CESL tender discovers 29% cheaper price for electric buses vs diesel ones

Convergence Energy Services Limited (CESL), a wholly-owned subsidiary of Energy Efficiency Services Limited (EESL), on Tuesday announced its prices discovered for the biggest non-subsidised demand for 6465 electric buses. Price discovery is the process which determines market prices, conventionally through interactions between the buyer and the seller.

CESL was mandated by NITI Aayog under the then CEO, Amitabh Kant, to implement a national programme of 50,000 eBuses. It was a ten-month long process that gave rise to a unified tender of 5450 e-buses, called ‘The Grand Challenge.’ with homogenised terms and conditions under the FAME-II subsidy programme. CESL has managed to discover prices that are 27 and 25 per cent lower than diesel and CNG, respectively, without considering the subsidy.

The lowest price discovered for a 12-meter bus (intra-city) is Rs. 54.3/km, & 12-meter bus (inter-city) is Rs. 39.8/km while for a 9-meter bus, Rs. 54.46/km is the price discovered. The prices do not include a subsidy and are 29 per cent lower than what it costs to operate diesel buses.

This unified tender, the company said, constitutes demand for electric buses from six Indian states and Union Territories – Delhi, Telangana, Haryana, Surat (Gujarat), Kerala & Arunachal Pradesh. “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,” Mahua Acharya, MD & CEO, CESL said. She added that 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.

This is the first tender under the National Electric Bus Programme (NEBP) launched at a value of over Rs 30,800 crores and CESL has taken up the baton to deploy electric buses both within city limits and on intercity routes, with the latter being able to do 325 kms on a single charge. National Electric Bus Programme aims to affect the deployment of 50,000 e-buses across the country, and 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.

Prices realised set a benchmark for public transport, the price point for which may encourage even the smaller cities to adopt electric vehicles, she said. This price discovery represents electric mobility as a “service”, a relatively new and emerging business model that makes it affordable for state transport undertakings to adopt electric buses.

“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 said.

The buses are expected to operate around 5718 million kilometers over twelve years, saving 1842 million liters of fossil fuel, according to CESL. This will result in 4.62 million tonnes of CO2e from tailpipe emissions, a major step towards mitigating climate change. Under 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. STUs on their part pay a fee for the bus service. “This tender is a part of the central government’s vision to deploy 50,000 electric buses on the roads in the next few years, whilst strengthening, modernizing and greening public transport in India,” Acharya added.

Also read: Ola sold 25,000 electric scooters in Dec 2022, grabs over 30% market share: CEO

Also read: SRM Technologies CEO talks about what lies ahead for the industry