HomeSpotlightWill the Budget-23 give boost to EV charging infrastructure?

Will the Budget-23 give boost to EV charging infrastructure?

As India embarks on its ambitious journey towards sustainable mobility, a robust charging infrastructure will play a pivotal role. With the growing number of EVs, the need for development of large network of charging infrastructure will only increase in the coming days. To support deployment of charging infrastructure in the country, the government has allocated a total fund of Rs 1000 Crore under the FAME II scheme. Under public procurement, Department of Heavy Industry (DHI) has sanctioned 2,636 EV Charging Stations, in 62 cities across 24 States/UTs and 1,544 such stations on highways under FAME II scheme. EV charging is a delicensed activity in India and the Ministry of Power (MoP) has published revised guidelines for Charging infrastructure for Electric Vehicles to facilitate the deployment of charging infrastructure. Apart from this, several states have announced targets for EV deployment including special EV tariff to incentivize EV charging in India.

Globally charging infrastructure is growing

EV charging infrastructure is being rapidly deployed globally. According to IEA report 2020, the global stock of EV chargers grew by almost 40% from 5.2 million in 2018 to about 7.3 million in 2019. Of the total stock however, 6.5 million chargers were private chargers.

Globally private sector playing active role

Thus, the share of private chargers is much more than that of publicly available chargers. Private chargers account for almost 90% of the total global charger count. Each EV is generally provided with its own charger which has helped in increasing the global count of private EV chargers. Further, the convenience of private chargers is another of its primary drivers for prevalence. The installation of private chargers may include residential locations and also chargers in the workplaces. Looking at the global share of private chargers, China has the highest share of private chargers with almost 2.4 million chargers. In comparison USA has close to 1.56 million private chargers by 2019.

The EV charging infrastructure really picked up in 2020, with an addition of almost 416,000 charging points solely in 2020 in the top 10 countries which forms almost a 50% increase over the cumulative public charging points till 2019.

Needs improved policy & regulatory environment

For the uptake of EV adoption in India, a major challenge of integrating the charging infrastructure with the electrical network needs to be tackled. The continued development of EV charging infrastructure and its integration will depend, among other things, on policy and regulatory environment, which must also account for grid stability. Although the government has taken decisive steps towards faster adoption of EVs, several challenges and gaps are existing in the Indian EV ecosystem that needs to be addressed.

For the efficient functioning of a market, it is essential to develop clear and precise policy decisions and market design frameworks from the start, minimizing market distortion and entry barriers. With regards to EV charging, this could potentially include the level of competition allowed and the price-setting approach.

Competitive bidding process may be used

A competitive bidding process may be used to award the winner a time-limited concession to set up charging infrastructure and provide services within a particular area. The policymakers can also mandate the state-owned utility to set up and operate charging stations. A combination of various techniques can also be considered if needed.

Policy on pricing

The policy makers also need to come clear on the principle for EV charging price setting. The policymakers can choose between a fully regulated price, a fully market-based price-setting or a price cap. After the elementary design choices are made, the policy is also required to mandate changes to incumbent regulation (such as open access, deregulation of electricity retail, etc.) to minimize entry barriers.

A few years ago, there was a dilemma of whether the EV or the charging infrastructure needs to come first but not anymore as we can very well derive upon the experience of other countries. Global experiences make it clear that the thrust has to arrive from either side. Therefore, initially, incentives for installing charging stations and necessary innovation are required to launch the market are of utmost importance. The EV policy needs to clarify whether or not an incentive for launching the EV charging market is to be provided to enable the rollout of charging infrastructure.

Avoid administrative barriers

Any entity to set up a public EV charging infrastructure needs to acquire several clearances and permissions (e.g., permission for land use) and are mostly handled by several different agencies that may or may not function in unison. There is a likelihood of unforeseen delays and inefficiencies in establishing the infrastructure and building barriers to market entry. Therefore, the EV policy must embody provisions that identify and avoid administrative barriers to the inception of charging stations.

Consumer data protection

The EV charging industry could potentially clash with the use and protection of consumer data and data privacy issues in the upcoming years. Technologies like smart chargers and smart grids would enable service providers to garner extensive data on consumer choices and behaviour, which can be a valuable resource for the service provider to optimize its operations, and its value could be monetized. However, there is also a significant threat of unauthorized misuse of consumer data.  Hence, the EV policy must acknowledge and mandate the development of a regulatory framework to govern consumer data and protect consumers’ privacy.

So, its not just about setting a target to buy electric vehicles that would help the nation’s transition into e-mobility mode unless there is an elaborate policy touching upon all the factors affecting EV introduction in the country, both on supply as well as demand side. Budget is the correct platform for the government to announce such a policy or at least announce a roadmap for various policy issues. Let’s hope that the Budget-23 turns out to be a pathbreaking one for the EV industry.

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