EV Impact

Regulatory and techno-economic considerations

Electric vehicles (EVs) are expected to come up in a big way and play a vital role in mitigating environmental degradation in the coming years. The government is promoting the use and manufacturing of EVs in the country under its National Electric Mobility Mission Plan (NEMMP) 2020 and the FAME-India (Faster Adoption and Manufacturing of [Hybrid &] Electric Vehicles in India) scheme. However, catering to EVs in the electricity grid requires deliberations on the kind of tariff structure and charging infrastructure needed. Besides, understanding the load impact of EVs on the grid would be useful in handling contingencies.

The Forum of Regulators (FoR) recently published a study report on assessing the techno-economic impact of large-scale penetration of EVs on the grid and evolving an appropriate regulatory framework for its roll-out. A summary of the key findings and recommendations of the report…

International experience

World over, the EV market is growing rapidly and discoms/regulators are taking proactive measures to support its adoption. Discoms have built an extensive network of EV charging stations and implemented programmes to minimise the impact of EVs on the grid. The key lessons abstracted from the implementation of EVs are as under:

  • Substantial fiscal incentives are the most important driver of EV uptake. However, these need to be supplemented with the creation of consumer awareness.
  • Availability of charging infrastructure is another prerequisite for electric mobility because it helps overcome range anxiety. Countries with dense public charging infrastructure have higher EV market shares.
  • Discoms have a key role to play in developing charging infrastructure and establishing clear pricing policies for charging.
  • Regulators in regulated electricity markets have directed or mandated distribution companies to invest in EV charging infrastructure.
  • Public-private partnerships have been successful in deploying infrastructure, supplementing consumer awareness efforts and providing independent incentives to consumers.

Technical impact of EVs on the grid

The EV load is non-linear in nature and can cause harmonic distortion, direct current offset, phase imbalance and voltage deviations in the distribution network. However, at the national grid level, the impact of approximately 5,000 MW of EV-related additional load that is expected to come into the system, is expected to be negligible.

The FoR study uses the Matlab/Simulink platform to analyse the effect of battery charging on different feeder systems. Based on the EV charging profiles considered in the simulations, a baseline 50 per cent loaded commercial feeder can safely absorb up to 20 per cent of additional EV load from fast charging. Further, residential feeders can safely handle a ratio of 60 per cent to 40 per cent from residential load and fast-charging EV load respectively. On the other hand, the peak coincident charging scenario showed that a loading of around 20 per cent from fast chargers should be the threshold.

Legal aspects and possible business models

As per the Electricity Act, 2003, the provision of public EV charging service to users amounts to distribution/supply of electricity. Hence, allowing EV charging businesses to resell the electricity without specific licensing arrangements would require specific amendments to the act.

Meanwhile, with regard to the models for EV charging stations, in the current legal provisions, the report suggests three business models. These are distribution licensee-owned EV charging infrastructure, distribution licensee-franchised EV charging infrastructure, and privately owned battery swapping stations.

Tariff impact of investments in EV charging infrastructure

As EV penetration in India requires a substantial boost through the development of EV charging infrastructure, the report estimates the tariff impact of distribution licensees’ investment through two scenarios. These are NEMMP targets (and corresponding EV charging infrastructure requirements) and a more aggressive target termed as NEMMP+. The latter assumes an aggressive growth in electric public transportation modes, specifically buses, as per the Ministry of Power.

The tariff impact scenario includes two options: investments made in the EV charging infrastructure socialised across all electricity consumers in the country and investments made in the EV charging infrastructure recovered from only EV users. It is evident that the entire investment in EV charging stations socialised to the entire consumer base in the country has a very low impact on retail electricity tariffs. In the case of NEMMP low- and high-growth scenarios, the tariff impact is as low as Re 0.07 per kWh to Re 0.10 per kWh respectively. In the case of the NEMMP+ scenario, the low- and high-growth tariff impact is Re 0.13 per kWh to Re 0.40 per kWh respectively. However, the tariff impact would increase substantially when it is apportioned to only EV users.

Apart from this, the report suggests that by promoting night-time charging, the fixed charges or capex investments paid by the utility to generators can be capitalised by offering aggressive time-of-day (ToD) tariffs.

Recommendations

The key recommendations put forth in the report are as follows:

  • Regulators to allow pass-through of investments made in EV charging infrastructure by the distribution licensees in tariffs.
  • Create a simplified framework for franchise agreements between the distribution licensees and private sector/interested public sector undertakings/associations for setting up public charging infrastructure.
  • Allow distribution licensees to appoint multiple and non-exclusive franchisees within their area of supply for setting up public charging infrastructure.
  • Create a new tariff category for EVs by allowing the recovery of the incremental cost of infrastructure through wheeling charges over and above the average cost of service.
  • Allow a special ToD structure for EV charging infrastructure, accounting for the use of backed-down assets during the night-time.
  • Allow open access to EV charging infrastructure aggregators without a cross-subsidy surcharge. Also, allow banking of renewable energy generation to promote reduced tariffs.
  • In order to encourage the use of renewable energy to meet the demand created by EVs, either directly or by way of substitution, design an appropriate incentive mechanism for such consumption.

Net, net, for the successful and smooth adoption of EVs in the country, it is necessary to ensure that a well-thought-out policy and regulatory framework and an attractive tariff structure is implemented for charging EVs.

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