Indian Business Environment

Dr Rajib Sarkar
July 6 & 7, 2021 (Section A)
July 6, 2021 (Section B)
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The Global Green Economy

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 Fossil Fuels and the Climate Crisis
 The burning of fossil fuels refers to the burning of oil, natural
gas, and coal to generate energy. Ever since the invention of
the first coal-fired steam engines of the 1700s, our burning of
fossil fuels has steadily increased. The effects of the burning
of fossil fuels, especially carbon dioxide, are having far-
reaching effects on our climate and ecosystems. When fossil
fuels are burned, they release large amounts of carbon
dioxide, a greenhouse gas, into the air. Greenhouse gases trap
heat in our atmosphere, causing global warming.

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Global Warming

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Solar and Wind Energy are Now Cheaper than Thermal Energy

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 The Global Green Economy

 Scientists and activists have worried about climate change for

decades. Recently politicians have shown signs of more
commitment: countries accounting for over 70% of world GDP
and greenhouse gases now have targets for net-zero
emissions, typically by 2050.

 Investors are demanding that firms change tack, spurred by

the new reality that clean technologies are more cost-
competitive. A cool $178bn flowed into green-tinged
investment funds in the first quarter of 2021.

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The Power Sector In India

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 Three Forces of Disruption In Power Industry

 Decentralization
 Decarbonization
 Digitalization

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ABCD of Power

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Per Capita Electricity Consumption Has Lot
to Catch Up With

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 The Economics of the Indian Power Industry
 About 90% of the profits of the regulated utilities come regulated return on assets.

 Industrial demand for power is about 40% of the overall demand.

 About Rs. 5 lakh crore ( almost 1% of GDP) is the debt sitting on the books of State
Electricity Boards (SEBs).

 For the private sector in the distribution business 9 about 10% of the total) has
brought down the AT&C ( Aggregate Technical & Commercial ) losses is mere 7 to
8% whereas the aggregate AT&C losses of the entire power distribution sector is
about 35%.

 In FY 2012 the Plant Load Factor ( PLF) was 74%. Now it is 56%.

 GoI’s Saubhagya scheme has taken electricity to 28 million villages.

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Structure of Indian Power Market

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Road to a Smarter Power Distribution System

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Energy Business Models

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Greening of the Energy Sector in India

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Indian Energy Sector : The Changing Mix

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CO2 Emitted Per KwH of Electricity Generated in India

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 India’s Renewables Sector
 GoI’s installed renewable energy capacity 2022 target is 175 GW which is
likely to be met next year.

 GoI’s target for the same for 2030 is now 450 GW.

 CAGR for past 5 years in the installation capacity of renewable energy in

India has been 17%.

 India’s installed capacity of renewable energy needs grow by 35 GW per

year for next 10 years.

 The run rate for last 3 years has been 8.5 GW per year.

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India’s Renewables Sector (contd.)
 NTPC’s installed green energy target is to reach 60
GW by 2030.
 For RIL, the corresponding figure is 100 GW.
 For Tata Power, the corresponding figure is 35 GW.
 For JSW, the corresponding figure is 20 GW.
 Adani Green has already installed close 25 GW green
energy capacity.

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India’s Renewables Sector (contd.)
 About 80 to 90% of India’s solar equipment is
imported from countries like China, Malaysia,
Vietnam and Thailand.

 To promote domestic industries, basic customs duty

of 25% on solar cells and 40% on solar modules has
been proposed. Will be applied from April 1, 2022.

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FDI in the Clean Energy Sector in India

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FDI in the Clean Energy Sector in India (contd.)

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 ESG Funding
 In 2020, six ESG ( Environment. Social and
Governance) funds were launched in India. As a
result, net inflows in ESG funds increased from Rs
22 crore in March 2020 to Rs 678 crore in March
2021.

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 RIL’s Green Energy Push
 RIL which earns about 60% of revenue from its hydrocarbon-
fuelled energy operations, had last year set a target of
becoming a net-zero carbon company by 2035 - a shorter time
frame compared to the 2050 cutoff self-imposed by many of
its global peers, including BP Plc and Royal Dutch Shell Plc.

 This comes as energy giants around the world come under

pressure to move towards a low-carbon future to help
improve the environment.

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 RIL’s Green Energy Push (contd.)
 Dhirubhai Ambani Green Energy Giga Complex on 5,000
acres in Jamnagar will be amongst the largest such
integrated renewable energy manufacturing facilities in
the world.
 RIL plans to build four Giga Factories to manufacture
and integrate all critical components of New Energy
ecosystem – solar photovoltaic module factory, energy
storage battery factory, electrolyser factory, fuel cell
factory.

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 RIL’s Green Energy Push (contd.)

 "Reliance will thus create and offer a fully integrated, end-to-end

renewables energy eco-system," he said. Ambani also announced
that the company will invest over 60,000 crore in these initiatives
over the next 3 years.

 RIL will invest an additional ₹15,000 cr in value chain, partnerships

and future technologies, including upstream and downstream
industries. Thus, our overall investment in New Energy business will
be ₹75,000 crore in 3 years.

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Electric Vehicles

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Types of EVs

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Solar Energy and EV (contd.)

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Solar Energy and EV (contd.)

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Solar Energy and EV

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Solar Energy and EV (contd.)

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The EV Revolution in India

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Some Recent EV Announcements in India
 GoI under Faster Adoption and Manufacturing of Electric Vehicles
(FAME) in India Phase II, increased the demand incentive for electric two-
wheelers to ₹15,000 per KWh from an earlier uniform subsidy of ₹10,000
per KWh for all EVs, including plug-in hybrids and strong hybrids except
buses.
 Flipkart plans to arm its entire delivery network with more than 25,000
EVs by 2030, besides setting up charging infrastructure.
 The Delhi government has ordered all its departments, autonomous
bodies, and grantee institutions to replace their fleet with EVs. It has also
mandated that by 2024, 25% of all new vehicle registrations should be
EVs.
 The Andhra Pradesh government aims to provide 100,000 electric two-
wheelers to all its employees over the year.

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The Opportunity is Big in Scooter Segment in India

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Electric Mobility : Chennai Based Startup Aventose Energy

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Bajaj Chetak Electric Scooter Launched in 2020 with a
Price Tag Ranging Between Rs. 1 to Rs. 1.15 Lakh

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 Hero Electric’s EV Foray
 Hero Electric is investing ₹600 crore to quadruple its capacity
to 300,000 units, and is targeting around 500,000 units to
700,000 units in the next four years. Their ICE business is a
stable system that has run for decades, but EV needs a very
nimble-footed approach. The world will not have IC engine
bikes at some point. The guys who enter first may have the
first-mover advantage.

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 Ola Electric’s EV Scooter Gamble
 Ola Electric’s ₹2,400-crore mega EV factory is coming up in Krishnagiri,
Tamil Nadu. At its full capacity of 10 million units by next year, Ola’s Future
Factory will roll out one e-scooter every two seconds. Once completed,
the 500-acre factory—the world’s largest two-wheeler plant— will account
for 15% of the world’s two-wheeler production.

 Around 30%-40% of the factory’s produce, will be earmarked for exports

to Europe, Asia, and Latin America.

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An Artist’s Impression of the Ola Electric’s EV Scooter Factory at Krishnagiri

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EV Battery Technology

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 Lithium-Ion vs Aluminium-Air Batteries

 A drive to reduce dependence on imported

materials and technology, especially from China,
is pushing India to invest in a battery technology
that uses aluminum rather than lithium as the key
ingredient. Indian Oil Corp., the nation’s largest
oil refiner, has teamed up with startup Phinergy
Ltd. to develop the Israeli company’s aluminum-
air battery.

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 Lithium-Ion Vs Aluminium-Air Batteries (contd.)

 Chief among them is the cost of materials that need to be added to

the battery to prevent the power from dropping and the fact that the
cells can’t be recharged. Instead, Phinergy’s plan is for users to be
able to quickly swap in a new battery and send the used one to a
recycling facility.

 It takes just three minutes to replace the battery, about the time it
takes to fill up at a gas station. The fuel retailer’s network of 30,000
service stations will come in handy here. Phinergy’s plan is for users
to be able to quickly swap in a new battery and send the used one to
a recycling facility.

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 Lithium-Ion Vs Aluminium-Air Batteries (contd.)

 In comparison, lithium-ion batteries often contain hazardous materials

that can be toxic if not disposed of correctly, making them harder to
recycle. By 2035, the world will have accumulated about 4 millions tons of
Li-ion batteries that have reached the end of their lives.

 Lithium is already entrenched in the EV market and absorbs most of the

research dollars, with many potential challengers based on sodium,
magnesium or aluminum focused on smaller segments such as backup
power systems, energy storage or low-power transport, like forklifts.

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