Electric vehicles will have mixed impact on imports: World Bank

Transport:  Notwithstanding the avoided fuel consumption in the longer run, the electric vehicle (EV) initiative itself is import intensive, a World Bank study on EVs has revealed.

The World Bank conducted the study as technical assistance to the Gross National Happiness Commission (GNHC), which had been asked by the Cabinet to undertake the task.

The study on scenarios, implications and the economic impact of electric vehicles stated that because the vehicles and a large part of the charging infrastructure will have to be imported, it is “import intensive”. On the other hand, avoided fuel consumption will reduce the demand for fuel imports in the longer run and have a positive impact on the trade balance.

“The EV initiative and resulting increase in EVs in Bhutan will have a mixed impact on imports,” the report stated.

Should Bhutan replace 245 vehicles with EVs annually, the report states that annual avoided fuel imports in 2027 will be about 5.1 percent of total 2012 fuel imports.

Presenting a “super high EV uptake scenario,” wherein each year 1,022 EVs replace fuel vehicles, the avoided fuel consumption by 2027 is estimated to be 38 percent of total fuel imports in 2012.

If the EV uptake scenario is as low as 79 EVs a year, the avoided fuel consumption is a meager 1.57 percent of fuel imports in 2012.

Bhutan imported fuel worth Nu 6.2 billion in 2012. Majority of fuel imports pertain to diesel mostly used in the hydropower sector.

“The avoided fuel imports will gradually increase in value with the rising number of EVs in the country,” the report stated. “Most of the avoided fuel imports will come from the EVs in the taxi segment.”

EV taxis will need fast charging during the day to be able to provide normal services. To provide fast charging for taxis, the world bank studied the occupancy of the chargers.

“A good starting point for providing fast chargers is having 20 taxis per single charger,” it stated.

To prevent high investment costs and low occupancy, the use of taxi fast chargers should be spread out over the day. A mobile phone app as a planning and reservation tool could be used for this purpose, it is recommended.

In the short term, the World Bank stated that while demand for electricity is increasing for general purposes, the charging infrastructure will add to the demand.

The uptake of EVs might require an upgrade of the distribution grid because of the additional EV loads.

The study also suggests that energy losses in transport and transforming stations will increase as a result of the growing volume.

“EVs are a new source of power demand, and this demand can be influenced with intelligent communication between grid and vehicle. To be able to capture this possibility, IT systems for smart grids need to be in place.”

However, over the next few years, energy production in Bhutan will increase significantly with the delivery of the country’s hydropower projects, so the extra energy consumption for EVs will in general not have an impact.

The report however states that total cost of ownership of EVs over fuel driven vehicles is the most deterrent factor. When the total costs of ownership appears at par or lower than other vehicles, a high uptake scenario is expected to commence. In other words, to encourage consumers to opt for EVs, buyers will have to be financially motivated. For this to materialise, as per the report, there ought to be a 10 percent reduction in upfront cost.

The World Bank’s report states that for taxis, switching to EV is more financially viable, but technically challenging.

World Bank’s analysis of the ownership cost reveals those fuel driven vehicles are more favourable than EVs even with current tax incentives rendered to encourage EV uptake. However, this will also depend on the annual mileage.

For the sake of comparison, a Hyundai i20 was chosen because it is relatively close to the Nissan Leaf. Assuming the mileage of 10,000km a year and fuel economy of 15km a litre, the study revealed that the Hyundai i20 is still favourable over a period of less than five years. But if stretched over a period of more than eight years, the Nissan Leaf becomes the more favourable option. That is excluding the intangible benefits EVs bring to the environment.

Only a part the World Bank’s study was made available to this paper, when it first wrote on the EV policy. The whole report was provided only recently.

Tshering Dorji

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply