CESL Discovers Prices for India’s Largest E-bus Tender

Convergence Energy Services Limited (CESL) has shared the prices discovered for the biggest non-subsidized demand for 6465 electric buses. The unified tender makes up demand for electric buses from the six Indian states & UTs of Delhi, Telangana, Haryana, Surat (Gujarat), Kerala and Arunachal Pradesh. CESL is a wholly owned subsidiary of Energy Efficiency Services Limited (EESL).

This is the first tender under the National Electric Bus Programme (NEBP), for which, the lowest price has been discovered for a 12-meter bus (intra-city) at Rs. 54.3/km, and 12-meter bus (inter-city) at Rs. 39.8/km. The price discovered for a 9-meter bus is Rs. 54.46/km while for a 7-meter bus, it is Rs. 61.92/km. The prices do not  entail a subsidy. They are also 29% lower than the operation costs for a diesel bus.

The National Electric Bus Programme, which aims to effect the deployment of 50,000 e-buses across the country, is envisioned to aggregate demand, support state transport undertakings to integrate electric buses into their operations, and work with states and DISCOMs alike to support the creation of charging infrastructure at their depots.

This tender, valued at over Rs. 30,800 crores, will pave the way for electric buses to be deployed within city limits as well as on intercity routes. On a single charge, the intercity routes will be able to achieve 325 kms. This contract will benefit from terms and conditions standardized through the Grand Challenge process and will be eligible to gain from a payment security fund currently under consideration by the Government of India.

CESL was mandated by NITI Aayog to implement a national programme of 50,000 eBuses. The mandate came after CESL managed a ten-month long process that gave rise to a unified tender of 5450 e-buses – The Grand Challenge with homogenized terms and conditions under the FAME-II subsidy programme and discovered prices that were 27% and 25% lower than diesel and CNG respectively, without considering the subsidy. The process of homogenization started in July 2021, following a Gazette of India notification dated 11^th June 2021 issued by the Ministry of Heavy Industries.

The buses will be operational for nearly 5718 million kilometers over a period of twelve years, in the process, helping save 1842 million liters of fossil fuel, consequently with 4.62 million tonnes of CO₂e from tailpipe emissions. As per the provisions of the Gross Cost Contract (GCC) model, the private operator brings the bus and operates it for a period of 10 and 12 years against pre-determined conditions as set out in the tender. State Transmission Utilities, on their part, pay a fee for the bus service.

Announcing the discovered prices, Mahua Acharya, MD & CEO, CESL said “As always, I really appreciate the participation of so many players in this tender, and the leadership shown by the states to deploy electric buses. This is a remarkable step in helping to transform our state transport authorities and build out a new market for electric mobility in India. Of course, a tender such as this is also witness to the commitment of the country in achieving the goals set by the Honorable Prime Minister to mitigate climate change and better the quality of life of our citizens.”

The realized prices have established a benchmark for public transport. The low price point may prove to be encouraging for the smaller cities to embrace electric vehicles. The price discovery represents electric mobility as a “service”, a comparatively new and emerging business model that makes the adoption of electric buses affordable for state transport undertakings.

Achieving low bidding rates

As the world’s largest e-bus procurement exercise, the development of the tender necessitated consultations between transit agencies- which had their own set of specifications, e-bus manufacturers, financiers, Ministries as well as government agencies. For the tender, a demand aggregation model was employed to make the e-buses cheaper than ICE counterparts. Given that it was a large volume tender, it helped lower the bidding costs among other factors, such as setting a base electricity tariff in order to make sure that a standard bidding rate was established- which was the answer to the problem of varied rates being quoted by different operators.

The Grand Challenge initiative has helped achieve a 30% reduction in bidding rates.

 In October last year, CESL established a first-of-its-kind solar-powered charging plaza for electric vehicles in the Ladakh region.