The emerging electric vehicle (EV) market is expected to impact both the road transportation and power sectors significantly. On the one hand, increasing penetration of EVs will reduce the heavy dependence of the transport sector on fuel imports, while on the other, the charging requirements of EVs will push the electricity demand, thus impacting grid operations. The latter will be a challenge as the load of EVs is non-linear and can cause voltage deviations, harmonic distortions and overloading, and would require smarter solutions. In light of this, smart chargers are being increasingly deployed, with a focus on demand management between EVs and substations.
Despite efforts to increase EV adoption, the fundamental challenges remain. These include the high cost of EVs, lack of adequate publicly accessible chargers, anxiety about their range and the high charging time involved. However, with advancements in battery technology and policy support from the government, the adoption of EVs is expected to increase in the near future.
A quick look at the opportunities, issues and challenges in the Indian e-mobility and charging space…
Background and current status
A major policy initiative for EVs came in May 2017 when the goods and services tax (GST) rate on EVs was reduced to 12 per cent. However, it was not low enough to incentivise consumers to purchase EVs. With the industry repeatedly voicing its concerns, the GST rate now stands at 5 per cent. In spite of all these incentives, EV uptake in India has not picked up as desired. A key reason for the slow uptake has been the lack of a robust supply chain, which is needed to gain consumer confidence. An emerging viewpoint is that the supply-side uptake of charging infrastructure should come first to push up EV uptake. Only then the proverbial chicken-and-egg-first debate with respect to EVs might finally come to an end. Industry experts believe it is ironic that most of the regulations and policy modifications revolve only around four-wheeler EVs, which have witnessed the least uptake. However, the electric bus segment has a different story to tell.
Many state governments and transport authorities have invited bids for the supply of electric buses under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme, and some of them have also started FAME, operating electric buses on fixed routes. Apart from this, the material handling equipment segment is witnessing the entry of global EV players that manufacture electric forklifts, reach trucks, electric stackers, tow trucks and hand pallet trucks. The advantage here is that these vehicles will remain within the warehouse, where the availability of charging infrastructure will not be an issue.
Impact of EVs on electricity demand
ICRA has made an assessment of the increase in power demand at different EV penetration levels across vehicle segments. It has estimated a gradual increase in the share of EVs in the total vehicle sales by the year 2030. The share in different segments is expected to be in the range of 5-20 per cent in 2021 and 12.5-50 per cent by 2030. Further, it is to be noted that energy consumption per km will vary across vehicle segments. Certainly, two-wheelers are expected to have the lowest electricity consumption while commercial vehicles will have the highest share. Based on these expectations, it is estimated that the incremental growth in the EV segment to meet the electricity demand will vary between 2 per cent and 5 per cent, depending on the penetration level of various vehicle segments. With this, the additional renewable energy capacity required is estimated to increase by 7,000 MW for every 10 per cent increase in EV penetration.
Impact of EVs on grid operations
Greater adoption of EVs will result in an increase in evening peak loads as vehicle users are expected to plug in their EVs when they return home from work. While the impact may not be high at overall grid level, the demand could be higher at the substation level in residential areas. If not managed properly, the peak load increase due to EV charging can impact local transformers, which have a low capacity. To meet this high peak load demand, grid operators will have to upgrade transformer and substation capacities at the distribution level. The investment required for an infrastructure upgradation will depend on the EV penetration level.
Discoms can influence user behaviour by promoting the use of charging infrastructure during off-peak hours through time-of-day pricing. In fact, discoms can deploy alternative solutions such as storage units at the distribution transformer level to charge and discharge during off-peak and peak hours respectively. However, this will require an improvement in the cost economics of energy storage. Among other ways to minimise the impact of EV charging on the grid is to set up public chargers near commercial establishments and depot chargers for electric buses.
The impact of EVs on the grid’s load profile can be minimised by managing charging patterns to coincide with low demand periods. With the increasing share of EVs in overall vehicle sales, the collective capacity of EV batteries could provide a balancing resource for the grid, especially given the rising share of renewables in the overall generation. To enable such a scenario, it is critical to keep transaction costs low. This would also mean the development of a robust communications infrastructure between the vehicle and the charger. From the grid operators’ perspective, high capacity public chargers can be better managed since they are likely to be used continuously, unlike residential home chargers.
In sum, large-scale introduction of EVs is likely to have a modest impact on overall electricity demand, though the impact on peak demand and individual substations could be more severe. However, a large part of the demand is expected to come in the evening or at night when there is limited availability of renewable energy, and this could increase the offtake of thermal power, thereby increasing the carbon footprint. This is an extreme scenario as with time the use of storage will increase and the cost of storage technologies will decline. The need of the hour is to design appropriate pricing mechanisms to ensure grid stability, while maintaining a minimum carbon footprint.
Opportunities for utilities
EVs will provide a growth opportunity for generation and distribution utilities. For distribution utilities, the consumer and the regulated asset base will increase substantially. The EV segment will also open up new revenue streams for utilities in the form of charging stations and related metering products. Moreover, EVs will facilitate the integration of intermittent renewable energy generation by offering flexible demand-side management.
In the long run, when EVs become capable of supporting bidirectional charging (grid-to-vehicle and vehicle-to-grid), utilities can encourage EV owners to charge their vehicles from intermittent sources such as solar and wind during periods of low demand from other segments. Further, energy stored in the vehicle battery can be used to meet the electricity demand of their houses or sold back to the grid during times of peak load. This scenario is feasible, though it does seem difficult at the moment, considering that the segment is still at a nascent stage.
Based on presentations by Manuj Khurana, Founder and CEO, NewMo; Jasmeet Khurana, Manager, REmobility, World Business Council for Sustainable Development; and Sabyasachi Majumdar, Senior Vice-President and Group Head, ICRA at a recent conference