Electric Vehicle market revives as Kerala's tariff reforms boost EV charging sector

Kochi: Although the recent tariff reform order from the Electricity Regulatory Commission may pose a setback for electricity consumers, it is set to provide a notable boost to the electric vehicle (EV) market. The Commission's order has waived the 'fixed charges' previously levied by the Kerala State Electricity Board (KSEB) on EV charging stations along with the energy charges.

Earlier, small-scale charging stations were charged ₹100 per kW under the low-tension (LT) category, and large-scale charging stations were charged ₹290 per kW under the high-tension (HT) category as 'demand charges.' These charges, along with energy tariffs, were being passed on to consumers through higher charging rates. This system was not only inconsistent but also excessively burdensome.

Highlighting this issue, Mathrubhumi published a report titled Kerala, what kind of charges are these? on September 21, 2024. With the new decision, charging rates are expected to decrease, encouraging more companies to enter the EV charging station business. Kerala is already one of the states with the highest number of EV charging stations in the country.

According to Central Government data, Kerala has 1,212 EV charging stations. The EV charging sector is witnessing steady growth as a business. Various companies in the state currently charge between ₹15 and ₹23 per unit for charging. The Central Government mandates that power distribution companies supplying electricity to charging stations should only levy energy charges (single-part tariff). However, Kerala's previous practice of imposing additional fixed charges had contributed to higher charging rates.

The state had earlier set the energy charge at ₹5.50 per kW in the LT category, along with an additional fixed charge of ₹100 per kW. For a 60 kW charging station, this amounted to a fixed charge of ₹6,000 per month.

As per the new decision, the energy charge in the LT category has been increased from ₹5.50 per kW to ₹7.15 per kW for the next two financial years. Similarly, in the HT category, the energy charge has been increased from ₹6 per kW to ₹7 per kW. Even with these hikes, the removal of the significant fixed charge component provides substantial relief to charging station operators, ultimately reducing the burden on consumers.