Electric mobility is a critical focus area in the energy transition space for governments worldwide. The electric vehicle (EV) market is set to revolutionise the global and domestic road transportation sector. In India, although the development of the EV market has been marginal as compared to established markets in Europe, North America and China, it has gained notable traction in recent years, after a period of staggered progress. India is a part of the global EV30@30 campaign, which targets at least 30 per cent of new vehicle sales to be electric by 2030.
While the policy push began a decade ago, with a financial incentive on the purchase of electric cars and scooters in 2010, the sector did not take off as planned, mostly due to the lack of cost economics and an enabling ecosystem. Even the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) initiative, launched in 2015 under the National Electric Mobility Mission Plan, was not successful in generating the expected demand for EVs.
It was then realised that along with EVs, equal attention needs to be given to charging infrastructure, as accessible charging facilities continue to be the most important deciding factor in the purchase of EVs. Since then, various policy and regulatory interventions have been made in the EV charging space, and a nascent but enabling market ecosystem has developed, involving a host of technology providers, local charging point operators (CPOs) and manufacturers, along with supportive discoms and transport companies. Significant initiatives are also being taken to integrate renewables, particularly solar power, with EV charging, in order to obtain a totally green value chain. The industry and the research communities have gone a step further and are making efforts in the vehicle-to-grid (V2G) space to make this segment commercially affordable.
In this article, we assess the progress made in the Indian EV charging sector, with a focus on regulatory developments, market structure, grid integration, major bottlenecks and emerging opportunities…
Policy and regulatory developments
The past few years have witnessed a series of policy and regulatory interventions by the government in the EV charging space, as deployment of quality charging infrastructure is of paramount importance in increasing EV uptake. The first such measure was taken in May 2017, with the release of a report, “Standardisation of Protocol for Charging Infrastructure”, by the Department of Heavy Industry (DHI). The report focused on the standardisation of public EV chargers and provided specifications for public AC metered charging outlets and public DC fast chargers.
Two critical policy measures followed in 2018. First, in April 2018, the Minstry of Power (MoP) delicensed the sale of electricity for EV charging. Then, in December 2018, the MoP released the “Charging Infrastructure for Electric Vehicles/Guidelines and Standards” for accelerated adoption of EVs in India. These guidelines have since been modified in October 2019 and June 2020. The guidelines set the much-needed base for EV charging in the country by permitting private charging stations at residences and offices and delicensing the setting up of public charging stations (PCSs) such that any individual is free to set up a PCS, provided that such stations meet the technical, safety and performance standards of the MoP and the Central Electricity Authority. This essentially categorises EV charging as a service and prevents the monopolising of EV charging licensing. The guidelines also direct discoms to give priority to the provision of connectivity to any individual applying for permission to set up a PCS. Regarding tariff determination, the guidelines direct that it should not be more than the average cost of supply plus 15 per cent unless otherwise specified by the tariff policy.
With FAME I not being entirely successful in creating a demand for EVs, FAME II was introduced in February 2019, with a renewed focus on incentives and charging infrastructure. The scheme came into effect in April 2019 with a sanctioned budget of Rs 100 billion for three years (2019-20 to 2021-22), including a specific budget provision of Rs 10 billion for charging infrastructure. In June 2021, FAME II was extended by a period of two years, up to March 2024. Under FAME II, there is a provision for supporting the installation of charging infrastructure, provided it complies with the charging infrastructure guidelines released by the MoP.
To promote the installation of EV charging stations and give an initial push, the DHI has also invited expressions of interest (EoIs) from urban local bodies (ULBs) or municipal corporations, PSUs, and public and private entities interested in deploying EV charging infrastructure in different states or cities for availing of incentives under FAME II. The DHI sanctioned more than 2,800 charging stations in 2020 alone. Further, the GST has been reduced from 18 per cent to 5 per cent for EV charging stations. The Ministry of Housing and Urban Affairs has also made provisions for EV charging infrastructure in cities’ master plans or regional plans, with 20 per cent of all parking capacity or vehicle holding capacity in a particular premises to be set aside for EV charging.
Beyond policy initiatives on the central level, various states have also introduced policies to promote EV uptake. Many of these policies have specific incentives for the promotion of charging infrastructure in the respective states. These incentives are in the form of direct capital subsidy on EV charging equipment, a separate category for EV charging in tariff orders and support in making land available for setting up EV charging infrastructure.These various policy incentives at the central and state levels have certainly helped create equal opportunities for greater deployment of charging stations by private players, especially in the corporate and commercial space. Further, the emerging opportunities in the Indian EV segment have led to the entry of a large number of technology providers, and various business models are being tried and tested for commercial viability.
To help boost the uptake of EVs and charging infrastructure, Energy Efficiency Services Limited (EESL) has been spearheading the efforts for demand aggregation for procurement of EVs and charging stations. It is supporting several municipal bodies, metro corporations and other city-level organisations in the EV transition by bringing in innovative business models for the roll-out of public charging infrastructure. Apart from EESL, various other PSUs such as NTPC Limited, Rajasthan Electronics and Instruments Limited, Bharat Heavy Electricals Limited and Indian Oil Corporation Limited have announced plans to implement EV charging stations on a massive scale across India. Moreover, discoms such as BSES, Tata Power Delhi Distribution Limited and Bangalore Electricity Supply Company Limited have also started setting up charging stations in their areas of operation through collaborations with CPOs.
All these demand creation measures are opening up new opportunities for both domestic and international technology providers for setting up EV charging infrastructure in the country, with a host of captive as well as public charging stations being deployed through partnerships and under various state and municipal agencies. Some of these charging stations are being implemented through government tenders as well, which is expected to increase as more states launch their tenders. Thus, India has witnessed a surge in CPOs offering a range of EV charging services for residential, office, commercial and public charging use.
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. Platforms such as Fortum’s Charge and Drive and Magenta Power’s ChargeGrid charger management software systems offer a range of services to EV users and CPOs. Through a mobile application interface of the software, EV users can discover nearby charging stations, check the availability at these charging stations, reserve slots, manage their charging as well as handle payments through various modes since these charging stations are usually unmanned. Meanwhile, through a web dashboard, CPOs can take care of charger integration and management, monitor usage, invoice customers and even generate business intelligence reports – and all this can be done remotely. Further, such platforms follow the protocol enumerated in open global standards such as the Open Charge Point Protocol to make it easy to integrate with existing systems and infrastructure. This paves the way for interoperability and roaming agreements between different charging networks in the future and facilitates easy charging access for consumers when the number of chargers and related networks increase.
All these developments have taken place within the span of a few years and the EV market is still evolving. According to a report by Deloitte, various business models have emerged, including ULB-operated infrastructure, public-private partnerships (PPPs), utility-anchored charging infrastructure, and transport company, fleet operator and auto company-owned- and operated infrastructure. In the nascent Indian market, PPP-led and public transport corporation models are ideal as both the risk levels and the initial investments are low in these cases. Due to the limited availability of charging stations, fleet operators have also opted for setting up their own facilities. Moreover, at present, many CPOs and developers are taking initiatives to install captive charging stations in commercial spaces on their own to increase visibility, bring confidence amongst EV buyers and address the range anxiety issue to some extent. However, PCSs are also expected to get a boost in the near future, following tenders and initiatives by various state and municipal authorities and discoms.
Impact on the grid
Low EV penetration, as is the scenario in India today, will not have any sizeable impact on the electricity grid. However, when the number of EVs connected to the grid increases, it will impact the planning and operation of power systems. Uncontrolled EV charging could lead to disruptions in voltage, phase imbalances, harmonic disruptions and issues with power quality. Further, evening peak loads are expected to increase as EV users would mostly charge their vehicles after work. This may not have a significant impact at the grid level, but it will surely affect local demand and related power supply infrastructure, which will have to be updated to cater to these demand-supply requirements.
To address this issue, EV charging can be promoted during off-peak hours through attractive time-of-day pricing models. Further, distribution-level energy storage systems can be deployed to address sudden load fluctuations. Moreover, EVs in greater volumes can collectively act as a balancing resource for the grid to manage the intermittency of renewable power generation. It is important to note here that using power produced by renewables can also be used to charge EVs and this will, in turn, create a net-zero emission charging process for EVs. While the use of renewables for charging EVs is limited at present, it is slowly gaining traction and can prove to be an ideal solution, especially on highways where power supply is unreliable.
For discoms in particular, EVs present a growth opportunity in the form of an integrated utility with an increased customer and regulated asset base leading to new revenue streams. Moreover, EVs can help discoms in effective demand-side management, especially during peak hours. While bidirectional charging (grid to vehicle and vehicle to grid) is not commercially applied at present, it will soon become a reality. Discoms can then encourage EV users to charge their vehicles during periods of low power demand during the day when solar power is available. The unutilised energy stored in EV batteries can be used to meet the power needs of user premises during peak power demand periods in the evening when solar power is not available.
As countries across the globe work towards carbon emission reductions to comply with global commitments, a rapid scale-up of EVs and the related charging ecosystem has assumed centre stage. Thus, there has been a global focus on policy formulation with attractive incentives for EV users and manufacturers, CPOs and related equipment providers. Further, efforts are being made towards standardisation of equipment and processes, grid-related requirements and interoperability across various charging networks with different CPOs. Power utilities, particularly across North America and Europe, have seen their role evolve from power transmission or distribution entities to more integrated facilities, not only catering to EV demand and related load management but also actively enabling the setting up of EV charging infrastructure and the network ecosystem in many cases.
In India, however, charging infrastructure penetration remains low. According to the World Business Council for Sustainable Development (WBCSD), the estimated number of PCSs in India as of February 2021 was just 3,200, while in the US, it was 105,000, in Europe 354,000 and in China, an impressive 820,000. Thus, the lack of adequate charging infrastructure, along with uncertainty in charging time and range, remains one of the topmost barriers to EV adoption. The country’s charging infrastructure lacks in number, funding as well as consumer experience. Land acquisition challenges and grid integration uncertainties are also impeding growth.
Thus, a few key actions need to be taken to address these issues. To continue private sector investments, a supportive market, with ease of doing business and clear standards, has to be created. Sustainable business models need to be developed to address low utilisation, which would also include the provision of demand guarantees as well as improved access to charging locations through effective land allocation policies. Greater policy focus is needed for the deployment of battery swapping stations and the scaling up of EV fleets. Stakeholders should work together to iron out these wrinkles and data sharing should be facilitated to understand user needs and develop new services accordingly. In addition, charging requirements should be synced with renewable power generation to maximise the cost benefits and ensure low emissions, supported by enabling regulations for virtual power aggregation as well as easy open access renewable power procurement. Finally, due attention must be given to interoperability between various networks, and regulations must be drafted to support such roaming arrangements to ease the future charging needs of EV users.
According to WBCSD, India needs 2 million public EV charging points by 2030, which creates a massive opportunity for all stakeholders. Mobility companies, real estate developers as well as power utilities need to work together to tap this opportunity and develop an enabling EV charging ecosystem in the country.
By Khushboo Goyal