India will require about 63,000 charging stations and cumulative investments of ₹26,900 crore for setting them up over the next five years to cater to the growing demand for power for operating EVs. In the next decade, in line with the growth in EV sales, the country could need 0.23 million charging stations, entailing a total investment of ₹1.05 lakh crore by FY32, said a report by India Ratings and Research. Per government data, there are about 1,000 commercial charging stations in the country in FY22.
The total demand for electric vehicles (EV) in the country could grow at a CAGR of 39 per cent in 10 years, the report said.
Several corporates and foreign players have started undertaking capital expenditure to set up charging infrastructure to capture a share of this growing market.
The EV penetration for the overall automobile industry is expected to reach 40 per cent by FY32 from about 4 per cent in FY23. The proliferation of commercial EV charging stations, which provide plug-in chargers on the road, would play a pivotal role in EV penetration.
A typical public charging station, comprising a slow charger of 3kwh power, two medium chargers of 20kwh power, and two fast chargers of 60kwh power, requires a capital investment of ₹20,40,000 (3kwh=10,000, 2x20kwh=2 lakh and 2x60kwh=18 lakh). With other expenses such as electricity connection, civil works, land rentals (Mumbai rates), and software, the total cost will work out to ₹35.5 lakh. The costs are estimated to go up in line with inflation as well as demand pick-up in the EV industry.
The proliferation of charging stations would lead to growth of charging station manufacturers as well as charging station operators (CSO). Charging station manufacturers would be responsible for providing complete charging point solutions for public and private charging, including hardware and software installation, maintenance of the hardware, and additional support services.
Some of the major charging infrastructure manufacturers are Delta Electronics Inc, ABB India Ltd, Exicom Power Solutions Ltd, and Okaya Power Ltd. CSOs would be responsible for operating a network of chargers, which includes electric vehicle charging, customer support, and network solutions (standalone or in partnership with a network service provider).
Meanwhile, the Union Ministry of Power has categorised electric vehicle charging as a service, and thus, the charging station providers would not need licensing under the Electricity Act, 2003. Some of the companies that offer CSO services are Energy Efficiency Services, Tata Power, and Magenta Group.
Priority sector lending
The NITI Aayog has proposed to categorise the loans to purchase EVs under the priority sector lending segment. The inclusion of EVs under this category would reduce the cost of finance and provide an impetus to demand, thus increasing the penetration of EVs in India.
Government schemes such as FAME and production-linked scheme for advanced chemistry cells, the government’s focus on expanding the footprint of the electric charging infrastructure, and sustained increases in the prices of petrol and diesel could lead to secular growth in the demand for EVs. The reimbursements through the FAME scheme aim to proactively promote more EV sales by reducing the TCO (total cost of ownership) of these vehicles.
In addition, State governments have been offering capital subsidies for installing charging stations, which will help to improve the EV charging infrastructure in the next 3-5 years.