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
