Pan-India E-vehicle policy expected to give automakers rich dividends

Posted on 24 Apr 2018

In a major move to bolster India’s fledgling electric vehicle sector, the government on April 13, 2018 fine-tuned the licensing policy required for charging infrastructure for e-vehicles. Entities can now set up and operate charging stations for e-vehicles across India sans separate license.

Electricity Act, 2003 was brought into effect from June, 2003 and section 12 of the Act mandates license to be obtained for activities of transmission, distribution or trading in electricity. Power generation utilities therefore had to seek a pan-India license to set up their e-vehicle charging infrastructure.

With the government’s latest amendment this requirement has been done away with.

The charging of battery essentially involves utilization of electrical energy for its conversion to chemical energy which gets stored in the battery. Thus, the charging of battery of an e-vehicle by a charging station involves a service requiring consumption of electricity by the charging station and earning revenue for this purpose from the owner of the vehicle. The activity does not in any way include sale of electricity to any person as the electricity is consumed within the premises owned by the charging station which may be connected with the distribution system. By the same logic, the activity does not involve further distribution or transmission of electricity.

Ministry of Power therefore clarified that the charging station does not perform any of the activities such as transmission, distribution, or trading of electricity which all however may require a license.

India’s e-vehicle business may be in a nascent stage today but has got an immense market potential tomorrow. As per Coal Vision 2030 of Coal India the advent of e-vehicles could significantly alter India’s power landscape. Power demand could surge up to 160 bKWh by 2030. The sale of electric vehicle is projected to make a 5% growth of the total annual sales of automobiles.

With e-vehicle charging stations no more being considered to be selling electricity, power companies which are scouting for new growth areas can move ahead with setting up infrastructure for charging e-vehicles. The need for obtaining a separate license for the charging station could have been a deterring factor for throttling the growth of e-vehicles in India. However, since the shackles have now been removed the potential could be explored.

Bloomberg Energy Finance in its report published in last July said India had around 350 public charging stations for e-vehicles serving some half a million vehicles as against 57,000 petrol pumps. The wide gap can now be bridged with this development.

Government has an ambitious plan for large-scale proliferation of e-vehicles both private as well as commercial on Indian roads by 2030. The shift it believes will enable it to cut environmental pollution and reduce fuel imports besides honouring the Paris agreement. Carbon emissions could be reduced by around 30-35% by 2030.

Companies can now deploy battery banks to swap batteries. It is expected to provide them booming business using renewable energy sources. Conventional oil and gas companies will also eye this lucrative business. Setting up of charging infrastructure would however require big investments and more involvement from private players. A report by Feedback Consulting suggests that for a complete transition to e-vehicles a significant investment to the tune of Rs.1.8 lakh Cr may be needed.

Large-scale e-vehicle push

To actively promote e-vehicles the union government needs to look beyond incentives and tax reductions. India will need an e-vehicle policy to create a big impact. Piyush Goyal who was the Union Minister for Power back in 2017 had said that the government was looking at having a full-scale electric fleet by 2030. Nitin Gadkari, India’s Union Minister for Road Transport and Highways, has time and again affirmed that the government would forcefully bring automobile industry out of petrol and diesel vehicles. Globally, countries such as France and UK have similar plans. Automobile manufacturer Volvo has announced that beginning 2019 it would only manufacture e-vehicles.

Some Indian states have started taking initiatives along this line. Karnataka recently approved an e-vehicle policy for the state which would lead to more research and innovations in e-vehicles. Maharashtra has come up with a strong e-vehicle policy. The state has already approved subsidies in manufacture of the vehicles and setting up charging stations.

Ola’s Mission Electric

In a relative development, Ola one of India’s transport aggregators, has announced an ambitious plan to deploy 10,000 e-rickshaws in its burgeoning force over the next one year. Christened “Mission Electric”, Ola expects that electrification will be a welcome change for drivers, customers as well as stakeholders involved. The company plans to develop Mission Electric platform and bring one million e-vehicles on Indian roads by 2021. Vehicle manufacturers and battery making companies can now look forward for some thriving business with Ola entering the fray. Sustainable technologies that are cost-effective and viable in daily operations will be an icing on the cake. Electric cabs, electric auto rickshaws, electric buses, rooftop solar installations, charging stations, and battery swapping business will soon gain popularity with this move.

However, for a larger success a pan-India policy is required. As an initial step we should move towards promotion of hybrid electric vehicles. They have just begun making an appearance on Mumbai roads in India. Popular automakers such as Maruti and Honda are expected to come up with a long-term strategy on this soon.

The advantage hybrid electric vehicles have is due to its dual-fuel nature as it has a longer range and better efficiency. Recent innovations in Japan show that hybrid vehicles are 40% more fuel efficient. India needs to follow countries such as USA and Japan that began manufacturing hybrid electric vehicles long ago.

Improving up on the power capacity and setting up of an independent grid could be other areas the government should focus on for realising its e-vehicle dream in time. Setting up of a separate grid for e-vehicles will be a necessary step to achieve the goal in a shorter time span. This will also help companies to set up fast charging stations. Charging stations in the US takes 10 minutes to charge a 100 KW battery could be used as a reference point here.

Technological innovation in batteries is another core area where the government should focus more. China has reportedly developed storage technologies for electric buses that can be fully charged in just 30 seconds. India should thus quickly move beyond its current lithium-ion batteries.

It is good to see that the government has woken up to the long-term benefits of switching to e-vehicles as petrol, diesel and oil won’t last forever and we need to find alternative sources. However, the government needs to build the required infrastructure. Once this happens, automobile manufacturers will throw their weight behind e-vehicles to make the programme a successful one.

(The author is a Delhi-based journalist. He can be reached at prasad.n@indoen.com)