{"id":41989,"date":"2017-10-06T03:44:10","date_gmt":"2017-10-06T10:44:10","guid":{"rendered":"http:\/\/siliconeer.com\/current\/?p=41989"},"modified":"2017-10-06T03:44:46","modified_gmt":"2017-10-06T10:44:46","slug":"electric-vehicles-can-change-indias-energy-consumption-mix","status":"publish","type":"post","link":"https:\/\/siliconeer.com\/current\/electric-vehicles-can-change-indias-energy-consumption-mix\/","title":{"rendered":"Electric Vehicles can Change India\u2019s Energy Consumption Mix"},"content":{"rendered":"

File photo of Mahindra E20 electric cars driving past India Gate in New Delhi, March 2013. Mahindra launched the new environment friendly E20 electric car powered by next generation Lithium-ion batteries and which can run up to 100 kms per charge. (Manan Vatsyayana\/AFP\/Getty Images)<\/em><\/p>\n

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India\u2019s energy consumption mix is in transition. While renewable energy is already a potent threat to electricity generated from coal, the advent of Electric Vehicles (EVs) has the potential to completely revamp India\u2019s need of fuel in the form of gasoline and diesel. Fossil fuels are heavily taxed in India and contribute healthy amounts to both the state and union treasuries. This may, however, change, writes Siddharth Srivastava.<\/strong><\/p>\n

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The market dynamics in India, as also the rest of the world, indicates that conventional petroleum producers will face the threat from EVs that have been gathering momentum in the U.S., China and Europe. As per estimates by Bloomberg New Energy Finance, by 2038 EV sales will surpass sales of internal combustion vehicles.<\/p>\n

In India\u2019s power sector, majors such as NTPC or Coal India are investing in renewable energy to diversify revenue streams given the threat to thermal generation. It seems refiners, both state and private, that produce gasoline and diesel will also need to adapt and re-structure due to the irreversible winds of change.<\/p>\n

Given Prime Minister Narendra Modi\u2019s push for renewable and alternate fuels, New Delhi has already announced plans to make EVs the main mode of transportation in the country by 2030 with objective to reduce India\u2019s fast burgeoning oil import bill by an estimated $60 billion while also significantly cutting down pollution. In an address to auto lobby group SIAM recently, India\u2019s Road transport minister Nitin Gadkari made the official intentions very clear.<\/p>\n

\u201cWe should move towards alternative fuel. I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it.\u201d Gadkari\u2019s comments are not empty threats. In keeping with the policy objectives, state agencies have already started to invite bids for EVs for use in government departments.<\/p>\n

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File photo of a worker cycling by an Indian oil refinery belonging to Essar Oil at Vadinar, some 380 km from Ahmedabad, Gujarat. (Sam Panthaky\/AFP\/Getty Images)<\/em><\/figcaption><\/figure>\n

More Fuel Consumption<\/strong><\/p>\n

India is the world\u2019s fifth biggest auto market with over 21 million vehicles sold annually. In keeping with the size, analyst reports have been predicting greater fuel consumption. International Energy Agency has projected demand at 458 million tons by 2040. Consultant FGE estimates India\u2019s fuel demand will rise significantly.<\/p>\n

As per BP Energy Outlook, 2017, India\u2019s consumption of energy in transport will grow by 5.8 percent a year by 2035, and oil will remain the dominant fuel source with 93% market share. In a report in September, Fitch Ratings said India\u2019s domestic demand for oil products will continue to be strong.<\/p>\n

\u201cWe expect demand for key products, gasoline, diesel and liquefied petroleum gas, to remain strong and this will ensure that overall demand growth will remain around 5% over the medium term due to continued growth in auto sales led by cars and two-wheelers and overall economic growth,\u201d said Fitch Ratings.<\/p>\n

Keeping such projections in perspective, private sector major Reliance Industries, operator of the world\u2019s largest refining complex at Jamnagar in Gujarat, is reportedly planning to expand its oil processing capacity by over 40 percent by 2030. Reliance\u2019s dual refinery complex could be expanded by 30 million tons per year to 100 million tons per year. This is as per a presentation made by company officials to the ministry of petroleum and natural gas on potential energy scenarios to 2030. It is estimated that the project would require an investment of about $10 billion.<\/p>\n

Meanwhile, state-owned Hindustan Petroleum Corp (HPCL) along with Indian Oil Corp (IOC) and Bharat Petroleum Corp Limited (BPCL) have already formed a joint venture company to set up the planned mega $40-billion refinery on the western coast of the country. The refinery-cum-petrochemicals unit with a capacity of 60 million tons a year will be located at Babulwadi in Maharashtra.<\/p>\n

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Oil and gas platform.<\/em><\/figcaption><\/figure>\n

Caution Needed<\/strong><\/p>\n

However, despite the analyst projections, refineries are being cautious. They have been studying the potential of producing petrochemicals, that are used to make plastics, fabric, rubber, chemicals, instead of transport fuels, should oil demand stagnate due to rising usage of EVs. Currently, India\u2019s petrochemical use is one-fourth the world average, while the country imports half its consumption needs. Demand is projected to jump from 30 million tons to 40 million tons by 2019\/20, valuing the country\u2019s petchem market about $65-$70 billion. Refinery-petrochemical integration can thus be a strategic option to cushion possible losses. It is estimated that India\u2019s State oil refiners, long focused on producing transport fuels, are planning a $35 billion push into petchem.<\/p>\n

Mukesh Surana, chairman of HPCL recently said, \u201cIf transport fuel demand is impacted then we can divert molecules of hydrocarbon to the next best opportunity like petchem. Petchem plants provide us with an alternative line of revenue and add to our gross refining margins. It is a good de-risking model.\u201d R. Ramachandran, head of refineries at BPCL, also said, \u201cLarge portions of future refineries should be in petchem to spread risk of reduction in diesel consumption.\u201d<\/p>\n

As India changes for the good, only the fittest and flexible companies will survive.<\/p>\n","protected":false},"excerpt":{"rendered":"

File photo of Mahindra E20 electric cars driving past India Gate in New Delhi, March 2013. Mahindra launched the new environment friendly E20 electric car powered by next generation Lithium-ion batteries and which can run up to 100 kms per charge. (Manan Vatsyayana\/AFP\/Getty Images) India\u2019s energy consumption mix is in transition. While renewable energy is…<\/p>\n

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