Friday, November 29, 2019

Brief Overview of Pakistan's Electric Vehicle Policy

Pakistan has a low level of motorization with just 9% of the households owning a car. Nearly half of all households own a motorcycle. Motorization rates in the country have tripled over the last decade and a half, resulting in nearly 40% of all emissions coming from vehicles. Concerns about climate change and environmental pollution have forced the government to to take a number of actions ranging from adoption of Euro6 emission standards for new vehicles with internal combustion engines (ICE) since 2015 and announcement of a national electric vehicle (EV) policy this year.

Vehicle Ownership in Pakistan. Source: PBS

EV Policy:

Pakistan electric vehicle policy 2019 sets EV adoption targets and includes incentives for buyers and manufacturers. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles. Here are some of the salient points of the policy:

 Policy Targets: 

1. Goal for cars: 30% of new sales by 2030 and 90% of new sales by 2040

2. Goal for 2 and 3 wheelers: 50% of new sales by 2030 and 90% of new sales by 2040

3. Goal for buses: 50% of new sales by 2030 and 90% of new sales by 2040

4. Goal for trucks: 30% of new sales by 2030 and 90% of new sales by 2040

Buyer Incentives: 

1. 1% GST for EVs vs 17% for regular vehicles

2. Lower electricity tariffs for EVs

Charging Infrastructure: 

1. Only 1% import duty on charging equipment.

2. Lower power tariffs for charging stations.

3. One fast DC charging station per 3km by 3km area in all major cities

4. DC fast chargers on all motorways every 15-30 km.

5. Ensure uninterrupted power on feeders for charging stations.

Manufacturer Incentives: 

1. All greenfield investments apply to EV manufacturers and those converting their existing facilities to manufacture EVs.

2. State Bank to offer lower rate financing for EV manufacturing.

Summary:

Announcement of National Electric Vehicle (EV) Policy 2019 by Pakistan government is a step in the right direction. It is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership. It also focuses on development of nationwide charging infrastructure to ease adoption of electric vehicles.  Meanwhile it's crucial that Euro6 emission standards be seriously enforced with proper inspections to limit emissions from internal combustion engine (ICE) vehicles being sold now.

Related Links:

Haq's Musings

South Asia Investor Review

Vehicle Ownership in Pakistan

Low Carbon Energy in Pakistan

Pakistan Transport Sector

Recurring Cycles of Drought and Floods in Pakistan

Pakistan's Response to Climate Change

Massive Oil and Gas Discovery in Pakistan: Hype vs Reality

Renewable Energy for Pakistan

Digital BRI: China and Pakistan Building Fiber, 5G Networks

LNG Imports in Pakistan

Growing Water Scarcity in Pakistan

China-Pakistan Economic Corridor

Ownership of Appliances and Vehicles in Pakistan

CPEC Transforming Pakistan

Pakistan's $20 Billion Tourism Industry Boom

Riaz Haq's YouTube Channel

PakAlumni Social Network

9 comments:

Ahmad F. said...

All sounds good but do they have a solution lined up for the recurring power shortages?

Riaz Haq said...

AF: "All sounds good but do they have a solution lined up for the recurring power shortages?"

Pakistan is rapidly expanding generating capacity as detailed in the following Dawn report:

The government plans to increase the country’s power generation capacity by almost 300 per cent in next 20 years to 111,000 megawatts and phase out almost all of the existing thermal power plants to meet rising energy demand at affordable costs.

The move is part of the Indicative Generation Capacity Expansion Plan (IGCEP) 2018-40 finalised by the National Transmission and Despatch Company in consultation with all the federal and provincial agencies and private sector consultants to ensure low-cost development of future projects and to comply with regulator’s Grid Code obligations.


https://www.google.com/amp/s/www.dawn.com/news/amp/1504502

Moaz said...

Thank you for the brief overview and crisp analysis of the new EV policy, Mr. Haq. This is the only place on the internet I could find actual details on the policy!
Keep up the great work.
As a Pakistani working at the International Council on Clean Transportation, I have been following the new EV policy with great interest. It is a great step forward. However, I share the concerns of some of my fellow Pakistanis. High-level goals aside, what are the instruments/institutions the federal government aims to utilize to make these plans a reality by 2030? Is the Ministry of Climate Change in tandem with the numerous other ministries who will see the execution of these policies?
Would love to have your opinion on that.

Riaz Haq said...

World s largest electric vehicles manufacturer BYD is all set to enter Pakistan. The announcement was made by Pakistan Electric Vehicles & Parts Manufacturers and Traders Association (PEVPMTA) General Secretary Shaukat Qureshi while talking to local media.

https://dunyanews.tv/en/Business/521071-BYD-electric-vehicles-manufacturing-Pakistan

“Toyota, the world auto giant, for the first time signed an agreement on November 7, 2019, to develop Electric Vehicles with BYD, the world’s largest electric vehicles manufacturer, with 44 plants around the globe employing 250,000 personals, with turnover of $250 billion," he said. “Scenario will definitely change in Pakistan as well, with the Japanese companies roll out their models by 2024," he added.

As a leading new energy vehicle (NEV) manufacturer, BYD has created a broad range of internal combustion (IC), hybrid and battery-electric passenger vehicles.

BYD s NEVs have ranked No.1 in global sales for three consecutive years since 2015. Developing electric vehicles that are intelligent and connected, BYD is inaugurating a new age of automotive innovation.

Riaz Haq said...

My quotes in story on Pakistan's Electric Vehicle Policy
----------------
Two cheers for Pakistan’s electric vehicle policy

https://www.thethirdpole.net/en/2019/12/04/two-cheers-for-pakistans-electric-vehicle-policy/

Riaz Haq, who worked in various tech firms for 35 years in the Silicon Valley and is an EV enthusiast, said with 32 million households and 17.5 million motorcycles registered in Pakistan, the motorcycle ownership has increased from 41% in 2015 to 53% in 2018. Pakistan is the fifth biggest motorcycle market in the world after China, India, Indonesia and Vietnam.

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“It is a forward looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership,” Haq wrote in his blog. He has recently bought a Chevy Bolt EV Premier “because of its 238 mile range on a single charge at a price 30% lower than Tesla 3”, after having test driven Tesla Models S, X and 3 and Chevy Bolt EV and Nissan Leaf and Leaf Plus.

Aware of the infrastructure that will be needed for EVs, Aslam sees it as an opportunity with a whole new service industry and numerous livelihood options opening up. “Pakistan is thirsting for new business opportunities and markets. Globally, China is leading the EV industry, like in the manufacture of batteries. If we build our capacity technologically, Pakistan can become a hub for exporting EVs – specially two and three wheelers. We have the appetite to lead and come up with innovative ideas like charging stations that run on solar.”

-------------------

All this will be possible, says Haq, because EVs are a lot simpler, “Easier to manufacture, have fewer parts and require fewer people on the assembly line saving labour costs.”

Riaz Haq said...

#Pakistan sets sights on floating #solar as #water scarcity bites. Floating PV modules on dams and lakes not only produce #energy but they also reduce water evaporation and water wastage. #RenewableEnergy #ClimateCrisis
https://www.pv-tech.org/news/floating-solar-to-conserve-water-in-pakistan#.Xek43gpIT1Y.twitter

With Pakistan's water reserves fast depleting, floating solar will be a key part of conserving resources and producing cheap energy, according to the nation's minister for Power and Petroleum Omar Ayub Khan.

Speaking at a conference on the water crisis, Khan announced that floating solar systems would be installed in four reservoirs besides canals at Tarbela, Mangla, Ghazi Barotha and Khanpur.

He noted Pakistan's plans to roll out 18-20GW in new hydropower capacity – taking the power source to 70% of the energy mix – and to ramp up nuclear power to 10% of the energy mix. The new hydro capacity would also offer great opportunities for FPV projects.

Speaking on water conservation, Khan said: "Not just flood irrigation system we have been used to. The world has moved on. We have to make sure that this resource is jealously guarded and used. We are already finalising plans with floating solar."

The government is already in discussions with the energy ministry of Punjab over placing floating solar on its canals so that its irrigation systems can also be run on solar power. Meanwhile, 29,000 tube wells in Balochistan will also be converted to solar. Floating PV modules not only produce energy but they also reduce water evaporation and water wastage.

Khan noted that solar will continue to decrease in price, given that the country has adopted competitive bidding for all new projects under its new renewable energy policy.

Riaz Haq said...

I'm quoted in Dawn's story on electric vehicles today. Most experts are lauding the policy as a step in the right direction. “It is a forward-looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership,” Mr Haq wrote in his blog. https://www.dawn.com/news/1521204

Riaz Haq said...

#Solar & #Batteries Will Change #Energy Industry Forever. #Costs are down nearly 90% in past decade, and will be only $8 to $14 per MW-hour by next year, or about a penny per kW-hour. #Electricity @themotleyfool #stocks $RUN $TSLA $HASI $SPWR $BEP $NEE https://www.fool.com/investing/2019/12/11/the-moment-is-here-for-energy-storage.aspx

One of the biggest criticisms of renewable energy has been its inherently intermittent nature. Solar energy plants don't produce power at night, and wind turbines don't produce power without wind, so utilities need fossil-fuel or power plants to keep the grid running. Without a way to store renewable energy, fossil fuel will always be the backbone of the electric grid.

What's changed in the past few years is that energy storage is suddenly an economical asset to consider as part of the electric grid. If regulators and utilities find ways for energy storage to generate revenue, finance companies will open up their wallets and fund investment. Before long, energy storage could change energy forever.

Solving the revenue problem
Energy storage is starting to make financial sense, which is the only way it will ever be able to reach scale. Utilities see value in energy storage as a way to offset expensive peak generation on high-demand days. For example, in one time of use rate plan in Southern California Edison's territory (southern California) peak rates during the summer are $0.38 per kW-hr but rates during off-peak hours are just $0.13 per kW-hr. The $0.25 difference can be cost savings for homeowners with a battery by using the battery's energy during peak hours and charging during off-peak. Depending on the size of the battery, savings could be a few dollars per day for consumers and for utilities it means buying less power from expensive peaker plants, helping lower rates for everyone.

Utilities are also seeing it as a way to reduce transmission and distribution costs, and even put off investment in new power plants. Con Edison is using batteries as part of a plan to defer $1.2 billion in substation investments. And new bids from solar plus energy storage are beating the cost of building new power plants.

Residential and commercial customers are seeing value from a different angle, using energy storage to reduce electricity bills. SunPower (NASDAQ:SPWR), Sunrun (NASDAQ:RUN), and Tesla (NASDAQ:TSLA) are starting to build energy storage systems that reduce on-site electric bills and can even bid capacity into electric grids by creating a virtual power plant. There are different models for consumers, but the time of use rate savings I highlighted above is one option and another is commercial building owners saving on demand charges by batteries lowering their peak electricity usage each month.

There's now money to be made in energy storage, so if costs are low enough, the investments will make financial sense.

The cost problem
When batteries cost thousands of dollars per megawatt (MW), it was tough to justify their value to the grid because the up-front expense was too high. But costs have fallen nearly 90% in the past decade, according to NextEra Energy (NYSE:NEE), and will be only $8 to $14 per MW-hour by next year, or about a penny per kW-hour. For perspective, the average kW-hour of electricity costs about 13 cents for retail users.

Combined directly with wind and solar, energy storage starts to become really compelling. NextEra Energy estimates that post-2023, wind plus energy storage costs will be $20 to $30 per MW-hour, and solar plus energy storage will be $30 to $40 per MW-hour. Natural gas is expected to match the solar-plus-storage costs.

As the cost of energy storage becomes competitive with traditional fossil fuel assets, there is a growing demand for battery installations and utilities and finance companies are finding ways to make it a profitable investment.

Riaz Haq said...

$9 Billion #Battery Project By #BMW, #BASF. Batteries/electric transmission account for 40% of cars’ costs. #Lithium-ion batteries are poised to power next generation of cars & to help #renewable energy like #wind and #solar. #electricity
https://www.bloomberg.com/news/articles/2019-12-09/-9-billion-battery-project-with-bmw-basf-gets-eu-green-light via @markets

The European Union’s plan to kick-start battery production and compete with Asian suppliers got a boost from the approval of 3.2 billion euros ($3.5 billion) in state aid for a landmark project that spans across seven nations.


The funds will unlock private investment of around 5 billion euros in the initiative by 17 companies, taking its total value to about $9 billion. It will include industrial and automotive giants such as BASF SE, BMW AG and Fortum Oyj, in order to support the development of innovative and sustainable technologies in lithium-ion batteries from mining and processing the raw materials to production and recycling.

“This is a very important step, even a breakthrough, in what I believe should be the new EU industrial policy,” European Commission Vice President Maros Sefcovic said on Monday in Brussels. “We should really focus on the area that is very important for this technological competition, which is becoming more and more severe.”

The move by Brussels underscores growing European awareness that key industries risk falling behind if they don’t fill manufacturing gaps in energy storage technology. Lithium-ion batteries are poised to power the next generation of plug-in cars. They also promise to help balance electric grids transmitting renewable energy like wind and solar.

Under the battery project, which aims to be completed by 2031, member states were cleared to grant the following amounts of state aid:

Germany up to around 1.25 billion euros
France up to 960 million euros
Italy up to 570 million euros
Poland up to 240 million euros
Belgium up to 80 million euros
Sweden up to 50 million euros
Finland up to 30 million euros
Clean mobility is set to play an important role in the EU plan to become the first climate-neutral continent by 2050. Commission President Ursula von der Leyen is set to present on Wednesday a detailed roadmap of her Green Deal to zero-out emissions.


Another EU battery project, coordinated by Germany, is under way and is likely to seek EU approval for state aid later this month, Sefcovic said. It will probably involve 12-13 member states and around 50 companies.

“The window of opportunity for the European battery industry is open until 2021-2022,” he said. “By then we have to be clearly able to demonstrate that we can manufacture the best batteries in the world on a massive scale, because this is when we expect the ramping up of the production of electric cars and demand in Europe.”

Batteries and electric transmission account for about 40% of passenger cars’ costs and the gap in nascent European production is largely being filled by Japanese and South Korean battery makers like Panasonic, LG Chem Ltd. and Samsung SDI Co. In the U.S., Tesla has built its own battery Gigafactory to satisfy demand for the cars it produces.