BIG BOOST FOR PRIVATE INVESTMENT IN ELECTRIC VEHICLE CHARGING INFRASTRUCTURE

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In order to boost private investment in charging infrastructure in the country, Ministry of Power (MoP) has issued the "clarification on charging infrastructure for Electric Vehicles with reference to the provisions of the Electricity Act 2003" on 13 April 2018. The power sector is regulated under The Electricity Act 2003. There was lack of clarity regarding whether or not there is a requirement to obtain a license to setup a charging station of batteries or electric vehicles under the Act. The ministry has now categorised charging batteries of electric vehicles as a service, which will help such stations operate without a licence and encourage the use of e-vehicles.

According to Section 12  of The Electricity Act 2003, the company requires to obtain a license for the activities of transmission, distribution or trading in electricity. Further, Section 2 of TEA 2003 provides definition for "consumer" for electricity (i.e. any person who is supplied with electricity for his own use and includes any person whose premises are for the time being connected for the purpose of receiving electricity) and "trading" of electricity (i.e. procurement of electricity for resale thereof). 

 All utilities have to seek licences for sale of power to consumers. The ministry said in a clarification that during the charging of e-vehicles, a station does not perform any activity related to the transmission, distribution or trading of electricity. The charging of battery essentially involves utilisation of electrical energy for its conversion to chemical energy, which gets stored in the battery. Further, the charging of the battery of an electric 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. this activity does not in any way “include the sale of electricity to any person as the electricity is consumed within the premises owned by the charging station, which may be connected to the distribution system or otherwise for receiving electricity. By the same logic, the activity does not involve further distribution or transmission of electricity. Hence charging of batteries of electric vehicles through charging station does not any require a licence under the provision of the Electricity Act 2003. 

 According to Tata Power Research, an area of 3 km will need nearly 300 charging stations with four to five charging slots each once electric vehicles become more mainstream,. The cost of setting up a rapid-charging outlet, he added, is around $38,245 (INR 25 Lakh), while that of a slow charging station will be around $1,529 (INR 1 Lakh). India currently has just 350 EV charging stations serving about half-a-million vehicles. This restricts the distance one can travel in an EV, limiting its use. Moreover, it takes at least an hour for an EV to get recharged, making it essential for users to factor this in while planning their commutes. 

This move will help to attract investment from private players in the charging infrastructure space. Non-availablity of city wide charging infrastructure was one of the major impediments in the way of promoting the use of electric vehicles. The government's National Electric Mobility Mission Plan launched in 2013 aims at ensuring 6-7 million electric and hybrid vehicles in India by 2020. The vision enunciated two years ago is for India to have 100 percent EVs by 2030.

The policy is expected to help the tariff for charging at an economical level of below INR 6.00 per unit. In the present scenario, the electric vehicles (EVs) make economic sense as their per kilometre running cost is less than a rupee, whereas the same cost for petrol and diesel works out to an average of INR 6.50.