Sales of electric vehicles (EVs) in India are growing exponentially, given that around 300,000 EVs were sold in calendar year 2021, registering a growth of 160 per cent compared to the previous year. EV sales are globally poised to scale up vertically in the upcoming decade on account of declining battery costs, improving performance efficiency and rising government stimulus to EVs. Consequently, increased EV adoption will reduce India’s crude oil imports, besides decarbonising the transportation segment by reducing tail-pipe emissions. The Ministry of Road Transport and Highways (MoRTH) aims to realise an EV sales penetration of 30 per cent for private cars, 70 per cent for commercial cars, 40 per cent for buses and 80 per cent for two-wheelers by 2030. In other words, every third vehicle sold from 2030 onwards is expected to be an EV. These ambitious targets indicate that India is poised for a rapid growth over the next decade in both EV sales as well as the number of EV charging stations.
The government is intent on simultaneously promoting the development of dense and robust charging infrastructure throughout India, so as to encourage consumers to adopt EVs without concerns related to charging stations. Fundamentally, the government recognises the need to prepare a comprehensive roadmap to ensure the deployment of an efficient and affordable EV charging infrastructure, which is integrated with the electricity grid as well as the transportation network. A robust charging infrastructure network catering to EVs with different battery systems and different voltages will boost the demand for EVs to a substantial extent.
Revised guidelines on charging infrastructure for EVs
In January 2022, the Ministry of Power (MoP) issued revised guidelines with the intent of channelling private investment towards EV charging infrastructure and ensuring that EVs are charged at competitive tariffs. This is the third amendment to standards and guidelines for charging infrastructure since 2018.
Eligibility criteria for installing PCSs: The new guidelines enable any entity to set up public charging stations (PCSs) conditional on their conformity to technical/safety/performance standards laid down by the MoP, the Bureau of Energy Efficiency and the Central Electricity Authority. Moreover, EV supply equipment is required to be tested by an agency or lab accredited by the National Accreditation Board for Testing and Calibration Laboratories.
The entity setting up PCSs would also have to apply for an electricity connection with the distribution company licensee, which shall extend the service in accordance with the relevant norms from the Electricity (Rights of Consumer) Rules, 2020. As per the new guidelines, these stations will be provided with connectivity within seven days of application in metro cities; 15 days from the date of application in other municipal areas; and 30 days from the date of application in rural areas.
The revised norms permit PCSs to directly obtain electricity from generation companies through the open access method. These norms also state that the PCS will also be required to pay a surcharge equivalent to the current level of cross-subsidy capped at 20 per cent, in addition to transmission and wheeling charges. Hence, PCSs are only expected to requisition electricity via open access only when it is extremely necessary, given the surplus they are expected to pay in this case.
Charging stations for long-haul and heavy-haul EVs: Moreover, the new guidelines also specify rules that are distinctly applicable to fuel charging stations charging long- and heavy-haul EVs. These fuel charging stations are mandated to have two chargers of CCS (combined charging system)/CHAdeMO (charge on the move, that is, fast charger) specifications with a capacity of 100 kW (200-750 V or higher) at a minimum.
The charging stations are also required to have appropriate liquid-cooled cables for a high speed charging facility. Additionally, they are also required to have fluid-cooled batteries so that long range EVs can swap their batteries. However, captive charging infrastructure, that is, entities or individuals with chargers for 100 per cent internal use of a company/an individual are not required to install all types of chargers.
Tariff and land provision: The tariff for electricity supply to PCSs will be a single-part tariff and will not exceed the average cost of supply until March 31, 2025. The same tariff will be applicable to battery charging stations. Also, the tariff applicable to domestic consumption will be applicable to domestic charging. There will be a separate metering arrangement for PCSs so that consumption may be recorded and billed as per the tariffs for EV charging stations.
Discoms may leverage funding from the revamped distribution sector programme for the general upstream network augmentation necessitated by the upcoming charging infrastructure in various areas.
As per the new guidelines, land available with the government or public entities will be provided to install to a government or public entity on a revenue sharing basis at the fixed rate of Re 1 per kWh.
Other policy initiatives
The Union Budget 2022-23 makes a big push towards accelerating the transition towards electric mobility. The budget details measures to introduce large-scale charging stations in cities, given the scarcity of space. The budget also elaborates that it will create special mobility zones in some areas that will have a zero-fossil fuel policy.
The government is also focused on incentivising sales and indigenous production of EVs as well as developing a supply chain infrastructure for EV auxiliary components such as batteries. For instance, the government launched a scheme called “faster adoption and manufacturing of hybrid and EVs-II (FAME-II)” with an outlay of Rs 100 billion for five years from April 1, 2019, with the objective of generating demand for EVs via subsidisation of EVs. The government has also approved a production-linked incentive (PLI) scheme worth Rs 181 billion, incentivising the manufacturing of advanced chemistry cells, with the aim of encouraging battery manufacturing in India. The government launched a new PLI scheme worth Rs 259 billion for manufacturers of automobile and automotive components, which will be disbursed over the next four years.
Some demand-side initiatives include the Ministry of Housing and Urban Affairs amendment to the Model Building Bylaws (2016), permitting the establishment of charging stations and infrastructure in private and commercial buildings. Similarly, MoRTH also announced that battery-operated vehicles will be given green licence plates and will be exempted from permit requirements.
Industry initiatives
Power major Tata Power has established an extensive network of 1,000 chargers across 200 cities. Public sector major Energy Efficiency Services Limited has installed 396 charging stations as of December 2021.
Discoms across India are also aiming to diversify from the distribution business by investing in the establishment of charging stations. For instance, the Kerala State Electricity Board inaugurated 100 charging stations in the state in December 2021. In a similar vein, the Karnataka electricity supply companies have signed an MoU in February 2022 with Ather Energy to establish 1,000 fast charging points. Delhi discoms, BSES and Tata Power DDL also plan to install around 3,000 EV charging stations in the city over the next two to three years, in collaboration with ETO Motors.
Meanwhile, other industry players are also ramping up installations. Mumbai-based start-up Magenta has begun installing streetlamp-integrated EV charging stations at railway stations and is targeting a total of 4,500 chargers across petrol stations, hotels and residences throughout the country. Ather Energy is looking to set up chargers in 500 locations by March. In December 2021, Ola announced its plans to install 4,000 hyper-chargers at fuel outlets owned by Bharat Petroleum Corporation Limited (BPCL) as well as in residential households by 2022. Additionally, BPCL intends to set up 3,000 CCS EV chargers. Other oil marketing companies such as Indian Oil Corporation Limited and
Hindustan Petroleum Corporation Limited plan to set up 10,000 charging stations and 5,000 charging stations, respectively, over the next five years.
Issues and concerns
Increasing electricity supply to the same extent as EVs and maintaining grid stability with the introduction of EVs in the electricity mix are two challenges that confront the power sector. Several experts expect that there will be a lot of volatility during peak hours on account of EV charging. For instance, when EVs are charged, the current drawn from transformers and the voltage drop increases grid volatility.
From a financial point of view, the upfront capital cost of EVs is higher than the capital cost of fossil fuel-based vehicles, although EVs may be more viable over the lifetime. Hence, there are relatively few buyers in India that are interested in replacing or buying an EV, over an internal combustion engine-based vehicle.
Other points of concern include lack of collaboration among Indian EV brands to develop interoperable standards for EV supply equipment, so that charging stations can be uniform. Additionally, the patchwork of fiscal incentives and regulations across different states means that there is a lot of reluctance and ignorance among buyers regarding EVs. Hence, sales have not yet taken off in India as expected.
The upcoming wave of investment in EVs and their charging infrastructure will provide a transformational boost in ensuring India’s transition to a more carbon-neutral future. The reduction in emissions and oil imports will also be accompanied by a corresponding increase in electricity demand for EV charging. Hence, it is imperative to direct funding and offer policy guidance to increase India’s electricity supply as well as charging infrastructure so as to meet the emerging demand.