or third party) during the lease term and replaced as and when required in accordance with the contractual obligation. Proterra, a bus company, entered the battery leasing contract with Park City Transit Company in the USA. The contract typically called an electric bus battery service agreement, is because the transit agency/transport utility can use the operational savings that accrue over the life of the electric bus (compared to a diesel bus) to cover the battery lease.

Under FAME – II, the government mandated the purchase of e-buses on the GCC model to avail of subsidy. Subsequently, NITI Aayog issued a Model Concession Agreement (MCA) in January 2019 to support electric bus procurement under FAME II. The MCA outlines the OPEX model (or GCC) of procurement of e-buses. The focus of the document is to assist cities with the contract award under the Gross Cost Contract (GCC) mode of procurement. This poses a risk to both Operator and Authority (STUs) alike. (i) Risk to STU upon the termination of the Contract. Technical Specifications suitable for ICE buses are specified As per MCA, the e-buses would need to conform to the Urban Bus Specification (UBS)-II issued by the Ministry of Housing and Urban Affairs (MoHUA) in April 2013. While UBS II covers many relevant aspects, it was developed for Internal Combustion Engine (ICE) based buses and does not capture many of the e-bus-related specifications like batteries and charging infrastructure. MCA could have specified the common bus specification for procurement. This would be helpful for OEMs to standardize their assembly lines. City-wise variants would cause issues in the standardization of assembly lines, obtaining approvals, etc. leading to lost opportunity of cost saving in manufacturing. The charging technology Operator can choose any charging technology as per the requirement. However, MCA does not put any obligation on STU to facilitate the Operator in case he wishes to put Pantograph Charging or wireless charging methods. MCA confined the premises of assistance up to Depot charging. This has limited the convenience of Operators to trade-off with respect to battery size, capacity, and cost that becomes available with different charging methodologies for e-bus. Development of Charging Infrastructure at each Maintenance Depot Development of Charging Infrastructure is a capital-intensive exercise. MCA makes it mandatory for the Operator to develop Charging Infrastructure at each Maintenance Depot, irrespective of the number of buses plying from the Depot (i.e., even for a Depot that would have low capacity utilization of charging infrastructure, Operator are still mandated to develop charging station). Instead, MCA could have provided the flexibility to the Operator to develop optimal Charging Infrastructure at suitable Depots to optimize the overall CAPEX requirement. Inappropriate division of responsibility among Operator and STU MCA requires the Operator to complete construction of the Maintenance Depot within 180 days from the Appointment Date. However, it provisioned 1 year for Authority from Appointment Date for the completion of the road up to the Maintenance Depot. The availability of roads up to the Depot is an enabler for the timely completion of the construction work at the Depot. ?Review of state RFPs for e-buses procurement Under FAME-II many STUs have floated RFPs for procurement of e-buses. The Model Concession Agreements (MCA) for these RFPs are broadly based on the standards issued by NITI Aayog with certain modifications according to the city’s local needs. The variability in RFPs and MCAs combined with changes in some key clauses like escrow mechanism and compensation in lieu of delay in payment of fees has increased the risk perception of the projects y reducing their bankability and increasing in cost of financing. ?Technology is emerging, and a bidder who has demonstrated its capacity to successfully deliver these projects could have been given more weightage in the selection. While L1 basis is the economical way of executing such projects but the same may not be suitable for undertaking projects involving emerging technologies such as EV and associated e-bus charging methodologies. No safeguard for Operator against delay in payment Assurance of time-bound payment against the services rendered is one of the vital factors considered for bankability of a contract. The RFPs issued under FAME-II have not provisioned for damages caused to Operator in case of delayed payment. This has increased the risk perception from the operator point of view. No Escrow Mechanism or alternative mechanism to ensure timely payment Escrow mechanism was provisioned in NITI Aayog’s MCA, with an objective to ensure timely payment to Operator. Cities like Ahmedabad have not only removed such provision but also haven’t provided any alternative mechanism such as Letter of Credit etc. to ensure timely payment to Operator and to increase bankability of the Contract. Unequal sharing of risk In RFPs issues by cities such as Mumbai, the risk sharing between STU and Operator is as the same.

??Recently lot of traction has been witnessed in development of charging infrastructure through collaboration and MoU. Several players having unique strengths are joining hands to collaborate with each other to leverage their core competencies or access to infrastructure to develop charging infrastructure. Key examples include: i. Tata Power has signed MoUs for setting up commercial EV charging stations at fuel outlets owned by Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited, and Indraprastha Gas Limited. Tata power has also signed MoU with MG Motors to set up fast-charging stations at its select dealerships across India. ii. NTPC is associated with IOCL, HPCL, DMRC and vehicle aggregators - Ola, Lithium, Shuttl, Bikxie, Bounce, Electrie and Zoom Car for development and utilization of public charging infrastructure. IOCL and NTPC are developing charging station in Greater Noida. iii. EESL has tied-up with private and public companies such as Apollo Hospitals, BSNL, Jaipur Metro, Chennai Metro, Maharashtra Rail Corporation Limited, BHEL and HPCL, among others, to set up public charging infrastructure99 . iv. Indian Oil Corporation and Fortum partnered to launch Electric Vehicle public charging stations. The duo have opened their first charging station in Hyderabad. They have plan to open 50 such stations at IOCL retail outlets in upcoming years100 .v. Exicom and BHEL sign MoU on EV charging infrastructure. Under the partnership, projects will be sought on the nomination as well as through competitive bidding.

?Bharat Heavy Electricals Limited (BHEL) to set up an electric vehicle (EV) charger manufacturing facility for the electric mobility business. Tata Power partners with Tata Motors to develop charging stations in Maharashtra. Tata Power is also partnering with Hotels, Malls, and Shopping outlets of Tata Group to set up charging stations that would provide convenience to their customer of charging vehicles. viii. IOCL has joined hands with Sun Mobility to set up a battery swapping facility at Chandigarh.. BSES and Ola Electric signed MoU to install battery charging stations in Delhi. As part of the agreement, Ola Electric will manage and operate these stations through a cloud-based software system. BSES will facilitate in identification of strategic locations for battery swapping (and charging) stations. Although MoUs are not legal commitments fructification of them in the future needs to be closely observed. Since these MoUs are not available in the public domain, the ownership structure and operational mechanism (BOO, BOOT, etc.) is not known. The charging station set-up by IOCL and Fortum is on a BOOT basis, Fortum ?Captive development by the fleet operator and OEMs Captive development of charging stations to provide exclusive access to vehicles of their own fleet has also emerged as another approach in developing charging infrastructure. OLA is said to be the pioneer of this concept in India. OLA partnered with carmaker Mahindra & Mahindra to launch an “electric mass transport project” in Nagpur to build charging infrastructure and bring 200 electric vehicles—including cars and auto-rickshaws— onto its app. OLA under its co-creating infrastructure strategy, broke the chicken-and-egg problem associated with the development of charging infrastructure and the adoption of EVs. It has inducted EVs in its fleet and also created the charging infrastructure to provide exclusive access for charging to its fleet. On a pilot basis, it has developed charging stations and battery swapping stations in Nagpur and Gurugram and has 1Exicom and BHEL signed MoU on EV charging infrastructure. Ola Electric to jointly install battery charging stations in Delhi. Indian Oil’s first electric vehicle charging station for the general public, in collaboration with Fortum India Pvt ltd Indian Oil Corporation Limited, envisions exploring newer avenues that are presented by alternative and renewable energy sectors and be part of the evolving energy landscape. Taking this forward, Retail Team-TAPSO successfully negotiated with Fortum India for setting up of first public charging stations at retail outlets in the city of Hyderabad on an exclusive basis. Fortum has developed a Charging Station at Goldstrike Fuel and Services fuel station of IOCL, Rajbhavan Road, Hyderabad.

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?Similarly, B2B mobility service provider company, Lithium Urban has developed its own charging infrastructure. Lithium has developed charging stations in the following three ways: i. Developed charging stations on client premises; ii. Partnered with commercial real estates developers such as Brookfield Properties and RMZ to set up charging stations on their properties; iii. Developing a “Charging hub” completely powered by solar energy that is run by Lithium and Fourth Partner Energy, a 100% rooftop solar company based in Hyderabad, as a joint venture. Lithium has developed the first charging hub in Gurugram. The Fourth Partner Energy is responsible for delivering clean and cheap power to Lithium Urban and Lithium ensures that the fleet will be charged at the hub. The company has 25-30 charging stations at the hub where 30 cars can be charged simultaneously. The company also plans to open a charging hub in Pune in the short term with a medium to long-term aim to have 20-25 such hubs across the country. OEMs are also actively playing a role in the development of charging stations to promote their vehicle sales and increase brand presence. ?It has developed an IOT-enabled keychain to access the dock to place the drained battery, pay for energy consumed and pick up a charged battery. Further, to overcome the problem of battery standardization, the company is manufacturing its own modular Smart BatteriesTM that are adaptable to different vehicle platforms.

?CONCLUSION

E-Chargeup, a Noida-based start-up, is also providing IoT enabled ?To understand the enablers and challenges in the uptake of electric mobility in the country, individual experts across the electric mobility industry, responded with their inputs. A summary of the survey output is provided below: EV mandate could provide confidence in manufacturer/charging infra developer/ investors in long-term prospects of EV and payback certainty. Priority for policy measures to fast-track EV adoption in India Public awareness is key in providing thrust to EV uptake. Perception of the public about EVs (Anxiety around the range, mileage, power, service, charging infrastructure, etc.) Inadequate charging infrastructure Insufficient government support in providing financial incentives for demand creation. Insufficient government support in providing financial incentives for the reduction in manufacturing cost Lack of R&D support in reducing battery prices leading to higher TCO for EVs (Capex + Opex) Concern around safety standards of EV and Charging Infrastructure. modeling/ EV charging-grid integration-related pilot demonstration project. High uptake of EVs would certainly have a huge impact on the electricity grid. It is prudent to be prepared for extremities by developing sufficient knowledge of grid behavior in all possible scenarios of EV integration to enable a smoother transition towards EV.