Energy savings firm EESL is procuring electric vehicles that can be rented to the government. And it has already received bids from Tata and Mahindra
At a charge of about ₹8-9 per unit, the operational cost of EVs would be less than ₹2 per kilometre, lower than CNG
Image: Madhu Kapparath
For a few years now, Energy Efficiency Services Limited (EESL) has made winning a habit. The Noida-headquartered energy savings company, a collaboration between four public sector entities, identifies an area where energy savings are feasible, and then throws its weight behind it.
Between 2015 and now, the company has single-handedly brought about an LED lamp boom in India; prices of LED lamps have fallen from about ₹310 to ₹38 apiece. EESL procured bulbs en masse from private companies and sold them to state governments, effectively helping bring economies of scale and bringing down prices for consumers over time. EESL had previously done the same with fans and irrigation pumps too.
Now, the company has turned its attention to transforming one of the world’s biggest automobile markets. India aims to move completely to electric vehicles (EVs) by 2030, which will help cut the country’s oil bill by some $60 billion and reduce emissions by 37 percent.
Just as it did with the LED lamps, EESL is now procuring electric vehicles, initially to rent them to the government. The company has already received bids for 10,000 electric vehicles from Tata Motors and Mahindra, and plans to procure another 10,000 vehicles during the course of the year.
“If you look at the operational cost of electric cars and, say, you charge at about ₹8-9 per unit, the cost of operating a vehicle is less than ₹2 per kilometre compared to ₹6.5 and ₹7 for petrol and ₹5.5 and ₹6 for diesel,” Saurabh Kumar, managing director of EESL, tells Forbes India. “Even CNG is about ₹4. So there is economic viability for the consumer at large.”
Tata Motors, India’s largest vehicle maker by revenue, bid ₹10.16 lakh per vehicle for 500 cars in the first phase of the government’s electric mobility mission. Mahindra, which bid a little over ₹2 lakh more than Tata Motors, was eventually forced to match the bid. EESL expects the mass procurement process to bring down electric vehicle costs in India by at least 25 percent.
“We believe there is a demand for at least half a million vehicles in the government sector alone,” says Kumar. “Many of these cars do intra-city travel. This is the sector where you can stimulate the market and the rest can work after the regulatory changes.” What is EESL?
EESL is a joint venture of the NTPC Limited, Power Finance Corporation, Rural Electrification Corporation, and Power Grid Corporation of India. The company was set up in 2009, but started making a mark only in the past few years.
It began with the Indian government’s UJALA scheme in 2014, a programme to distribute 770 million LEDs by March 2019 across 100 cities along with energy-efficient fans. Since then, EESL claims to have helped save over ₹14,000 crore in energy costs. During that time, the company’s revenues have grown over 46 times while profits have jumped more than 50 times.
[bq]Esl has also set up 200 charging stations across delhi and invited tenders to set up 2,000 charging units across India[/bq]
“We see demand picking up in the next few years as far as electric vehicles are concerned,” says Kumar.
EESL is now gearing up to make a recommendation to the government to bring in a policy that makes it mandatory for the government to use electric cars. The company believes such a shift (nearly 500,000 vehicles) could save over 5,000 million litres of fuel and ₹28,000 crore. It will also give a big boost to the Make in India programme.
“All that the government has to do is to make sure that PSUs and government organisations use electric cars,” says Kumar.
EESL’s decision to foray into the EV industry could have a big impact on India’s migration to electric vehicles. Apart from the reduction in vehicle costs, the company believes its initiatives could lead to the entry of new EV manufacturers, including global ones. Representatives from Hyundai, Renault and Nissan had already met the company during the pre-bid meeting for the e-vehicle tender.
Alongside, EESL has also been setting up charging stations in Delhi on its own. “One of the biggest challenges to the EV transition is the problem of range. Most of these vehicles run about 130 kilometers on a single charge,” says Kumar. “Once we have the necessary infrastructure in place, buyers will be keen to adopt the technology.”
The company has put up approximately 200 such units across Delhi. They are installed at government offices with the units connected to the meter.
“Under the Electricity Act, no one apart from a distribution company can sell or resell power,” explains Kumar. “So that is the first gap that exists and the power ministry is looking to fill that gap through an amendment to the act. That will enable regulations.” Meanwhile, even as the government considers changes to laws, EESL has invited tenders to set up 2,000 charging units across India.
The company has also begun talks with various state governments to seek their participation in the shift towards electric vehicles. In the next phase, apart from government institutions, EESL is also looking at selling vehicles to private institutions.
“I think more than buying vehicles for its use, the government should look at setting up the necessary infrastructure,” says Deepesh Rathore, co-founder of the automotive consultancy Emerging Markets Automotive Advisors. “China did not go about buying cars for the government. Instead, building charging points and better awareness are the only ways to lure customers into embracing a technology such as electric vehicles.”
Will turning to public transport such as buses help in the electric vehicle transition? “We did evaluate the role of buses. But they are capital intensive and getting various state transport boards to agree would take time,” says Kumar. “That’s why we turned to cars.”