Electric vehicles can support renewable energy integration under the right policies

The government of India announced ambitious energy transition plans at COP26, saying it will deploy 500 GW of renewable electricity generation capacity by 2030 and sign up to the global EV30@30 campaign.

The renewables plan would triple India’s renewables capacity and the campaign calls for electric vehicles to make up at least 30% of new vehicle sales by 2030.

These two ambitious targets are closely connected. Shifting the country’s vehicle fleet from internal combustion engines to electric motors will further trim emissions if accompanied by an accelerated decarbonisation of India’s power sector. At the same time, electrifying road transport will unleash a tremendous number of distributed energy sources, which – if properly piloted and managed – could help absorb surplus solar and wind generation, reduce costs for consumers and utilities, and further incentivise EV adoption.

Beyond spurring EV sales, policy support for charging infrastructure and incentives for grid-friendly charging are essential to realise this potential, in particular to encourage daytime charging to absorb abundant solar output during the day.

The Indian policy landscape gives EVs the green light

EV uptake in India rose sharply in 2022, with electric car sales quadrupling to 48 000 vehicles from 12 000 in 2021. The two-wheeler sales share reached 7% while electric three-wheelers were 55% of new sales at 450 000 vehicles, ahead of China’s 350 000. One of the world’s largest two- and three-wheeler factories is being built in Tamil Nadu.

The government of India supports EV deployment through the Faster Adoption and Manufacturing of Hybrid and EV (FAME) II scheme, aiming to reduce primary oil consumption and pollution in cities as well as creating battery and EV manufacturing capacity at global scale. Phase one of the scheme was launched in 2015 with an allocation of INR 5.3 billion (USD 65 million1). FAME’s second phase began in April 2019, with funding boosted to INR 100 billion (USD 1.2 billion), and around 85% of the funding allocated to EV purchasing incentives. The scale up also added a component for charging infrastructure deployment, amounting to 10% of the funding allocation. In 2021 the scheme was extended to 2024.

Government think-tank NITI Aayog released Version 1 of its Handbook to Guide EV Charging Infrastructure in India in August 2021, further focusing attention on charging infrastructure. The handbook aims to guide authorities in planning and realising charging infrastructure and is set to be updated over time. India’s Ministry of Power also released revised guidelines and standards for charging infrastructure in 2022. Public charging infrastructure has jumped up in the last year from 900 publicly accessible chargers in 2021 to nearly 11 000 in 2022.

The rate of EV deployment varies across the country with the highest shares of EV sales in Delhi, Tripura, Assam and Karnataka where state-level policies are supportive. Delhi, for example, targets EVs to reach 25% of new vehicle sales by 2024. It has restrictions on polluting vehicles and exempts EVs from registration fees and road taxes.

EVs and solar can benefit each other

Scaling up solar PV and EVs presents potential challenges and opportunities for power systems. Large amounts of PV capacity can lead to excess generation availability during the day, resulting in curtailment.

At the same time, the natural tendency to recharge cars after returning home from work can add significantly to evening peak loads just as the sun is setting, stressing grid capacities and boosting required generating capacity, which may be met by fossil fuel generators.

On the other hand, these two technologies can complement each other if EVs can be charged during daylight hours with cheaper, cleaner electricity, at the same time helping integrate solar generation

Timing is everything

Time of use tariffs are currently one of the main measures to incentivise system-friendly EV charging patterns. In today’s India, time of use tariffs incentivise night-time charging, there by reducing peak loads. However, as solar generation plays an increasingly large role in the power mix, the key will be to shift charging to the daytime when solar output is high.

In order to illustrate the impacts of different charging strategies in a future Indian power system, we modelled several different charging cases in the context of the World Energy Outlook’s Announced Pledges Scenario in India for 2030 using the IEA’s India Regional Power System Model. The Announced Pledges Scenario includes all recent major national announcements as of September 2022 for 2030 targets and longer-term net zero and other pledges.

For this assessment, 80% of plug-in light duty vehicles and 2-to-3 wheelers are assumed to follow one of four different charging patterns: baseline, night, day, and dynamic (optimised) charging. This evaluation aims to illustrate the potential benefit of specific charging approaches if adopted by most eligible vehicles, with 20% of the fleet remaining on the baseline pattern to account for limitations in the availability of vehicles for charging. Commercial vehicles and trucks are excluded because of their tighter time constraints for charging, especially during the workday.

We look at three types of impact that EVs can have on the system: increased peak electricity demand costs, operational costs (e.g. power plant fuel consumption) and CO₂ emissions associated with charging. The first finding is that while night charging in this scenario can substantially reduce the peak electricity demand impact of EV charging, it has only a small benefit for operating costs and even less for emissions. This is because increased night-time demand is met primarily by coal, so while it avoids the need for increased capacity it still entails similar operating costs and emissions.

Percentage change in peak and operating costs, and emissons due to EV charging relative to baseline charging scenario due to different charging regimes, Announced Pledges Scenario, 2030

Note: Percentage reductions are calculated relative to a baseline case with predominantly unmanaged charging and refer to costs and emissions relating to EV charging only, e.g. an 80% reduction in the peak costs associated with electric vehicles. All cases are based on the IEA’s India Regional Model in the Announced Pledges Scenario in 2030. Operating costs consist of the costs for fuel, generation ramping and generator startups and shutdowns.

By contrast, a fixed charging pattern with EV load concentrated during the daytime results in the same reduction in peak costs accompanied by a much larger reduction in operating costs and a substantial reduction in the emissions associated with EV charging. If the benefit were entirely passed on to EV users, this would translate in a reduction in energy component of the charging cost from 0.41 to 0.29 USD per kWh. This illustrates that even a fixed time of use tariff structure could deliver large benefits, but the key will be to ensure that the timing is aligned to hours of high solar production rather than focusing only on peak load reduction. There is also the need with time of use tariffs to manage the risk of creating new load peaks due to coincident charging, where a specific tariff encourages too many users to charge EVs at the same time.

Dynamic charging has more relevance at the distribution level

Optimizing the EV charging pattern, which represents real-time load adjustment that might be achieved by dynamic tariffs, reduces operating costs by 29% and CO₂ emissions by 11%. The similar benefit in terms of operating cost savings between fixed and dynamic daytime charging indicates that even if non-dynamic approaches do not account for daily weather variations, the bulk of system-level benefits of shifting EV load into the daytime can still be captured.

Dynamic charging may have larger benefits at the distribution level, where it can manage local peaks in demand or renewables supply. Time of use tariffs can cause charging demand to exceed supply, e.g., during the daytime on a cloudy day, which can be avoided by dynamic tariffs. This effect may be more pronounced locally than at the system level where geographical smoothing applies for both load and renewables supply.

The synergies between EV and PV are also important at the local level. When possible, co-locating rooftop solar generation and electric vehicle charging provides an opportunity to mitigate the impacts of both technologies on the local grid. Where solar generation and EV demand are more physically distant, dynamic charging can come into play to help avoid grid congestion, and it may be necessary to consider grid strengthening.

EVs could ultimately contribute to peak supply

Further improvements in managing the EV fleet and ensuring their active participation in system balancing and emissions reduction can be achieved through vehicle-to-grid approaches. Vehicle-to-grid allows for both managed charging and discharging of EVs and, with the right tariff structure, can contribute to both balancing the power system as well as reducing EV owners’ charging bills.

EVs with vehicle-to-grid capabilities could potentially provide a large contribution to the power system. The services they can provide encompass both the ability to meet peak demand and an improved ability to provide ancillary services since each vehicle’s battery can both charge and discharge to smooth fluctuations in demand or supply, in effect acting as distributed storage.

Enabling vehicle-to-grid EVs in India faces similar challenges to smart charging, as well as additional barriers. These include complex value chains, the need for strong communication networks and protocols for linking with the grid, consumer acceptability and a need for mechanisms to reward providing ancillary services.

Policy support has an essential role in both EV uptake and smart charging

Policy has a key role in paving the way for increased EV uptake as well as ensuring system-friendly deployment. The IEA has recently published a framework that can be used to prioritise policy actions according to EV and variable renewables uptake. A number of key findings from a Clean Energy Ministerial accelerator on EV deployment are relevant to promoting system-friendly electric vehicles in India. In particular, the need for active engagement of stakeholders at many levels, the importance of taking into account mobility needs as well as grid assets, and the central role of infrastructure planning.

Policy supports for EVs in India so far have focused on alleviating the purchase cost of vehicles. This remains an important focus area in the shorter term, until EV prices fall to a level where they are competitive with conventional vehicles. Support for new business models such as “energy as a service” approaches, where vehicle owners lease rather than own batteries, can also enable faster uptake.

Further increases in availability of charging infrastructure will be a key priority going forward. The benefits of daytime charging places an important emphasis on the availability of charging at workplaces or parking lots, where vehicles are likely to be stationed during the day. This is already receiving attention in some states, with for example a workplace charging guidebook for corporates in Delhi released by the Dialogue and Development Commission of Delhi and World Resources Institute, India in November 2021. An increased focus on enabling work charging stations throughout India can have the dual benefit of increasing access to charging infrastructure and enabling daytime charging.

Increased availability of tariffs that can incentivise system-friendly charging will also be important. Most Indian states have some time of use tariffs available, but these are mostly limited to commercial and industrial users and current cost-recovery frameworks in India and do not incentivise distribution companies to pursue more advanced tariff offerings. At the same time, many states have already issued specific EV charging tariffs across India, and the open access minimum load requirement has been reduced to enable wheeling of renewable power directly to charging stations that have a load of more than 100 kW. Improving the regulatory incentives for distribution companies is a key policy measure to further advance smart charging in India, e.g., through performance-based regulation.

Given the rapid trajectory of EV sales in India, these policy measures need to be developed and implemented so that EVs and their capacity become an asset rather than an additional burden for India’s power sector.