Budget 2022 to Execute Power up EV Charging Scene – EQ Mag Pro
The government of India through the Ministry of Power recently promulgated the ‘Revised Consolidated Guidelines & Standards for Charging Infrastructure for Electric Vehicles (EV)’ on 15 January 2022.
Among many issues, these guidelines have fixed the timelines for providing grid connectivity for the installation of public charging stations, which is the right step for ease of setting up this critical infrastructure.
The state electricity regulatory commissions will have to enforce these guidelines in letter and spirit. The guidelines lay down the following locational density targets for deploying public EV charging stations:
- At least one charging station in every 3×3 km grid
- One charging station every 25 km on both sides of highways and roads
- One fast-charging station every 100 km on highways/roads for long-range/heavy-duty EVs
The need for EV charging investment and deployment is irrefutable. But the demand and other uncertainties combine to make public charging infrastructure risky and an unattractive investment. To achieve scale, debt financing is critical, and the industry must gradually reduce dependence on policy-driven subsidies. Simply put, the business case needs to improve substantially.
It is critical to understand the levers that can increase revenues and reduce costs to make the business case more appealing to mainstream debt investors. There are significant commercial, structural and operational levers to reduce latency, enhance revenues and cut costs. Smart charging services, advertisement, retail colocation and network interoperability are levers for revenue enhancement.
In this context, the guidelines promote revenue sharing model for setting up public charging stations. Land available with the Government/Public entities can be monetised for installation of Public Charging Stations on a revenue-sharing basis at a fixed rate of Re 1 / kWh (used for charging). This is a step in the right direction if adopted widely with transparent and competitive bidding mechanisms. However, the budget can further clarify how this land will be made available.
The upcoming budget can also reimagine ways for promoting the ease of charging EVs with low-cost renewable energy (RE) systems. Coupling EV charging with low-cost renewable energy systems can go a long way in improving the economics of both EV and RE adoption. The guidelines notified by the Ministry of Power have taken the first step in this direction for public charging stations by allowing open access, stipulating the timelines for open access applications and applicable open access charges. Access to cheaper finance can also be made available for a certain period till this becomes self-sustaining. Also, even larger-sized commercial vehicles are also equally polluting and should be shifted to electric as soon as possible. Capital subsidies could be provided for these as well.
Further, while incentives have been provided for charging infrastructure, more incentives can also be provided for battery swapping – this is a big enabler of electric mobility particularly for the commercial segment. Also, GST on EV has been reduced but that on batteries seems to be still on the higher side. This can also be considered for a reduction in line with that of EVs.
Budget propositions for promoting green hydrogen
The supply chain of GH2 is complex like any other fossil fuel commodity and includes production from renewable energy sources, storage and delivery (if the production and demand centres are not co-located). Beyond this, many potential end-use applications may need technology and infrastructure to support energy transformations such as H2 to electricity and vice versa, H2 to ammonia, H2 to methanol, etc. GH2 production, storage, and supply need to meet the purity, pressure, and volume requirements of specific industries and applications.
Achieving parity with grey hydrogen and natural gas prices will determine the speed and scale of GH2 adoption. This requires boosting demand for GH2 in a phased manner thereby achieving economies of scale across the supply chain, indigenisation of supply chain, and technology improvement to enhance efficiencies of GH2 production and transformations with earth-abundant raw materials. R&D investments and programs are crucial for technology indigenisation across the supply chain.
Much of the debate on reducing the cost of GH2 is focused on production, particularly electrolyser systems and renewable energy supply. Government intervention and pilot projects must also address and demonstrate the cost-effectiveness of GH2 storage and delivery systems. Our models simulating the techno-economic of the GH2 supply chain indicate that the goal of reducing GH2 costs to less than 100 INR/kg cannot be achieved without cost-effective storage and delivery systems.
The launch of the National Hydrogen Mission (NHM) and various GH2 pilot projects initiated by public sector undertakings are all steps in the right direction. The upcoming budget can provide more clarity on the short-term strategies of NHM to boost demand for GH2 including but not limited to GH2 purchase obligations, GH2 blending targets with piped natural gas, indigenous manufacturing and pilot projects for technology demonstration.
However, the primary focus of the budget should be towards boosting R&D investment with public-private partnerships (PPP) and grand challenges to demonstrate efficiently & cost-effective GH2 electrolysers, storage and delivery solutions using earth-abundant electrocatalysts and materials.
The Council of Scientific and Industrial Research (CSIR) can lead this initiative and design a PPP program to drive R&D investment from India Incorporated in collaboration with premier academic institutes of the country. The budget should provide a concrete roadmap towards developing testing facilities and certification mechanisms relying on globally harmonised standards & regulations for GH2 production, storage and delivery.
Viability gap funding should be focused on GH2 projects enabling low carbon steel, cement, trucking, and maritime shipping. RE power systems are typically oversized to account for variability in the production of green hydrogen systems. A purchase guarantee mechanism to buy back excess renewable electricity can generate alternate revenues for investors and reduce the overall cost of production.
The budget should also focus on creating world-class talent in the value chain of GH2 by way of introducing dedicated academic programs/ degrees and establishing national research institutes focusing on GH2. This is important to kick start the indigenisation of technology development and support the industry ambitions towards R&D, product development, and services in the entire value chain.
Budget propositions for other clean energy technologies
Solar industry is still dependent on a large number of imports for various equipment. These still attract a heavy price making our indigenous modules uncompetitive. The budget could look at measures to reduce the cost of imported equipment for promoting the solar industry. Also, new and more innovative applications, as well as efficiency modules, are needed as we move along. Clarity should also be provided on the tenure of Basic Customs Duty on the import of solar modules to promote the indigenous industry.
It is imperative that the budget be set across a fund for R&D to promote this in India. We need to do much more on R&D for the evolution of new technologies that could be mass-produced and exported.
Another measure could be to reinstate the accelerated depreciation benefits. Some sort of Viability Gap Funding can be considered for sunrise sectors that are still not viable such as energy storage, offshore wind, floating solar, etc. PLI scheme has seen a phenomenal response and the outlay, as well as the ambit of this scheme, can be expanded further.
MSMEs are a very promising segment that can play a huge role in EV, batteries, and distributed renewables. The potential of this segment must be harnessed in full. For this purpose, certain additional benefits could be extended such as access to concessional finance or even special financing products are given the risk perception, access to common manufacturing facilities and testing centers, etc.
Source: eletimes
