Gearing Up

Power utilities explore the EV charging opportunity

Recent developments in India’s energy policy environment suggest that the country has embarked upon the journey of electric mobility transition. India’s EV30@30 initiative targets a 30 per cent sales share for electric vehicles (EVs) by 2030. Recently, the Union Minister for Road Transport and Highways stated that the prices of all EVs in India will be equivalent to the cost of petrol vehicles by 2023. The increasing impetus on EVs ac­ro­ss the country signals the leading role that electric mobility may play in decarbonising India’s transport sector.

Discoms are a key stakeholder in the EV charging and battery swapping value chain. On the one hand, discoms can create an enabling environment for rapid in­te­gration of EVs in the country by deploying charging stations and providing allied services. On the other hand, the landsca­pe for utilities is now changing. As consumers are moving towards distributed and rooftop po­wer generation systems, utilities may re­quire newer models for revenue generation. EV charging provides a great opportunity for discoms to create new revenue streams and utilise existing assets more effectively. This article aims to identify the potential roles that discoms can play in the EV charging value chain, the possible challenges and future outlook.

Potential roles and opportunities for utilities

Utilities can assume diverse roles across the EV charging value chain. As electricity retailers, discoms may conduct their regular electricity retail operations and also re­tail electricity to charge point operators (CPOs) at prescribed EV tariffs. Further, they can operate as CPOs through forward integration. However, the economics of such forward integration would need to be carefully worked out for each power utility. Discoms may also provide land to CPOs using the revenue sharing models recommended by the government. Further, discoms may play a role as demand aggregators for EV fleets for various government bodies and departments.

Going ahead, expanding into the EV charging space presents diverse opportunities for discoms. They may utilise vehicle-to-grid integration to control and manage EV charging requirements. They can also tap into EV charging at residential and commercial buildings to encourage home and destination charging. Time-of-day tariff charges may help discoms in shifting load from peak hours to non-peak hours. Furthermore, creating a completely different business within discoms for charging services may potentially make EV charging operations more att­ra­c­tive and feasible for utilities.

Recent developments

In recent months, several discoms have pursued EV charging projects across In­dia. In June 2022, Tata Power installed 150 clean energy-powered EV charging sta­tions across various locations in Mum­bai including residential societies, malls, commercial complexes and petrol pum­ps. These chargers will utilise renewable sour­ces of energy such as wind, so­lar and hy­dro­power for electricity. The co­mpany also collaborated with the National Real Estate Development Council, Mahara­shtra, in April 2022. Under the partnership, up to 5,000 EV charging points will be in­stalled across the state. Re­cently, Maha­ra­shtra State Electricity Distribution Com­pany Limited also anno­un­ced its plans to establish two EV charging stations in Na­shik. It has already dep­loyed 13 EV ch­a­rging stations and plans to install 2,375 more stations across the state. Further, the utility has launched an EV charging application as part of an effort to integrate its charging stations.

Earlier this year, BSES Yamuna Power Li­mi­ted (BYPL) commissioned India’s first Smart Managed EV Charging Station at Mayur Vihar Extension – I in East Delhi. The station is demand response (DR) co­m­patible, which is a crucial demand-side ma­­­nagement tool for utilities as the rising EV charging load is adding to the peak power demand of discoms. Greater dep­loy­ment of such DR-compatible stations is likely to play an invaluable role in the load management of power utilities during both peak and off-peak hours. Recently, Fortum Charge & Drive India also partnered with BYPL to develop India’s first load balancing pilot project which will focus on providing intelligent load allocation between chargers and EVs. BSES aims to install 150 ch­arging points over the next two years and is planning to convert its entire fleet of vehicles to electric by 2030.

The Kerala State Electricity Board (KSEB) has set up 56 EV charging stations in Ke­rala. The power utility aims to install 1,140 pole-mounted charging stations for two- and three-wheelers across the state. Kar­nataka’s BESCOM currently operates 136 EV chargers. In March 2022, the De­part­ment of Heavy Industries, through the FAME II scheme, sanctioned 172 EV char­ging stations for the state. Of these, Ben­ga­luru had an allocation of 152 charging stations. BESCOM has signed MoUs with NTPC and Rajasthan Electronics and Ins­tru­ments Limited for installing these ch­arging stations across Bengaluru city. The discom aims to add 140 EV ch­ar­gers over the next six months. BESCOM has also developed a dedicated mobile app, EV Mitra, for streamlining the use of charging services by consumers. Further, tenders have been invited to set up 1,000 EV charging stations across Karnataka using a PPP model.

To improve electric mobility in Telangana, the state government has authorised TSREDCO, a nodal agency, to set up charging infrastructure for EVs across the state under a single-window clearance sy­s­tem. The nodal agency will facilitate the revenue sharing agreement with landow­ning agencies as per the guidelines of the Ministry of Power (MoP). Such an endeavour to streamline the adoption of EV charging sta­tions can further encourage discom participation in the state’s electric mobility mission and improve discoms’ confidence as charge point operators.

Key challenges

While EV charging presents several op­portunities for discoms, there also exist a multitude of challenges including load ma­na­gement, uneven feeders, financial li­mitations, limited revenue, high risk of initial investment and EV tariffs. As EV ch­arging is intermittent, it may potentially cause a disruption in grid management due to overloading during peak hours. Th­e­refore, discoms must establish a robust grid management system to ensure the stability of the grid during peak and off-peak hours.

Moreover, many discoms are struggling with revenues, making it unviable for th­em to invest in establishing charging po­ints without financial assistance and inc­entives as EV charging stations are capital intensive. Since utilities typically work only within one state, their operati­ons as char­ge point developers may also be limited and less profitable as compa­red to independent CPOs who can operate throughout the country. Further­more, the Ministry of Power has recommended the wavering of demand charges for CPOs. This may negatively impact the re­venues of power utilities.

In countries such as China, safety hazards have become an issue in residential EV charging points. While taking on the ro­le of operating residential charging po­ints, it is crucial for utilities to ensure the safety of the infrastructure as well as the users to make residential charging a profitable endeavour.

Outlook

Going forward, planning would be the primary and most crucial step for discoms to ensure that their role in the EV charging sp­a­ce is feasible and profitable in the long run. Furthermore, greater collaboration be­t­­w­een public sector units, utilities and CPOs will lead the sector forward. It is al­so vital to improve the financial perform­ance of utilities. At present, several discoms att­ra­ct limited revenue. Consequ­ently, they may not possess enough capital to invest in charging infrastructure. Sin­ce the market is still at a nascent stage, the risks involved in such investment are also much higher. Most discoms, thus, do not have the capacity to expand into the EV charging space. In the short run, provision of low-cost financing mechanisms may be an effective tool to encourage utilities to set up charging facilities. However, robust infrastructure and greater consumer awa­reness are necessary to promote the ad­op­tion of EVs on a significant scale. This is a fundamental precursor for establishing the commercial viability of EV charging undertakings.

Other stakeholders such as the government, industry associations, banks and fi­n­ancial institutions also have a vital role to play in creating a conducive environment for the uptake of EV charging by discoms.  Policies, regulatory mechanisms and standards must be streamlined and re­­gu­larly updated. Industry bodies and firms may collaborate with state and government institutions to assist in the formulation of policies and processes supporting the EV ecosystem. Furthermore, diverse debt and financing options may be introduced to enable discoms to play a greater role in the EV charging space. At present, the FAME II scheme does not provide a full range of financial incentives for EV charging. The scheme can thus be ex­pan­ded. As a short-term incentive, taxes and duties may also be rationalised further. Incentives under the production-lin­ked incentive scheme may also be exten­ded for EV charging components not yet covered under the scheme.

Additionally, revenue sharing arrangements for lands, especially urban lands, is essential. The MoP has laid do­wn its recommendations in this regard. To make the establishment of charging stations feasible, public land must be ag­gregated and provided th­ro­ugh a revenue sharing ar­rangement. This will allow CPOs to reduce their operational expenditure and pay according to their earnings. The­se incentives are expected to provide the required momentum to kick-start the EV charging industry. How­ever, ultimately, the industry must aim to become self-sustaining as it moves towar­ds achieving large-scale commercial viability.

This article is based on a recent webinar hosted by Renewable Watch on “Role of Utilities in EV Charging”. The speakers included Chaitanya Kanuri, Senior Program Manager, Electric Mobility, World Resources Institute; D.V. Rama Krishna Kumar, Project Director, TSREDCO, Government of Telangana; and Somesh Kumar, Partner & Leader (Power & Utilities), EY India.

By Kasvi Singh

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