The emerging electric vehicle (EV) market is expected to significantly impact both the road transportation and the power sector. On the one hand, the increasing penetration of EVs will reduce the dependence of the transport sector on fuel imports, while on the other hand, the charging requirements of EVs will significantly increase 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 these attempts, the fundamental challenges remain. These include the high cost of EVs, few publicly accessible chargers, range anxiety and high charging time. However, with advancements in battery technology and continued government support, the adoption of EVs is expected to increase. The following section provides the highlights of key sessions from a recent Renewable Watch conference, E-mobility and Charging Infrastructure, with a focus on opportunities, issues and challenges in the Indian e-mobility space…
A major policy initiative for EVs came in May 2017 when the 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 has now been reduced to 5 per cent. Despite the incentives, the uptake of EVs in India has been limited. A key reason for the slow uptake has been the lack of a robust supply chain, which is needed to build the confidence of consumers. An emerging viewpoint has been that the supply-side uptake of charging infrastructure should come first to expect more uptake of EVs. With this, the age-old chicken-and-egg debate with respect to EVs might finally come to an end. Industry experts believe that it is ironic that most of the regulations and policy modifications revolve 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 state transport authorities have invited bids for the supply of electric buses under the FAME [Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles] scheme, and some of them have also started operating electric buses on fixed routes. Apart from this, the material handling equipment segment is witnessing the entry of global EV players, which manufacture electric-based forklifts, reach trucks, electric stackers, tow trucks and hand pallet trucks. The advantage here is that these vehicles will remain within the warehouse and the availability of charging infrastructure will not be an issue.
Impact of EVs on electricity demand
ICRA has assessed the increase in power demand at different EV penetration levels across vehicle segments. It has assumed a gradual increase in the share of EVs in 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 assumed that energy consumption per km will vary across vehicle segments. Certainly, two-wheelers will have the lowest consumption while commercial vehicles will have the highest share in electricity consumption.
Based on these assumptions, it is calculated 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 7,000 MW for every 10 per cent increase in EV penetration.
The adoption of EVs will lead to 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 an 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 the transformer and substation capacities at the distribution level. The investment required for the upgradation of infrastructure will depend on the level of EV penetration.
The discoms can influence user behaviour by promoting the use of charging infrastructure during off-peak hours through time-of-day pricing. In fact, the 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. Other ways to minimise the impact of EV charging on the grid are to set up public chargers near commercial establishments and depot chargers for electric buses.
The impact of EVs on the load profile of the grid can be minimised by managing the 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 the transaction costs low. This would also mean the development of a robust communication 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 the residential home chargers.
In sum, the introduction of EVs is likely to have a modest impact on the overall electricity demand, though the impact on peak demand and individual substations could be more severe. However, as a large part of the demand is likely to come in the evening or at night when the availability of renewable energy is limited, this could increase the offtake of thermal power, thereby increasing the carbon footprint. This scenario is a little extreme as with time the use of storage will increase and of the cost of storage technologies will decline. The need of the hour is to design appropriate pricing mechanisms to ensure grid stability and minimal carbon footprint.
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 will be capable of supporting bidirectional charging (grid to vehicle and vehicle to grid), the 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, the energy stored in the vehicle battery can be used to meet the electricity demand of their houses or can sold back to the grid during periods of peak load. This scenario is feasible, but does not look realistic considering that the segment is still at a nascent stage.
Based on presentations by Manuj Khurana, Founder and CEO, NewMo; Jasmeet Khurana, Manager, Mobility, World Business Council for Sustainable Development; and Sabyasachi Majumdar, Senior Vice-President and Group Head, ICRA