Wheels of Change: Gearing up to meet expected growth in power demand from electric vehicles

Gearing up to meet expected growth in power demand from electric vehicles

As envisioned in the National Electric Mobility Mission Plan (NEMMP), 2020, electric vehicles (EVs) are likely to play a significant role in India’s transition to a low-carbon economy. The government is pushing for e-mobility and targeting the sale of only EVs by 2030. This has to be supported by the creation of the necessary charging infrastructure. In fact, several national and international players across sectors are keen on entering this segment. However, due to the lack of clarity on policy and regulatory treatment of such infrastructure, only a few auto and power sector companies are experimenting with setting up charging stations on a pilot basis.

Power Line presents recent policy, regulatory and industry developments related to EV charging infrastructure and its possible impact on the power sector…

Policy and plan

At the central level, the Ministry of Heavy Industries and Public Enterprises, under NEMMP 2020, seeks to enhance national security, mitigate the environmental impact of road transport vehicles and boost domestic manufacturing capabilities for the EVs. It has set an ambitious target of reaching 6 to 7 million EVs. It is promoting EVs under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME), a scheme formulated as part of NEMMP 2020. Proposed to be implemented by 2020, the scheme aims to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles. The scheme is expected to support hybrid/e-vehicle manufacturing and market development, as well as make this segment self-sustainable.

In May 2017, NITI Aayog along with the Rocky Mountain Institute released the  “India Leaps Ahead: Transformative Mobility for All” report, charting out a whole-system approach towards mobility transformation. It includes three elements – system integration, shared infrastructure development and scaled manufacturing. The report recommends actions on these elements over three time periods, 2017-19, 2020-23 and 2024-32, aligning it with NITI Aayog’s 15-year vision document. It also notes that making India’s passenger mobility shared, electric and connected can cut energy demand by 64 per cent and carbon emissions by 37 per cent.

Shared infrastructure development involves mobility-oriented development and vehicle grid integration (VGI). Requisite actions need to be taken on these two aspects such as designing regulations that enable EV supply equipment (EVSE) deployment and VGI, and empowering the Forum of Regulators (FoR) to create regulatory frameworks that make EV charging ubiquitous, affordable and a grid asset. The strategic deployment of EVs could help in integrating renewable energy into the supply mix and improving the financial viability of discoms. Further, system capabilities must be developed with a view to capture and monetise multiple EV value streams in the future.

Rapid scaling up of such a regulatory framework could ensure that renewable energy fuels all new EVs. EV charging infrastructure could act as a distributed energy resource providing both on- and off-grid benefits, besides providing ancillary grid services, including demand response and frequency regulation. Further, smart charging, bidirectionality and vehicle light-weighting (with smaller batteries involving shorter charging times) have great potential to enhance India’s electricity grid. However, the report points out that the involvement of multiple ministries and departments could hamper the progress. Other barriers include lack of EV infrastructure and no clear business case for investment in such infrastructure, lack of regulatory clarity, and the need for aligning the agendas and priorities of state and central governments for sustainable VGI. Therefore, political commitment and a clear regulatory framework are required to implement the long-term vision involving EVs.

At the state level, the Maharashtra and Karnataka governments have announced plans to come up with their own policies for setting up EV charging stations.

Regulatory framework

The Central Electricity Regulatory Commission (CERC) recently conducted a study on the legality of EV charging stations. Based on this study, the commission is framing draft guidelines on the EV charging infrastructure framework within the existing law. The regulator has apparently identified three business models for companies that wish to foray into the EV charging space as permissible under the provisions of the Electricity Act, 2003.

Clearly, the existing discoms can set up such infrastructure to sell more electricity. The state regulators could set the tariff for this service under a special/separate category. Other interested players either have to partner with these discoms under the public-private partnership franchise model or set up battery swapping shops. This restriction is due to the fact that only licensed distribution companies are allowed to sell electricity under the Electricity Act. In the case of the franchise model, there is no need for a separate licence as the company will act as an agent of the existing licensee. In the case of the third model, the battery swapping shops will not be involved in any direct sale or electricity trade as they will simply aggregate batteries, charge them and swap them with discharged batteries. Meanwhile, the FoR, which is led by the CERC, is also seeking out an adviser to study the impact of EV on the grid. In September 2017, the FoR invited bids for appointing a consultant to study the impact of EVs on grid requirements and capacity, as well as formulation of the necessary framework to enable its implementation.

Recent developments and the experience so far

So far, the majority of EVs in the country are being charged at home. However, significant charging infrastructure is being set up in a few cities. There are now 150-200 EV charging points across the country. Bengaluru has an estimated 25 charging stations under the FAME scheme. Particularly, the city has over 100 charging points set up by Mahindra Reva Electric Vehicles Private Limited, which is the only company that sells EVs in India. While the Bangalore Electricity Supply Company had plans to install two charging stations in Bengaluru under a smart grid pilot, the project was shelved in 2016 due to its unviability.

In May 2017, Nagpur became the first city with electric mass mobility when taxi aggregator Ola launched its fleet of 200 EVs including taxis, buses, e-rickshaws and autos. It has invested Rs 5 billion on EVs and charging infrastructure. As part of this, it is setting up 50 charging points across four strategic locations in Nagpur. The first of these stations also has a battery swapping facility. These charging and swapping ports are exclusively reserved for Ola’s own fleet.

In the National Capital Region (NCR), power companies have installed over three dozen EV charging stations. BSES Yamuna Power Limited has set up 31 charging ports in east and central Delhi, Tata Power Delhi Distribution Limited (Tata Power-DDL) has five stations in North Delhi, while NTPC Limited has recently set up EV charging stations at its offices in Noida and Delhi.

Charging stations are being installed in other cities as well. In August 2017, Tata Power installed its first EV charging station at Mumbai.

As per Tata Power-DDL’s research, the expected load of bringing autos, taxis and buses in the e-charging mode along with e-rickshaws will be 1,013 MW pan-Delhi. “Delhi, which is power surplus during off-peak hours and loses heavily by selling this surplus in the market at dismally low rates, can efficiently utilise this power to charge vehicles. This will reduce commercial losses on account of the sale of surplus power, thereby preventing tariff increases and curbing pollution significantly,” said Sanjay Banga, vice-president, Tata Power-DDL. In fact, according to him, there could be a reduction in power purchase costs by 8 paise-10 paise per unit in end-consumer retail tariffs.

The discom is reportedly working to implement a software for balancing the grid, according to time and requirement, to prevent abrupt changes in the electricity consumption pattern that may occur with the use of EV charging stations. To promote EVs in the city, the state regulator in its tariff order for 2017-18, (announced on August 31, 2017), introduced a flat rate of Rs 5.5 per unit for EV charging stations. It also notes that EVs can be charged from any of the metered connections and the tariff shall be charged for that relevant category.

Tata Power-DDL recently announced its plans to invest Rs 6 billion to upgrade its power transmission network and install 1,000 EV charging stations over the next five years. The discom is in discussions with the Municipal Corporation of Delhi and the Delhi Metro Rail Corporation for acquiring land for these stations. NTPC is also planning to set up more charging stations across Delhi and other cities in the near future. It is looking at creating a new business segment of EV charging points for this purpose. The Power Grid Corporation of India (Powergrid) is also exploring possibilities of installing EV charging infrastructure. Meanwhile, Bharat Heavy Electricals Limited is exploring EV manufacturing opportunities while JSW Energy recently signed an MoU with the Gujarat government to set up a Rs 40 billion EV manufacturing facility (including batteries and charging infrastructure) in the state.

In September 2017, Energy Efficiency Services Limited (EESL), on behalf of the central government, invited tenders for 10,000 EVs to be used by government departments and agencies. Separately, it has also invited tenders for 4,000 chargers including 3,000 alternate current or slow chargers and 1,000 direct current fast chargers.

The way forward

Given the considerable growth expected in the EV market, supporting charging infrastructure has to developed in tandem. It is also expected that greater adoption of EVs in India would have a considerable impact on the grid. This would require a thorough study by the regulators as proposed by the FoR and appropriate regulatory measures (including dynamic pricing) to ensure maximum utilisation of these assets for renewable energy integration and grid balancing, among other things. Once there is greater policy and regulatory clarity, investment is expected to start flowing into the segment quickly with several players ready to enter the market. The development of EV charging infrastructure will help boost power demand and improve the utilisation of existing generation capacity. Further, greater EV penetration could improve the financial viability of discoms as it would increase sales and lower power procurement costs, and ultimately, bring about a reduction in retail tariffs.