India’s market for electric vehicles (EVs), as well as their charging infrastructure, is rapidly evolving and expanding. As per the dashboard of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME)-II scheme, around 0.8 million EVs have been sold in the country, as of January 2023. Charging infrastructure development is gaining momentum, driven by central government programmes, particularly the FAME scheme, as well as initiatives by public and private players, including oil marketing companies. Ongoing government tenders, clarity on EV charging regulations and delicensing of EV charging are expected to further increase public charging point density in India in the near future.
Growth drivers
Rising fuel prices and the attractive total cost of ownership of EVs are resulting in a switch to EVs. The rise in awareness regarding tail pipe emissions is also making end users seek cleaner transportation alternatives. Moreover, supportive policies and regulations are driving the demand for EVs. The government has set a target of achieving 30 per cent EV sales penetration by 2030. To help meet this ambitious target, the Department of Heavy Industries launched the FAME India scheme in 2015.
Phase II of FAME has been under implementation since April 2019, with budgetary support of Rs 100 billion. It is meant to incentivise demand for EVs by providing upfront subsidies and creating EV charging infrastructure. One million electric two-wheelers, 500,000 electric three-wheelers, 55,000 electric cars and 7,090 electric buses are planned to be supported under FAME-II, through subsidies. An allocation of Rs 10 billion has also been made under FAME-II for the provision of EV charging stations. However, a large portion of the funds allocated for public charging infrastructure remains underutilised. Under the two phases of FAME, a total of 562 charging stations have been installed as of December 7, 2022 (479 under FAME-I and 83 under FAME-II). The Ministry of Heavy Industries had sanctioned 520 charging stations under Phase I, and 2,877 charging stations across 68 cities in Phase II.
State governments are also taking active steps to increase the EV charging network in their states by providing attractive incentives in the form of capital subsidies and 100 per cent reimbursement of the state goods and services tax. So far, 18 states – Andhra Pradesh, Delhi, Karnataka, Kerala, Maharashtra, Tamil Nadu, Telangana, Haryana, Uttar Pradesh, Madhya Pradesh, Odisha, Rajasthan, Gujarat, Assam, Goa, Meghalaya, West Bengal and Uttarakhand – have either approved, notified or formulated dedicated EV policies. States such as Haryana, Kerala, Madhya Pradesh and Andhra Pradesh provide attractive capital subsidies for deployment of fast and slow EV chargers. Meanwhile, Delhi and Maharashtra are favourable locations for installing of private charging due to the availability of additional state subsidies. Besides these incentives, some state electricity regulatory commissions have announced tariff for EV charging as a separate category in their tariff orders.
Market trends
EV sales have grown considerably over the years – from 56,399 in 2016-17 to 428,213 in 2021-22, recording a compound annual growth rate of nearly 50 per cent. As per the FAME-II dashboard (accessed on January 13, 2023), the overall number of EVs sold in the country has reached 813,607. Meanwhile, the required EV charging infrastructure to support the EVs is still lacking. As of August 2022, there are a total of 2,826 operational public charging stations (PCSs) in the country. In terms of sales, 17,520 units of EV chargers were sold in the country, aggregating to a capacity of 201.5 MW, in 2021, as per data from Customized Energy Solutions. This includes chargers supplied by EV original equipment manufacturers (OEMs) and procurement by public sector undertakings (PSUs), commercial fleet operators, bus operators and charging service providers.
Various modes are being used for charging EVs, such as private, public, captive and battery swapping. Private charging is typically carried out on residential premises, while public charging infrastructure is available at publicly accessible locations. Captive chargers are the ones installed at government offices, corporate houses, etc. and used by commercial fleets such as electric cars and buses. Finally, the battery swapping model, which involves replacing discharged electric batteries with charged ones, is expected to gain traction in the Indian market. Most of the battery swapping is currently taking place in the e-rickshaw segment, and it is becoming increasingly popular. India is the first country to publish an official battery swapping draft policy. Further, charging infrastructure can be classified into alternating current (AC)- and direct current (DC)-based chargers. AC chargers are further divided into light EV (LEV) charge points (for e-scooters and rickshaws), Level-1 AC chargers and Level-2 AC chargers. DC chargers, meanwhile, are classified into Bharat DC-001, CHAdeMO and Combined Charging System (CCS) Type 2 chargers. Of the total EV charger sales in 2021, the majority were accounted for by Level-2 AC chargers, which are typically supplied with passenger electric four-wheelers, and installed by PSUs and charging point operators (CPOs) at PCSs. Meanwhile, CCS chargers are mainly utilised for captive charging of electric buses and fast charging of PCSs.
Policy push
In January 2022, the Ministry of Power (MoP) issued the revised consolidated guidelines and standards for charging infrastructure. According to these, 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. There will be a separate metering arrangement for PCSs, so that consumption may be recorded and billed as per tariffs for EV charging stations. Discoms may leverage funding from the Revamped Distribution Sector Scheme for the general upstream network augmentation necessitated by upcoming charging infrastructure in various areas. Further, discoms have been directed to provide electricity connections to PCSs in accordance with the timelines specified in the Electricity (Rights of Consumers) Rules, 2020. As per these guidelines, land available with the government or public entities will be provided for the installation of charging stations on a revenue sharing basis at the fixed rate of Re 1 per kWh, initially for a period of 10 years. Recently, in November 2022, the MoP issued an amendment to these guidelines. The amendment envisages PCSs offering a prepaid feature for service charges, including time-of-day rates and solar hour discounts.
In April 2022, NITI Aayog drafted a battery swapping policy. As per the draft policy, battery swapping would fall under the battery-as-a-service model, whereby customers can pay a regular subscription fee at fixed intervals to service providers for battery services throughout a vehicle’s lifetime. Only batteries using advanced chemistry cells, with performance equivalent or superior to EV batteries supported under FAME-II, would be considered under the proposed policy. The policy will provide incentives for greater adoption of swappable batteries in EVs. The incentives available to EVs that come pre-equipped with fixed batteries will also be available to EVs with swappable batteries.
Initiatives being taken in the Indian market
Currently, Energy Efficiency Services Limited’s (EESL) subsidiary, Convergence Energy Services Limited (CESL), is supporting the roll-out of public charging infrastructure in India. In October 2022, CESL announced the list of selected agencies for the installation of 124 battery swapping stations, 352 standing chargers for electric two- and three-wheelers and 1,294 standing DC fast chargers for electric four-wheelers across eight cities. These will be built under a build-own-operate model valid for eight years. Under this tender, CPOs will be given the right to use the sites provided to them by CESL for setting up and operating the charging infrastructure in the area. This business model is a shift from the earlier mode of business where CESL was responsible for investing, owning and operating these stations. With this tender, CESL has 1,770 EV charging stations under implementation.
Apart from EESL, various other PSUs such as NTPC Limited, Rajasthan Electronics and Instruments Limited and Bharat Heavy Electricals Limited have announced plans to implement EV charging stations on a massive scale across the country. Meanwhile, oil PSUs, which are seen to be in a strategic position to build charging infrastructure, especially on highways and expressways across the country, are allowing CPOs to set up charging stations at their retail outlets. Oil marketing companies such as Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited have pledged to use their outlets to cumulatively set up 22,000 EV charging centres by 2025. Discoms such as BSES, Tata Power Delhi Distribution Limited and Bangalore Electricity Supply Company Limited are proactively partnering with several market players to set up charging stations and battery swaping points in their areas of operation. Tata Power recently announced the K2K (Kashmir to Kanyakumari) Plan for nation-wide installation of around 25,000 EV charging points over the next five years. The National Highways Authority of India is also working closely with the government to build charging infrastructure on national highways. It plans to cover 35,000-40,000 km of national highways with charging stations by 2023.
Additionally, charging station network developers such as Fortum, Magenta Power, Volttic and TecSo Charge Zone have developed their own charging platforms for managing their EV charging networks. Further, vehicle OEMs are collaborating with CPOs for providing existing and upcoming buyers with assurance regarding public charging points. For instance, vehicle OEMs such as Hero Electric, BYD India and Ather Energy have tied up with CPOs such as Charge Zone and Magenta ChargeGrid.
Tariff design and policy support
The fixed or demand charge for an electricity connection is levied on the sanctioned load for the connection or the maximum power demand registered during the billing period, which must be paid irrespective of the actual power usage. Energy charges are the variable component of an electricity tariff applied on the total volume of energy/electricity consumed during the billing period. There is significant variation across states in terms of tariff design. A few states, including Gujarat, Haryana, Karnataka and Maharashtra, have introduced demand charges while some states such as Andhra Pradesh, Delhi, Chhattisgarh, Telangana and Uttar Pradesh have notified only energy charges. Each state sets its own rates for distinct consumer groups; therefore, the two sides of the tariff, energy and demand charges, differ from one another.
Issues and challenges
EV sales witnessed a year-on-year rise of 168 per cent in 2021. However, the number of PCSs set up by PSUs increased by only 39 per cent during the same period. Further, the current utilisation rate of PCSs in India is in the range of 10-15 per cent. This low utilisation rate has been deterring investors and CPOs from expanding their fleets. However, with the increased usage of EVs by commercial fleet operators and the increased adoption rate of EVs by the public, the utilisation rates are expected to increase. Further, EV drivers may find it challenging to charge their vehicles on different charging networks until the networks become interoperable. CPOs will need to join hands and remove this barrier to provide a seamless charging experience to drivers. As per Customized Energy Solutions, the electrification of transport will lead to a rise in demand for energy and thus grid capacity. In the business-as-usual scenario, with the current adoption rate of EVs, the deployment of around 28 GW of charger capacity will be required between 2022 and 2030. The current annual installed capacity, as of 2021, stands at 201.5 MW. The key challenge would be to contain the tariff rates within affordable limits amidst such grid investments.
Outlook
Collaboration between EV OEMs and CPOs is providing assurance to existing and upcoming buyers with respect to the availability of public charging points, which will boost the purchase of EVs. According to India Ratings and Research, in the next decade, India might need 0.23 million charging stations, entailing a total investment of Rs 1.05 trillion by 2031-32 to cater to the growing demand for EVs and the resultant requirement of power. Of these, 63,000 charging stations, entailing an investment of Rs 269 billion, are expected over the next five years.
In terms of energy requirement for the charging infrastructure, as per studies being carried out by the Central Electricity Authority to estimate the demand in 2031-32, a provisional requirement of 69 billion units for EVs has been considered. Further, action plans for nine major cities have been prepared by the Bureau of Energy Efficiency for installation of PCSs. As per the initial estimates, a total of 46,397 PCSs are being targeted to be installed in these cities by 2030.
Going forward, the recent policy initiatives and steps taken by oil marketing companies, as well as private and public players, towards setting up EV chargers are expected to boost the country’s EV charging ecosystem significantly.
Nikita Gupta
