Getting the electric vehicle policy right

After announcing an audacious plan to have an all-electric vehicle mobility market by 2030, India is having second thoughts. There are four reasons it should press ahead.

* Electric vehicle-renewable energy link: India is committed to 175 gigawatts of clean energy—including 100 gigawatts of solar energy—by 2022. Union Minister of State for Power R K Singh has said that the country could even exceed that target. There will be significant amounts of zero-marginal-cost power available that could be used by cars or stored in car batteries. The storage in car batteries can also be used to balance the grid—an increasingly important function as the share of renewables in the energy mix rises. A trial conducted in Denmark by Nissan and Enel last year allowed electric car owners to earn money by feeding power back to grid.

* Beyond passenger cars: Electrification of mobility, which one could argue is a critical step to intelligent autonomous (self-driving) mobility, is progressing speedily. Car-sharing schemes have the potential to free up precious urban space locked by parking and decongest cities. Beyond passenger cars, my colleagues recently tracked the increasing use of battery-powered passenger ships and ferries, as well as electric buses, around the world. I believe the First World Flying Electric Vehicle Summit was held in Geneva earlier this month. India has to choose whether it wants to be part of this next-generation mobility or continue to work with the tried, tested and polluting model.

Electric vehicle

* Lower pollution: The most important reason for the country to move towards electric mobility is vehicular pollution. There will be fewer noxious fumes in the air even if all the power for electric vehicles was coming from coal power, though that will likely not be the case. India should be leveraging the abundant solar and wind resources it is blessed with each single day to power its homes, its offices, its factories and its vehicles.

* Playing to India’s strength: India can leverage its engineering talent to have a role in the development of electric and intelligent mobility. For a nation that can carve a niche in the satellite launch market, surely this cannot be too ambitious an ask.

The formula for getting the electric vehicle policy right is the same one that has worked for the solar sector. Set an ambitious target, finalise the incentives, drive it from the top and avoid flip-flops in policy decisions along the way. Investors may still seek more, given the unease of doing business in India.

Kick-starting the market last year via bulk procurement of 10,000 electric vehicles through Energy Efficiency Services Limited was a good step, though there were hiccups on rolling out charging infrastructure. Another tender of the same size is reportedly in queue already.

In the rest of the world, China announced a shift in electric vehicle subsidies from June. It will offer higher incentives for more efficient vehicles or those that can travel longer distances on a single charge. In Australia, Tesla was awarded funding to build the trial phase of the world’s largest virtual power plant, which will pool rooftop solar and battery storage from 1,100 households.

Vandana Gombar is Editor, Global Policy, Bloomberg New Energy Finance. She can be reached at vgombar@bloomberg.net