Union Budget 2022-23 | EV Charging Sector Expectations From Budget 2022

Krishna K.Jasti Jan 28, 2022

Electric and hybrid vehicles are the future of mobility. While the technologies and infrastructure around hybrid fuels are still at a nascent stage, electric vehicles have gained more traction the world over. India too has invested in the accelerated adoption of electric vehicles.

The sector has tremendous potential to not only transform mobility and boost sustainable development but also contribute significantly to the economy. As per the projections made by the India Energy Storage Alliance, the EV market will record a 36% CAGR growth by 2026 and the EV battery market will record 30% CAGR in the same period.

The Government Initiatives to Boost EV Sector

The Ministry of Heavy Industries had launched FAME to accelerate progressive Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India. For FAME II, an outlay of 10,000 Cr from 2019 to 2021 was approved. India is rapidly implementing FAME-2 under the National Mission on Electric Mobility, and it has been extended for two years more till 31st March 2024. The Government has allocated Rs 75,000 Cr was allocated for Advance Chemistry Cell (ACC) Battery and Automobiles & Auto Components and an additional outlay of Rs 18,100 Cr for National Program on Advance Chemistry Cells (ACC) battery storage under its Production-Linked Incentive (PLI) Scheme.

To power the emerging EV fleet, the Government is continuously focusing on charging infrastructure for electric mobility. As per the latest developments, the Ministry of Road Transport and Highways has made provisions for installing EV Charging Stations as part of the Wayside Amenities (WSAs). The National Highways Authority of India (NHAI) has already awarded 39 facilities for EV charging infrastructure. Furthermore, the Government has launched Revised Consolidated Guidelines & Standards for Charging Infrastructure for Electric Vehicles, which would provide grid connectivity for the installation of public charging stations.

Need for Charging Infrastructure & Expectations from 2022 Budget

An independent study by CEEW Centre for Energy Finance, if we meet our ambitious 2030 target, India can tap into a US$206 billion opportunity. A total investment of over US$180 billion in vehicle production and charging infrastructure would be needed.

Consequently, the charging infrastructure segment needs stronger support because without a robust, wide, and adequate number of EV Charging points, the EV policy will struggle to succeed. There has to be more support to enable creation of charging infrastructure by private companies, which will in turn enable large scale adoption of EVs. The following are some of the industry expectations from the budget 2022.

Ownership of Charging Infrastructure. As charging infrastructure is installed over a huge geography, it is almost impossible for the Government or a handful of private companies to create the charging infrastructure required for our country. To create accessible charging infrastructure, key role would be played by local players and real estate owners, whereas CPOs may help in managing this infrastructure. There needs to be some policy empowering the installation companies without adversely affecting ownership rights of the property owner.

Boost revenue. The EV charging infrastructure business is in investment stage with not enough utilization to be profitable as of now. It may take more years to start turning profitable. Through budgetary and policy interventions, such as promoting retail colocation, interoperability of network, subsidising cost of raw materials, etc., the Government can help companies generate more revenue and minimize cost of installation, thereby empowering organisations to scale-up installation.

Subsidize the capital heavy business. The cost of designing and installing charging infrastructure is very capital intensive. For the sector the first priority is to minimize capital cost as much as possible. While facilitating Grid connectivity is a right step for ease of setting up charging infrastructure, it is important for the sector that the Government subsidizes electrical connections and fixed load charges of EV charging point operators.

Responsibility Sharing. As properties of installed charging stations are not owned by companies or EV charging point operators (CPO), the responsibility of taking up the electrical load is always debated. If the Government can provide for the electrical load infrastructure costs in the budget, the number of charging stations we will have in our country will grow by manifold.

Promote low cost renewable energy. For EV mobility to be sustainable and environment friendly, India needs to replace high cost fossil fuel based power generation with low cost renewable energy. Therefore, the supply of low cost RE electricity will reduce the operational cost significantly. This can be enabled by supporting solutions such as open access for solar power.

Make charging stations a part of Green Real Estate. Mandating charging stations for parking zones, commercial, industrial, and residential real estate and other sustainable and green real estate projects will resolve the challenge of adequate charging infrastructure, boost sectoral growth and create revenue generating avenues for the industry.