Annuity Hybrid E-Mobility (AHEM): An Emerging EV Infra Financing Model

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By – Abhijeet Sinha –  National Program Director EODB & National Highways for EV

Electric Mobility adoption is need-based! But its adoption is primarily based on two main categories of financing: ‘EV Financing’ and ‘EV Infra financing’. Being the fourth largest automobile market in the world has not come easy for India. Similarly the road to Electric Mobility adoption in the country also has faced lots of difficulties and is currently piled up with pressing challenges in both financial categories. 

Industry stakeholders admit that Indian E-Mobility sector has huge potential to capture shares of the world EV market. But also in burning need of Ease of Doing Business in ‘EV Infra financing’. ASSAR’s Ease of Doing Business division stepped into the E-mobility sector in 2018 to underwrite it with the Reform, Perform and Transform mantra of our Prime Minister Modi. National Highway for Electric Vehicle (NHEV) is an Ease of Doing Business pilot initiative to upgrade regular highways into E-Highways. NHEV has recently completed its 210 km TECH-Trial Run of India’s 1st E-Highway between Delhi and Agra on Yamuna Expressway in Dec 2020. It answered many industry questions related to business barriers in E-mobility, need of E-Highways, banking challenges, hybrid financing model, emerging procurement tools, charging station cost and allocation to investors, it’s charging infra CapEx break-even and charger’s actual utilization.  

Its known that EV is a simple technology in comparison to complex IC engines, but projected and marketed as a complex thing to adopt in day to day life; may be to avail subsidies from govt to cushion initial assembly line CapEx of EVs as it looks like govt was exclusively responsible for everything related to adoption in early days.

We have been using many battery operated golf-cart type EVs in green campuses. But following European trends, instead of focusing on institutional and captive usages, upgradation first. Indian EV industry made a premature jump to frontline retailing of EVs, where it came in direct competition with Diesel / Petrol / CNG and Hybrid vehicles; that too without sufficient charging infra in place. But disparity arising out of this wrong equivalence was thrown on the government as business barriers and difficulties to grow in this sector. The author referred to it as a reason why the Ease of Doing Business team affianced to do this pilot.   

Financing EV charging infra or projects in such volatile situations is obviously negative for NBFCs and Banks; until there are numbers and without numbers investing in charging infra was another loss making business thrown on govt as a mankind responsibility. Unknowingly, we created this deadlock and without bold reforms it seemed impossible to break it or bring Ease of Doing Business.  In our early shout-out during 2018 Govt of India, Ministry of Power clarified that there is no such license needed for setting up tomorrow’s Fuel Pumps means EV Charging Stations. It was a big bold reform from the Govt. But do people even know about it?No! 

It’s not because people aren’t interested. It’s because there is no foot-print and system to process, validate, fund and support; if actually people, companies, institutions start filing applications for setting up EV infra or Charging Stations. 

It flared up the need of a new EV Infra financing model and an immediate need to pilot it to prove its capability and competence. Annuity Hybrid E-Mobility (AHEM) did not only come as an exception in the row of financing tools. But It is also the 2nd proven model after Hybrid Annuity Model (HAM) with robust utilization dynamics and funding options. For example – “Hybrid Annuity Model (HAM) to award road projects has encouraged investments in the sector – says Moody ” was not only a news headline. But such Models like Hybrid Annuity Model (HAM) have also changed the speed of making roads and highways in India beyond 4 fold. Precisely this miracle in kilometers, we used to make 9-10 km roads per day and with innovative models like HAM; today we are making 38-40 Km roads per day. Annuity Hybrid E-Mobility (AHEM) is highly inspired from Hybrid Annuity Model (HAM) and miraculously delivers 4 key challenges of E-mobility adoption and commercialization. 

  1. Max 30 minutes for automated backup to reach breakdown EVs on this e-highway  
  2. 30% lesser upfront price of Electric Vehicle with Battery Subscription & RSA services 
  3. 30% CapEx Utilization of Charger and Charging Infrastructure at stations 
  4. 3 years breakeven period for cost spent on Station by Investors    

AHEM is best suited for Indian E-mobility market economics. Because India is India not China, Europe, America or Africa! It has its own unique ‘Economic’ structure; where PCO (phone booths) have been a rural business and getting a ‘Petrol Pump’ license is an income guarantee for the next generation. But the government has already clarified that no license needed for setting up tomorrow’s Fuel Pumps means EV Charging Stations. The reason why people aren’t expressing interest in setting up is- “the utilization of same Charging station space and electrical EVSE investments in some other business or activity turns to be far more profitable compared to a setting up a charging station with 2% to 3% utilization results and initially negative ROI with a breakeven thrown beyond 30 years.  

This new financing model minimizes dependency on govt for subsidy and funding both by converting existing traffic between two cities with ‘Charging Stations’ on connecting highways. Those stations equipped with RoadSide Assistance (RSA) competence to reach any EV in 30 km radius. They merely seek land and electric connection from state govt to set-up these stations to induct 3% EVs on route to achieve EV Charging infra CapEx break even in 36 months for their Public & Private investors and station lease holders. 

By Abhijeet Sinha – National Program Director EODB & National Highways for EV

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