Karnataka Electric Vehicle and Energy Storage Policy

The Electric Vehicle and Energy Storage policy announced by the state government of Karnataka is well ahead of even the Indian government’s proposed Electric Vehicle policy. The opening lines of the policy declare that Government of Karnataka wishes to make Bengaluru, the Electric Vehicle (EV) capital of India.

Check the link to know more about India’s Electric Vehicle Vision

The statement from the Government of Karnataka looks ambitious, but considering what Bengaluru, the silicon valley of India, has managed to achieve with the IT sector and subsequently turn into a start-up capital, the statement could in fact have more substance than what meets the eye. In the past few years, there has been an upspring of start-ups not only in the IT space but also in alternate energy and electric vehicles in the region.

A key characteristic feature of this policy happens to be the fact it tries to integrate energy storage manufacturing which is key to fostering an electric vehicle industry. The proposed policy as expected is filled with incentives and concession packages to lure investments. The policy has a validity of 5 years or until a new policy is announced.

The policy document intends to align with the national objective of having an all-electric vehicle fleet by 2030. In addition to reducing the dependency on crude oil consumption, where in 80% of India s oil requirement is imported and about 1/3rd of it is used in the transportation sector; the policy also emphasizes to reduce emissions in the sector by promoting EVs, which is laudable. Incidentally there is a mention of recent World Health Organization report that says India is home to 10 of the world’s 20 most polluted cities.

Highlights of the policy

Listen to the conversation to know more.

  • A key major objective of the policy is attracting investments of around 31,000 Crore (about 5Bn$) and employ 55,000 people in the sector.
  • EV manufacturing zones and clusters with complete infrastructural facilities is envisaged like in similar automobile manufacturing.
  • Three wheelers, cab aggregators, corporate fleets and school buses/vans are to be encouraged to shift to electric transportation. Already, non-transport private vehicles are exempt from paying taxes under the Karnataka motor vehicles act. Also, the national committee is evaluating the proposal to use standard batteries for public vehicles like 3 wheeler rickshaws. These are likely to aid this objective.
  • Similarly public fleet operators will introduce 1000 EV buses during the policy period with Bangalore Metropolitan Transport Corporation proposed to have EV fleet services within city by 2018.
  • An emphasis on EVs has been made for goods transportation within city limits operated by logistics firms. Logistics firms operating with e-commerce platforms are likely to benefit.
  • Battery manufacturing will be facilitated by the Karnataka Udyog Mitra who will operate an online clearance system with special incentives for modular lithium ion batteries.
  • The policy proposes to adopt BIS standards for setting up charging infrastructure with proposal to amend any existing bylaws to setup charging stations in public buildings.
  • The government will encourage industry and academia to undertake research in this space and setup charging infrastructure that adheres to ARAI/BIS standards.
  • A Special Purpose Vehicle (SPV) involving different government agencies in Bangalore will be mooted to setup charging infrastructure in the city.
  • A special tariff is likely to be proposed for EV charging in the state including proposals to permit energy resale at charging stations. This is an interesting proposal considering there are regulatory hurdles before any such proposal can go through even at the central level.
  • Fast charging stations and battery swapping networks at every 50km interval to be established on prominent highways of the state including Bangalore-Mysore is also proposed.
  • Public bus and metro stations to have EV charging infrastructure.
  • The policy also intends to encourage lease or pay-per-use business models for battery swapping stations. A few companies in the state are already evaluating the business proposition of swappable batteries.
  • An end of life battery use for solar PV applications is also envisaged including a safe disposal mechanism in Public-Private Partnership model.
  • On the manufacturing side for batteries the state has declared a target of inviting investments up to the tune of 5GWh, which is expected to generate a net employment of over 10,000.
  • Special incentives for skill development in battery manufacturing is also proposed.
    • An Investment Promotion Subsidy (IPS) in the range of 20-25% of total fixed assets shall be provided to manufacturers of EV components.
    • The Investment Promotion Subsidy will be available over and above any subsidy offered by Government of India (GoI).
    • Total exemption on payment of stamp duty, concession on land registration charges, reimbursement of land conversion fee and exemption from tax on electricity tariff are other incentives proposed.
  • A special package of incentives and concessions will be considered for Ultra Mega and Super Mega EV enterprises/Lithium ion battery manufacturers catering to exclusively for EV market based on investment and employment potential.
  • All project proposals and incentives will be subject to the approval of technical committee. A high level inter departmental review committee will also be constituted to regularly review the progress of developments under this policy.
  • Incentives in the form of capital subsidy up to the tune of 25% of capital investment for the first 50-100 fast charging, battery-swapping stations depending on the type of EV served.

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Cover image :Tesla Energy

Is solar power development sustainable?

RE20173I got an opportunity to speak at the Times Renewable Energy Expo, a Renewable Energy (RE) conference in Pune this past week. I was privileged to be part of the panel featuring Dr Chetan Singh Solanki, Prof. IIT Bombay who has pioneered the adoption of solar power in rural communities. The theme of the panel was ‘Pace of RE scale-up in India’.

I represented India Energy Storage Alliance (IESA) and spoke about integration of energy storage with RE. The intent was to emphasise the need for energy storage in providing flexibility to the grid under increasing penetration of renewable energy. Being intermittent and seasonal, wind and solar energy do have its drawbacks. In spite of being a clean source of energy, the intermittent nature stresses the traditional fossil fuel plants and forces them to operate below optimal efficiency thereby increasing the operating cost and associated emissions. The message was well received by the audience comprising of project developers, researchers, policy makers and RE enthusiasts. But, the burning topic throughout the conference was ‘Are the record low solar tariffs realistic?’

The drop in solar prices

The recent bids in Bhadla that resulted in record low tariffs of ₹ 2.62/kWh and ₹ 2.44/kWh in a span of 2 days was a major discussion point. The drop from ₹ 3.15/kWh to ₹ 2.44/kWh (23%) in a month was never expected. (Read more about why there are no more outliers in solar)


Module costs

The drop in solar prices is attributed to the decline in module prices which is true but it hides the bigger picture. In a recent publication by Bloomberg, an Altman Z score analysis(see below) of the module manufacturers reveals a gloomy picture. Only one company lies above the mark with three others in ‘just safe’ zone while the rest have all indications to go burst. Incidentally Solar World just announced the beginning of its end. (Also, interestingly Bloomberg lists most of these companies under Tier 1 suppliers).


Is the development sustainable?

Wind recently witnessed an intense debut reverse bidding and if the indications are right, it could well follow the solar route albeit at a lower rate. So the big question then turns out to be, ‘Is RE development sustainable?’ ‘Can companies and the stakeholders sustain this in the long run?’ I have due respect to all the experts in the big corporations who are winning projects at this price, I wouldn’t challenge their acumen. At a personal level, I just have a few points to say why I believe this development is not sustainable in the overall gambit of things.

  • There is intense corporate competition, with no long term visibility and the urge to develop large portfolios in a short time is driving the bids.
  • How can module manufacturers who are financially weak be trusted to produce quality product that performs for 25 years?
  • Supply is just one side, on the other side low tariffs is also driving down installation costs. There is an even bigger pool of ‘installation experts’ who offer manpower services at any price asked for (What about the logic that says your pay increases as you build expertise?).
  • And, the last one, preserve natural resources. I personally feel this is a huge problem, we don’t want to destroy land (and water) resources on projects whose performance is going to decline rapidly every year.

Renewable Energy development that is sustainable is the need of the hour!

What’s next for the energy storage sector in India?

The Indian electric grid is now certain to have over a 100GW of Renewable Energy (RE) even under the worst case scenario by 2022 (CEA, 2016). It would mean over 25% of the installed capacity being intermittent and hence there is a need to build flexible assets to compliment them. The enthusiastic industry participation at the Energy Storage India-2017 clearly hinted that the industry is gearing up to address this huge market.


Although the key industry trend is to shift to Lithium ion technology, the Indian market is still energized by lead acid batteries. The Indian battery market of which over 90% is lead acid based is growing by over 10% YoY. Indian research institutes today have Lithium ion prototyping facilities and are working on the 3rd generation of the technology. IIT-Bombay declared that it has two patents under review for the same.

“The real question is if the industry has picked up on the research and resulted in commercialization?”

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On the global scale, the number of research publications and commercialization have been on the rise with the focus now shifting to Lithium-Sulphur batteries. Ultra-capacitors is another technology that has potential with TEEMP Inc. indicating their intent to setup facility in India to power the Hybrid Electric Vehicle mission of the country. Thermal energy storage powered by the Phase Change Material (PCM) technology is seen as the next big thing to increase energy efficiency of commercial HVAC systems.

Policy and Regulatory

The current drivers in terms of regulations is very low for storage projects. The forecasting, scheduling and deviation settlement mechanism could aid the market if the prices are lucrative. Storage projects should be treated as a flexible asset and should be added to the fleet of balancing power plants. At the Govt. level CEA has hinted at evaluating storage as part of the balancing services shortly. There was a consensus that co-benefits through market mechanisms would be the key enabler for energy storage in India.

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“Intermittent generation needs flexibility in transmission, distribution and storage. There will be a need for the right policy and regulatory framework to support this market”


The market currently is driven by the inverter backup assets, as one of industry leaders indicated that close to 5-6GWh of energy storage has been sold annually in the last decade in this segment. The next big market currently is the telecom sector which is witnessing a switch from lead acid batteries to lithium ion technology. Although a nascent market, Electric Vehicles (EV) is likely to see big gains in the next couple of years owing to the launch of new models of passenger vehicles including variants of Hybrid Electric Vehicles (HEV). In comparison to these sectors, storage integration for RE generation looks small but has significant potential as the RE share increases.

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The market for large scale energy storage projects has just opened up. The first phase is witnessing a number of demonstration projects being undertaken by the Power Grid Corporation of India (PGCIL) and the Solar Energy Corporation of India (SECI). The National Thermal Power Corporation (NTPC) and the Neyveli Lignite Corporation (NLC) are gearing up with couple of large scale energy storage projects for the Andaman Islands. The recently concluded 2×2.5MWh SECI tender saw 13 bid submissions. From the private sector AES energy followed up with its maiden India project with Panasonic last year with another 10MWh project, this time with Mitsubishi and Tata Power Delhi Distribution to provide peak management and flexibility in the Delhi distribution network. A major announcement at the event was Ecoult’s partnership with Exide industries to manufacture ultra-batteries in India. A few other firms announced their portfolio expansion to assemble Li-ion batteries in India. These partnerships align with the Make in India initiative of the Govt.

Overall, as the international panel concluded a level playing field in storage needs a few issues to be resolved and energy storage should be the 4th column of electricity market design. The market has just started to open up in India for energy storage and as one of the business heads remarked “The Indian market has caught the tail of energy storage elephant and hopefully with declining prices a bigger market is created every year and the whole elephant is seen”.