Running On Power: Unveiling The Story Of India's Electric Vehicle Charging Infrastructure
The evolution of India”s charging infrastructure resembles a jog on a treadmill—constant movement, but the progress seems limited. Despite the surge in electric vehicle (EV) adoption in one of the fastest-growing EV markets globally, the number of public charging stations (PCSes) remains relatively low. The hesitancy among financiers and investors stems from the challenges faced by PCSes, including low utilisation rates, uncertain breakeven periods, and high capital and operating costs. While the potential for EV growth is significant, the question lingers: Why is India”s charging infrastructure lagging, and what factors contribute to the apprehension of stakeholders?
One of the primary hurdles is the financial viability of PCSes, given their capital-intensive nature, with costs reaching around ₹30 lakh per PCS. According to industry sources, utilization rates hover as low as 5%, with customers often encountering non-functional chargers. Comparatively, the visibility to breakeven and profitability seems more apparent for small petrol pumps, making them a more bankable investment. The capital cost, coupled with operational expenses, creates a challenging scenario for PCSes, making financiers skeptical about their returns.
The underutilisation of PCSes has a domino effect on their bankability. In contrast to established processes for financing petrol pumps, the lack of visibility into the earnings of charging stations becomes a major deterrent for financiers. Unlike the clear metrics available for petrol pumps—breakeven, return on investment, and utilisation—charging stations lack such transparency. The unfamiliarity with the revenue potential and the lengthy breakeven periods deters financial institutions from readily supporting PCSes.
Globally, India”s ratio of EVs to PCSes is significantly lower, emphasising the need for rapid scaling of charging infrastructure. India is projected to require 1.32 million charging points by 2030 to achieve a favourable 1:40 ratio of charging infrastructure to EVs. However, conflicting estimates, such as the International Energy Agency”s projection of 300,000 charging points by 2030, highlight the uncertainty in forecasting charging infrastructure requirements. The current 17,093 public charging points in India, accounting for 0.6% of the global total, underscore the urgent need for expansive charging infrastructure development.
The chicken-and-egg situation arises concerning charging infrastructure—investment hesitancy persists due to low EV adoption, while the lack of charging infrastructure hampers widespread EV usage. Notably, China overcame this challenge by strategically investing in charging infrastructure concurrently with EV subsidies. However, India focused primarily on promoting EVs without addressing the essential charging infrastructure requirements, contributing to the current disparity.
To make PCSes viable, industry experts emphasise the importance of increasing charging volumes. The utilisation rates can improve significantly if reliable charging networks are established, accompanied by transparent information on charger availability. Additionally, the business model heavily relies on subsidised electricity tariffs supplied by states. Once these subsidies diminish, commercial rates might jeopardise the sustainability of the charging infrastructure business model unless supported by substantial charging volumes.
For charging networks to secure financing, attractive usage rates or collaborative efforts among multiple parties sharing charging infrastructure are crucial. Fleet charging emerges as a more viable option than standalone PCSes, as it ensures higher utilisation levels, reaching 40-45%, backed by power offtake guarantees from fleet operators.
While India”s EV market is flourishing, the charging infrastructure faces challenges that hinder its growth. The focus must shift toward addressing utilisation concerns, encouraging collaborative charging solutions, and formulating business models that extend beyond charging revenues, creating a more sustainable and bankable ecosystem for charging infrastructure development.
