Natural gas vehicles are likely to account for 50% of new three- and four-wheeler sales by 2030, a study by the Indian arm of Japanese consulting firm Nomura Research Institute (NRI) has found. The number of natural gas vehicles in India is expected to shoot up to 33 million in 2030 from 3.3 million in 2019—a 900% rise, added the study called ‘Transforming Mobility Through Natural Gas’.
A robust network of compressed natural gas (CNG) and liquefied natural gas (LNG) will play a huge role in working this transformation, the study said.
“The implementation of BS-VI emission norms from April 1, 2020, will increase price differential between CNG and diesel vehicles, making CNG vehicles more attractive,” the study said. The CNG infrastructure is the main driver for CNG vehicle demand, which has led to original equipment manufacturers increasingly offering CNG variants in passenger, commercial and goods vehicle segments. The study said that by 2030 India is likely to have 15,000 CNG stations and 1,500 LNG stations. The CNG retro fitment technology can also be leveraged to convert existing vehicles running on conventional fuels, the study found.
According to the study, this will help seven states where natural gas supply is set to increase after the 10th round of the City Gas Distribution. These states account for 55% of total vehicle sales in the country as of 2018. “After the 9th and 10th round [of City Gas Distribution], CGD infrastructure will cover 52% area (of vehicle penetration) and 72% population and will make natural gas accessible across the country,” the study said.
“NGVs (natural gas vehicles) can play a big role in transforming mobility in India, as an automobile fuel, natural gas is a proven technology in terms of providing better air quality, sustainability and eco-friendliness,” Ashim Sharma, partner and group head, NRI Consulting & Solutions India, said.
He adds that a favourable policy is required for promotion of natural gas vehicles through development of CNG infrastructure to increase customer acceptance and provide cost competitiveness.
The primary energy consumption in India is largely dependent on coal and imported crude oil. The transport sector is one of the major contributors to the crude oil burden as it makes up around 53% of demand of petroleum products, the study said. “The existing volume of oil import is posing a monetary as well as a strategic burden on the Indian economy leading to an imminent need to reduce import dependence,” it said.
The study further found that cost competitiveness, infrastructure development and domestic manufacturing will make LNG a promising alternative to fuels used in long-haul trucks and intercity buses.
According to Nomura, upcoming LNG terminals will bring natural gas supply to underserved states, while LNG infra on the major highways is needed for LNG adoption. “The increase in LNG production and export capacity, along with flexible contracts will lead to increased competition among LNG suppliers, which will make natural gas prices attractive for the end-consumers in the short term,” it said.
Nomura also predicted that the demand push resulting from countrywide infrastructure will incentivise OEMs to launch dedicated NGV platforms leading to better economies of scale and efficient products.
“Localisation of NGV components such as LNG cryogenic cylinders and certain CNG powertrain components will reduce the acquisition cost for the customer boosting their TCO (total cost of ownership) savings,” it says.
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