India’s automotive market and the global energy shock - Issue #13
News Of The Week
Electric mobility, first.
Ola is back in the headlines. Last week, it said it had developed a Lithium Ion cell in-house.
Company founder Bhavish Aggarwal also went on Twitter to say the company was going to “build the sportiest car ever built in India!”
With Ola’s scooters still facing complaints from users, the announcement resulted in tired sighs from renewable industry veterans.
The week also saw a cautionary report from The Bastion, one of India’s younger environmental journalism startups. Talking about the impact of electric mobility on automotive supply chains, it looked at the labour costs of India moving from internal combustion engines to EVs and cites a CEEW study as saying that if the share of EVs in India’s automotive market rises to 30%, the jobs supported by the sector will fall by 23-25%
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This, says the report, is another ‘just transition’ India needs to discuss.
Elsewhere in the sector, there was cheerier news. According to Bloomberg, India is doing better than China at taking swappable batteries to the market. “Across the Indian capital’s dense localities, battery swapping stations are becoming a frequent sight at local provision stores and small retail outlets,” says the report, but cautions that battery swapping for cars will be a stiffer task.
From EVs to renewable energy
India is changing how it awards renewable energy contracts. The current approach of electronic reverse auctions for renewable energy projects is being junked. Introduced to boost competition, as Moneycontrol explained, these allowed bidders to see rivals’ bids in real-time and gave them an option to revise bids, unlike closed auctions where only one bid is submitted.
However, this format had been criticised by RE players, who said it led to intense competition and a steep fall in tariffs that some projects were left unviable. The new approach, said the portal, might be “state-specific” bids. Further details are awaited.
In other news, the juggernaut of Adani Ports continues to roll.
The company’s first port complex came up in 1998 -- at Mundra (Gujarat). In the next fifteen years, it commissioned two more ports -- Dahej (2010) and Hazira (2012), both in Gujarat.
After that, however, its growth has been quicksilver. In 2013 came Mormugoa (Goa) and Vizag (Andhra Pradesh) – this deal ran into trouble in 2017 and fell through in 2022. In 2014 came Dhamra (Odisha), bought from L&T and Tata. In 2015, the group set up Tuna Tekra (Gujarat), next to state-owned Kandla Port, and bought Katupalli (Tamil Nadu) from L&T.
In 2018 came Ennore (Tamil Nadu). In 2019, Vizhingam (Kerala). In 2020, the company bought Krishnapatnam (Andhra Pradesh) from its promoters. In 2021, it purchased Dighi port through India’s bankruptcy proceedings, Gangavaram (Andhra Pradesh) from its promoters, and the West Coast Terminal in Colombo (Sri Lanka).
Now comes news of another international acquisition. Along with Israel’s Gadot group, Adani Ports has acquired the country’s state-owned port of Haifa.
That is 15 ports in 25 years. That number gets even more dramatic when you look at the last ten years -- 12 of these ports have come up since 2013, making Adani India’s largest private port operator. A scarcely believable pace of growth.
Adani is not the only group close to the ruling dispensation expanding outside India. Last week, Sterlite Power won two transmission projects in Brazil.
The Global Energy Shock
The previous instalment of this newsletter had alluded to the energy crisis in Japan.
Last week came news that China is hurting as well. In its report about Zhejiang, the province abutting Shanghai, South China Morning Post (SCMP) wrote: “One of China’s major manufacturing hubs has restricted power usage for some factories amid a stifling heatwave and rising coal prices, raising concerns over a potential large-scale power outage that could further debilitate the struggling sector.”
The consequences are striking. Unwilling to risk another avoid outage like last year, China is thinking of ending its two-year unofficial ban on Australian coal. The ban had been imposed, wrote SCMP, after Canberra barred “Huawei Technologies Co. from building a 5G network, and after then-Prime Minister Scott Morrison led calls for an independent probe into the origins of the coronavirus”.
In the meantime, temperatures are spiking across Europe.
Elsewhere in the world, arbitrage is underway. With Russia selling fuel at discounted prices after international sanctions, Saudi Arabia has more than doubled its purchases of Russian fuel oil. The country, as Reuters reported, is using Russian supplies to feed its “power stations to meet summer cooling demand and free up the kingdom’s crude for export”.
As for Russia, it is now planning to launch a national oil benchmark to blunt western sanctions.
Fatih Birol squelched any lingering reasons for hope if all this wasn’t depressing enough. The world might not have seen the worst of this energy crisis yet, he said in Sydney.
Climate Podcast of the Week
Climate Long Reads
It has been a spectacular week in Sri Lanka. From The Hindu’s Meera Srinivasan, this long-read on Janatha Aragalaya, the movement that booted out the Rajapaksas.
While The Hindu looks at the popular upsurge, the Financial Times dwelt on the polycrisis which resulted in the Rajapaksas’ ouster.
Book of the Week
We don’t have a book recco this week because the Financial Times has reviewed four new books on climate change. All of them look rather good.