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State-run Convergence Energy Services Ltd (CESL) is working on a grand challenge among nine major metros to allocate electric buses, a top executive said, as it tries to encourage green mobility in the country.

As many as 7,408 e-buses may be offered under the modified 10,000 crore Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (Fame) scheme. The government has allotted the demand aggregation of electric three-wheeler and electric bus component to CESL’s parent firm Energy Efficiency Services Ltd (EESL) and extended the marquee scheme by two years till 31 March 2024.

“For rolling out e-buses, nine metro cities having a population of more than 4 million have been shortlisted for the grand challenge, wherein there will be a differential allocation based on their rankings," CESL chief executive officer and managing director Mahua Acharya said in an interview.

These cities are Mumbai, New Delhi, Bengaluru, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat and Pune, where these buses may be offered on an operating expenses model. In this, private operators will be chosen on the basis of the lowest per-kilometre charge per bus quoted by them.

As part of the payment security mechanism, the states may also set up an escrow account for timely payment to the operators selected to run these e-buses.

“We are working on this grand challenge after EESL was nominated to do the demand aggregation of electric three-wheeler and electric bus component under Fame. We are meeting state road transport undertakings (SRTUs), city commissioners, state transportation secretaries and state ministers for designing this challenge and assessing their interests," Acharya said.

Fame is designed to support the electrification of public and shared transport and help create charging infrastructure. The scheme is an important part of the government’s strategy to reduce vehicular emissions and dependence on fossil fuel. The government has also announced a 18,100 crore production-linked incentive (PLI) scheme to make lithium-ion cells to promote e-mobility and domestic manufacturing.

“We will put out an ambitious benchmark including benefits such as carbon credits and quantify the air quality benefits, environmental value for buses and e-charging. It is an attractive proposition for states as they will be able to access subsidy through the Fame-2 scheme. The ranking in the grand challenge will decide the number of buses they will get and the subsidy quantum," Acharya added.

Some of the issues impacting the e-bus component of the scheme’s previous version from taking off include the high price of e-bus, which is as much as 2.5 times of buses having an internal combustion engine, and payment default risk by SRTUs. The earlier version failed to take off, with only 5%, or 492 crore, of the 10,000 crore allocated under its second phase spent till March, as reported by Mint earlier.

“We are working with the World Resources Institute (WRI) to design this grand challenge," added Acharya.

CESL and WRI signed a pact last Friday “to work on strategizing for India’s transition towards a net-zero emission trajectory". “Making the move to electric mobility requires a carefully planned strategy that envisions merging the transportation and energy sectors and re-envisions relationships between people and vehicles," they said in a joint statement on Friday.

“Under this partnership, WRI India will support CESL in building adaptative business models to help state governments realize their targets, including decentralizing renewable energy and improving battery storage capacities," the statement added.

The Centre has also increased the incentive for electric two-wheelers to 15,000 per KWh under Fame. CESL aims to have 200,000 two-wheeled electric vehicles (EVs) and 300,000 three-wheeled EVs across India.

As part of the plan, it will supply electric two-wheelers to Andhra Pradesh, Kerala and Goa, among others, and halve their price to about 75,000 through incentives offered under phase 2 of the Fame scheme, state government subsidies, support from EV makers and carbon credits.

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