Electric vehicles charging infrastructure: Debate begins with sale vs service argumenthttps://indianexpress.com/article/india/electric-vehicle-charging-infrastructure-debate-begins-with-sale-vs-service-argument-5045460/

Electric vehicles charging infrastructure: Debate begins with sale vs service argument

The Central government is learnt to have set up a committee chaired by the Member Planning, Central Electricity Authority to recommend the way forward for developing EV charging infrastructure in India.

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While an attempt is on to prod vehicle manufacturers to start EV production, the blueprint for the charging infrastructure is still on the drawing boards. (Illustration: C R Sasikumar)

Besides the upfront cost of electric vehicle, the availability of user friendly charging infrastructure is the single biggest factor that determines whether a country’s EV (electric vehicle) pursuit would succeed or not, Vidar Helgesen, Norwegian minister of climate and the environment, emphatically asserted when The Indian Express met him in his office in Oslo last month. Helgesen would know. Norway currently has the highest per capita number of electric cars in the world and has set an all-electric vehicle sales target for 2025. India has recently followed suit, having set a stiff all-electric vehicle sales target of 2030, but things will have to start from scratch here. While an attempt is on to prod vehicle manufacturers to start EV production, the blueprint for the charging infrastructure is still on the drawing boards.

Work-in-progress

The first and foremost question, as one looks at the legal and regulatory framework in India’s price-sensitive automobile market, is whether EV charging should be treated as a ‘service business’ or as purely the ‘sale of electricity’. The Central Government is learnt to have set up a committee chaired by the Member Planning, Central Electricity Authority (CEA) — the apex policy advisory body in the power sector — to recommend the way forward for developing EV charging infrastructure in India that can push the introduction of EVs on a large scale. The Forum of Regulators — an aggregation of power sector regulatory institutions — has also commissioned a separate study to look into the various aspects.

Read | Some incentives for EVs a good thing; charging infra should get high priority: Vidar Helgesen

The CEA panel has largely approached it from the legal aspect, fundamentally four key questions: Whether charging of EVs at a public charging station is distribution of electricity? Whether EVs, which use public charging stations, are consumers of the distribution licensee of the area? Whether the activity of charging of EVs by a public charging station will be “Supply” of electricity in terms of the Electricity Act, 2003? And, more crucially, whether charging of EVs at a public charging station is sale or resale of electricity or is a service business?

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The CEA panel seems to be veering around to the view that an AC (alternating current) or a DC (direct current) charging facility, while undoubtedly being a service, involves third party sale of electricity by a consumer of a distribution utility, among other things. So, if EV charging is commercially allowed under the existing provisions on the ground that it does not involve purely the resale of electricity by the private charging station, it could lead to a host of such interpretations on the ground that the service is not merely the sale of electricity, but a composite service.

Also Read | Environment-friendly mobility: Norway’s high-voltage EV push offers a template for India

The panel has, therefore come to the view that public EV charging by private entities should be allowed after explicit exemption is provided in law. Given this conclusion, the panel is learnt to have recommend to the government that a beginning can be made immediately by adopting a franchise model for setting up charging stations. This is being proposed as an interim arrangement, till the time that the Electricity Act 2003 is amended (the amendment is warranted since offering electricity charging service to EV users entails supply of electricity and hence would fall within the ambit of electricity distribution, which is a licensed activity and is in the jurisdiction of the distribution utility). The selection of a franchise is likely to be proposed to be done through competitive bidding on least markup criterion and bids bring invited from franchises over a large area such as a state as a whole, or the area under a discom (distribution company). Once the Electricity Act is amended, in next phase, the panel is likely to propose the introduction of market-based public charging stations to come up in competition with franchisees.

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The panel has, therefore come to the view that public EV charging by private entities should be allowed after explicit exemption is provided in law.

While experts concur that EV charging is undoubtedly a service, the panel’s view incorporating a regulatory attitude to keep EV charging under tight control could be detrimental to the development of the crucial infrastructure. Therefore, it might be a better to amend the law right at the onset and let the private sector come into EV charging service from day one.

Features of EV charging facility and the international models used for EV charging.

Types of charging

Level 1 Charging: Uses the same power supply and standard outlets available in the households using power cord and equipment that EVs come with. This is a simple charging facility which can be made available in the household or business property parking by installing a dedicated electric outlet in the parking lot of the premises. The cost of installation for Level1 Charging is low and has low impact on the grid. The disadvantage is that it provides slow charging, typically 3 to 8 km/hour.

Level 2 Charging: Requires installation of an Electric Vehicle Supply Equipment to enable faster charging. It is more efficient than Level 1 Charging and may provide charge of 15 to 35 km/hour. It will have a higher impact on peak power than Level 1 Charging.

DC Fast charging: DC fast charge provides compatible vehicles with an 80 per cent charge in 20-30 minutes by converting high voltage AC power to DC power for direct storage in EV batteries. It may provide a charge of 90 to 130 Km in 20 minutes. It is significantly more expensive than Level 1 or Level 2 equipment and will require a high voltage 3 phase power connection. It has higher impact on peak power than Level 2 Charging.

When it comes to Public EV charging facilities, the relevant benchmarks are the Level 2 and DC fast charging. The international models for EV Charging facility vary from country to country:

Norway: Norway has more than 5,600 public charging stations and more than 74,000 EVs on its roads. They have set a goal of 200,000 EVs by year 2018. 20 per cent of new vehicles sold in Norway are 100 per cent electric. In 2009, private companies and municipalities started working on a Norwegian nationwide network of public charging of EV. Public charging network has been established by private companies and municipalities. The location of charging stations was market driven and there was no master plan behind development of network of charging stations. For people who park their vehicles on road side, charging stations have been provided on the road side. It was felt that easily accessible and reliable information about charging infrastructure is crucial for the success of EV. To achieve this, all players combined their efforts. EV Association offered advice for standardisation of the charging points. The cooperation between government entity Transnova and Norwegian Electric Vehicle Association has resulted in development of an open, publicly owned data base that allows everyone to build services using standardised data free of charge.

France: French Regulatory Commission issued directions for the utilities to facilitate development of EV charging business and recommended that energy code can specify that recharging is not considered as electric supply.

The US: California: EV charging is exempted from existing California Electric Utility Law. Californian Public Utility found that EV charging station did not constitute resale of electricity. This was codified by the legislature with the passage of Assembly Bill 631. In second ruling, California banned Utilities from owning public charging stations, finding that it was unlikely that utility ownership of charging stations would increase supply or lower rates and that the potential for limited customer choice outweighed potential gain. In the Assembly Bill No. 1236 (which was approved by the Governor on October 8, 2015), the legislature has declared that it is in the interest of the legislature that local agencies do not adopt ordinances that create unreasonable barriers to the installation of EV charging stations and not restrict the ability of homeowners, agricultural and business concerns to install EV charging stations. Further, it is the intent of the legislature that local agencies encourage installation of EV charging stations and to remove obstacles to and minimise costs of, permitting for charging stations. The city council has to administratively approve an application to install EV charging station through issuance of building permit or similar nondiscretionary permit. Review of application to install EV charging station shall be limited to building official’s review of whether it meets all health and safety requirements of local, State and federal law.

In summation, there are four broad regulatory models prevailing internationally:

* EV charging is not considered as sale of electricity and is not regulated by the Electricity Regulators and electric utilities and municipalities and private entities are free to install public EV charging stations.

* EV charging business is not regulated except where the same are owned and operated by the regulated electric utilities.

* Electric utilities are not permitted to install EV charging stations as it is feared that the utility may use its dominant position to discourage competition.

* EV charging is considered as sale of electricity and is regulated by the Electricity Regulator.

Utilities and public entities are useful for deploying an initial network of charging stations, as they can put them in place that would initially not provide enough income to earn profit to attract private investment. Utility ownership would overcome the initial chicken-and- egg situation and get the urgently needed charging infrastructure in place. However, utilities may not be allowed to monopolise the EV charging market. Development of private EV charging station will provide pricing efficiency of competitive procurement and ability to scale beyond limited service territories and bring in new technologies and facilities for the customers. A healthy competition between the electric utilities, municipalities and private entities is required for development of public charging infrastructure.

There are other, very India-specific problems. For instance, in countries such as Norway, a majority of the electric charging stations are located inside the premises of a conventional fuel station. In India, this would not be possible in most of the fuel pumps, especially those in the cities, since the infrastructure is typically cramped into a tight plot of land. According to Ole Henrik Hannisdahl, chief executive officer of Green Contact, which builds and sets up fast-charging stations in Norway and who has made several sorties to India, emphasises that there is a need to space out the electric charging infrastructure from the fuel tanks and pumps for safety reasons. “This would not be possible in most of the pumps in cities such as Delhi, where everything is so tightly packed in. So, fresh thinking would be needed on where to house EV charging stations.”

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While that may be a secondary problem, getting the legal framework right is the first imperative. Amending the law to opening up the EV charging service to potential players and fostering competition between electric utilities and private entities could be a good way to start.