Full Throttle: Investments and interest pick up in EVs and charging infrastructure

Investments and interest pick up in EVs and charging infrastructure

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.