“NGV market has the potential to create new job opportunities, help small and large businesses reduce costs of operations and the country achieve Forex savings”: Nomura Research Institute

India‘s bio-CNG generation potential, once fully realized, can meet the current natural gas demand of the country and can power 54 lakh additional vehicles

Mumbai, 26th May 2022: With fuel prices soaring and electric vehicles becoming prohibitively expensive for most Indians, vehicles that run on compressed natural gas could be considered as a welcome relief and alternate fuel for mobility. A recent report by NRI (Nomura Research Institute) Consulting & Solutions titled as Path to clean mobility: Increasing penetration of NGVs in India released at the Messe Frankfurt’s NGV India Summit, 2022 , highlights some of the major trends across the Natural Gas Vehicle (NGV) ecosystem that are disrupting the automotive industry.

The report states that, with increasing focus on blue hydrogen as a bridging solution, Natural Gas can play a key role in transition towards hydrogen economy. It further added that the expansion of the CGD (City Gas Distribution) network and increasing number of CNG stations is expected to encourage the proliferation of NGVs.

With increased differential TCO (total cost of ownership) benefits compared to other fuels, CNG is gaining more prominence among consumer preference post BS VI. The technology is now well established in India with major OEMs concentrating to bring in a range cost efficient and fuel efficient CNG variants.

Megatrends in NGV Space:

Increasing NGV Penetration

5.3% growth rate in the no. of CNG vehicles from March ’18 –March’ 22

Improving Fuel Infrastructure

CNG fuelling stations growing at a rate of 32% from March ’18-March ’22

Improved Customer preference for CNG

Total Cost of Ownership of NGV is better compared to Diesel and Petrol

Increasing focus of OEMs on NGVs

New CNG Models launched across Passenger Vehicles & Commercial Vehicle segments

Upcoming alternative sources of CNG

Bio-CNG plants that are being set up can act as alternative sources of CNG

Supporting Regulatory environment

Favourable regulations and policies to accommodate growth of NGV segment

However, the report underlined the following challenges too.

Availability of domestic natural gas
The domestic production of natural gas is much lesser than the reserves, investments in exploration & production are needed
Increasing gas prices leading to unfavourable CGD economics
Increase in CNG prices and greater imports will make the economics unfavourable for CGD players and impact network expansion

Ashim Sharma, Senior Partner & Group Head, NRI Consulting & Solutions, said, “The immense volume and favourable conditions of the Indian automobile market give an opportunity to promote widespread adoption of NGVs in India. However, higher gas prices will exacerbate the CGD industries’ already unfavourable economics, limiting network expansion and negatively impacting consumer experience. The government, industry, and CGD companies must all work together for India’s NGV market to thrive in the future.”

The study laid down the following set of solutions to deal with these challenges:

Boosting NGV adoption through incentives and infrastructure development will help in establishing economies of scale in manufacturing and hence, reduce costs
Use of composite light-weight materials in CNG components will help in reducing the vehicle weight
Type IV tanks can be used to reduce the vehicle weight

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