India-US electric bus deal key to overcoming funding hurdles: Mahua Acharya

Earlier this week, India and the US stitched up a deal to fund the rollout of 50,000 electric buses on Indian roads by 2027, in a push towards achieving renewable energy targets.

Mahua Acharya, chief of staff at social impact project developer CQuest Capital and one of the architects of the deal that was announced at the COP28 climate summit in Dubai, spoke to Press Insider about how the Indo-US partnership will accelerate India’s National Electric Bus Program (NEBP).

Acharya was earlier chief executive and managing director of state-run Energy Efficiency Services Ltd’s subsidiary, Convergence Energy Services Ltd (CESL), which focuses on electric mobility and solar power.

Under NBEP, Acharya played a key role in facilitating the adoption of 10,000 e-buses by public state transport undertakings and transport corporations. During her tenure, CESL had implemented a demand aggregation model, achieving competitive pricing for electric buses through economies of scale.

The initiative also introduced a gross cost contract model, where e-bus manufacturers are compensated on a per-kilometer basis by state road transport undertakings (SRTUs). This model initially received a tepid response from automotive original equipment makers, primarily due to the precarious financial standing of many SRTUs.

Acharya believes the proposed Indo-US partnership will be crucial in overcoming such challenges., and envisions it as the foundation for risk mitigation instruments, essential for attracting commercial investments into the sector. This collaboration is expected to further bolster the adoption and implementation of e-buses in India, paving the way for a more sustainable public transport system.

Edited excerpts:

What key changes did you observe at the COP28 summit in Dubai this year?

There is a massive shift in our transportation systems; I’m confident we’re moving in the right direction. Ground transportation is about 13% of our emissions. I’m just coming back from the COP28, and although it may seem quite obvious, for the first time, there were transport ministers at a climate conference, and that’s because that’s a big chunk of our emission story. It’s a big chunk of economies like ours and a huge chunk of general economic development. We have to address transport. So, I have returned tired, but I am also very hopeful.

How did CESL procure the first about 5,500 buses at almost 40% less cost than diesel buses in July 2021?

We are focused on electric mobility across three-wheelers and two-wheelers. At CESL, our disruptive program was electric buses. We also worked on electric vehicle policies. At CESL, we homogenized demand for transport as a service. So we changed the business model to providing service and then got states to sign up for a joint tender that had never been done before. As a result, we got massive volumes in the first tender of 5,450 electric buses. And when you get those volumes, I was lucky that the industry worked with me in great detail and very closely; the bid was oversubscribed, and we could get prices significantly lower than diesel. We did these two innovative things, for which I remain incredibly grateful and happy we could bring about large-scale change in India.

Can you elaborate on the significance of the tendering process for the over 10,000 e-buses (5,450 buses in July 2021 and 5,000 more in June 2020) to India’s e-bus ecosystem?

India has made electric mobility by buses affordable quickly. The country floated two massive tenders of over 10,000 electric buses, with one bus costing about ₹1.5 crore. However, the 50,000 electric bus program will cost around $10 billion. The question is not where the money will come from but the risk. Initiatives such as the collaboration between the US and India are essential because they build risk mitigation instruments against which commercial funds can come in. The latest one launched in Dubai is the bedrock of all significant financing in these contracts. With 10,000 electric buses and the participation of some of India’s biggest OEMs, the financial sector’s involvement, and most importantly, the government of India driving this, it is a significant chapter of India’s electric bus story.

What lies ahead for India on the adoption of electric cars?

Consumers need to have the opportunity to try out as many electric cars as possible, just like they would when buying a petrol car. Unfortunately, this is not yet the case for electric vehicles. However, I’m confident that this will change soon. Six or seven new models are already coming on stream in the next few months. One of our biggest challenges is making charging stations more widely available and getting people comfortable with electric cars. We need to address these issues so that people don’t have to worry about running out of battery or not having enough mileage to get where they need to go.

What are your thoughts on electric car affordability and consumer concerns about range anxiety?

You’re right that there is a wide range of car prices, from ₹1 million to the most expensive cars. It would be great to see more vehicles in the affordable range. As for range anxiety, it’s something that people get used to over time. You need to know and trust your car, but you also need to know that charging stations are becoming more widely available. Just like when you step out of your house and know you’ll find an ATM if you need one, you’ll soon be able to rely on omnipresent charging stations. While we’re still working on making this a reality, it’s important to note that most people charge their cars at home. Range anxiety is usually only an issue when taking your vehicle out longer distances. We’re making progress, and I’m confident we’ll continue doing so.