The biggest risk that we face while starting a business is that we are investing our hard-earned money today and what if the government make changes in their policies and we lose our money.
But what if you get to know that the government is encouraging you to start a business. Everyone would love to do that business.
In this article, I’ll explain to you about starting an electric charging station business. I’ll cover the business requirements, complete process, who should you contact, what would be the total investment and how to start with minimal investment. I’ll also cover the profit you can expect and in how many years will your investment be recovered.
Types of Electric Vehicles
Decide for what type of vehicles are you going to start the charging station –
- 4 Wheelers
- Large & Heavy Vehicles such as Truck & Bus.
Drawbacks of Starting an EV Charging Station for Trucks & Buses – These are large vehicles and need more space for parking and movement. Hence you’ll need bigger land if you want to start a charging station for these.
Also, buses get parked in their depot and charging points are already available there. Hence, there is nothing much to do. As far as electric trucks are concerned, they are not available in India as of now. Hence, you can drop that idea as well.
Now, we are left with 2-wheelers, 3-wheelers and 4-wheelers. Now ask yourself,
Where do you get to see all these vehicles types more?
In big cities, you get to see these in the parking lot of malls and also at a lot of other commercial parking spaces and definitely on the road and housing societies with big parking spaces. There, people have their own vehicles with ample parking space.
A lot of people want to go for electric vehicles but they know that EV charging is a major problem. Hence they are restricting themselves to buy an electric vehicle.
If you can solve their vehicle charging problem by setting up a charging station in their society or in the parking of a mall or at any other commercial parking space, they’ll be benefitted from this and the number of electric vehicles will increase in that area.
Also, the charging requirement of a commercial vehicle will be more as compared to a private vehicle as people can charge their private vehicles at their home and a private vehicle won’t be discharged in the shorter commutes within the city.
However, for a commercial vehicle such as an electric auto or an electric cab, even though they start with a fully charged battery in the morning, their commutes are longer and this might lead their battery to be discharged fast. Hence, they will need a charging station for fast charging. So you should consider a separate charging station for commercial electric vehicles as commercial vehicles can’t be charged inside a housing society.
But if you plan to start a station within a housing society, you’ll be able to charge all the vehicles of the society. Also, if you are planning to start the charging station in the parking of a mall, you get the benefit as you are not far away from the crowd as people are already visiting the mall. They will find it convenient to charge the vehicle while they enjoy their time in the mall.
Step-by-step Process of Starting an EV Charging Station
Now that you are clear about the charging station for the type of vehicle, let’s understand the step-by-step process of starting it.
- Location – You need the location to start the charging station.
- Quotation for Equipment – You need to get the quotation for the equipment such as chargers, transformers, etc. and finalize the supplier for the setup.
- DISCOM – You need to contact the DISCOM of your area.
- Setup Charging Station – You can now set up your charging station.
- DISCOM Approval – A person from DISCOM will visit and inspect the setup and will give you a clearance certificate.
Requirements of an EV Charging Station Business
Now that you know the step-by-step process, let’s move to the requirements that you’ll have.
- Land Requirement – First, you need land to set up the charging station. This could be your private land or you can lease it out or you can lease out the parking space of a mall or a housing society or any other commercial building.
- Electricity Connection – You have to get an electricity connection along with a transformer. You’ll also need 33/11 KV heavy-duty cables for this connection and the setup. You’ll also need other electrical components.
- Civil Work – Then there is some civil work for charging towers, shades above the cars if it is an open parking. Also, the entry and exit of the charging station should be smooth without any discomfort. This is important as it is mentioned in the guidelines to have smooth vehicle movements. You’ll also need CCTV cameras and a little flooring work just as you have seen at any other CNG station or a petrol pump.
- Charging Tower and Equipment – There are 2 types of charging towers – AC & DC, we’ll discuss these in detail.
Types of Chargers for an EV Charging Station
There are different types of chargers that you can install as per the government guidelines. These include fast chargers as well as slow and moderate chargers.
Fast Chargers – These include CCS chargers, CHadeMO chargers and type 2 AC chargers. While CCS & ChadeMO chargers are for 4-wheelers. Type 2 AC charger is used for all 2-wheeler, 3-wheeler and 4-wheeler vehicles.
Slow/Moderate Chargers – These include Bharat DC 001 & Bharat AC 001. Bharat DC-001 is further categorized under 2 types – 48V output and 72V or higher output. Bharat DC-001 48V output charger is used for all 2-wheeler, 3-wheeler and 4-wheeler vehicles. Bharat DC-001 72V or higher output charger is used for only 4-wheeler vehicles. Also, the Bharat AC-001 charger is used for all 2-wheeler, 3-wheeler and 4-wheeler vehicles.
In simple words, these different types of chargers are similar to different types of smartphone chargers. Like there are multiple jack options in smartphone chargers. But nowadays, smartphone chargers are also coming with a universal Type C charging jack. These EV chargers are somehow similar to that concept.
EV manufacturers produce charger types as per their compatibility but now they have also started moving on universal chargers.
NOTE: In the 2018 circular from the government, it was said that a charging station must have all of these chargers. But in a revised circular in 2019, it was changed to have at least one of these charges.
Cost of Starting an EV Charging Station Business in India
How much does it cost?
Cost is divided into 2 categories. The first, being the capital expenditure and the second is the operational expenditure.
Capital Expenditure of Starting an EV Charging Station
For capital expenditure, let’s start with the chargers first.
- Chargers Cost – CCS & CHadeMO Chargers cost around Rs 7.5 lakhs each. Type 2 AC charger will cost around Rs 1.25 lakh. Under moderate/slow chargers category, BHARAT DC-001 will cost around Rs 2.5 lakh and BHARAT AC-001 will cost around Rs 70000. If you install all of these chargers then your charging station capacity will be 3240 kWh.
- Electricity Connection Cost – After chargers, now you need to get an electricity connection of 250 kVA along with a transformer, cables, meter and other components. All of these will cost you around Rs 6-7 lakhs.
- Civil Work Cost – Then you have to get the civil work done such as shades for cars, parking arrangement, flooring, etc. All of this civil work will cost you around Rs 2-3 lakhs.
This was the total capital you would need if you are planning to start a charging station. if you add these numbers, it will sum up to around Rs 30 lakhs.
However, this number includes all types of chargers. But it is not compulsory that you should get every charger installed from the list. You can even start with at least 1-2 chargers depending on your budget. This reduces your capital expenditure.
Operational Expenditure of Starting an EV Charging Station
Now, let’s talk about the operational cost required to keep the EV charging station business running.
- EVSE management software – This software lets your customers know if there is a vacant slot available at your charging station. They can even book the slot from this software. This software costs around Rs 50000 annually.
- Manpower – To run 1 charging station, you would need at least 2 people as per the government guidelines. One of them would be a trained technician who will take care of the charging work. The other one will take care of the car parking and maintenance. The salary of these 2 people will cost around Rs 4-5 lakhs annually.
- Payment Gateway – For online payment options like payment from a card using a swipe machine.
- Internet Connection – For the EVSE management software and the payment gateway.
- Land Rent – If you’ve taken the land on lease then you have to pay the rent for that as well.
- Marketing & Advertisement – You can also get some marketing and advertisement done, which is optional but it increases sales.
- Electricity cost – Electricity cost for charging the electric vehicles.
I’ve not discussed the operational cost in detail as it varies from place to place. For example, if the land is yours then you need not pay the land rent and it reduces the operational cost. Also, the salary of the people might vary. Hence, you can note down the operational cost as per your understanding.
In total, it will cost you around Rs 30 lakhs to start a charging station including all types of chargers. This cost will reduce if you don’t include all types of chargers.
Profit in EV Charging Station Business
Now comes the main part, How will the profit be? As you know that you have to charge the electric vehicles visiting your station. You will get the electricity from DISCOM. DISCOM will provide you electricity at a certain price/unit. You can then add your margin on it and start charging the electric vehicles.
There is no such price capping on the electricity you will sell further for electric vehicle charging. But in the future, there will be a price cap for sure. Hence, you can assume the margin of Rs 2-3/unit.
Now, let’s understand the profit,
Profit in Worst Case Scenario
Assume you’ve installed a plant with all the chargers and as I told you, this charging station’s capacity is 3240 kWh/day. Let’s assume that the charging station stays functional 6 hours a day.
If we go by this data then the total consumption in a day would be 810 kWh.
Let’s also assume that the charging station stays open 365 days a year just like any other gas or petrol pump and assume the margin on the electricity is Rs 2/unit.
This makes the annual revenue of Rs 591300.
If the margin is increased to Rs 3/unit then the total annual revenue will be Rs 886950.
Profit in Average Case Scenario
In this scenario, let’s assume the vehicles have increased and now the station stays functional 12 hours a day.
This means consumption of 1620 kWh/day.
With a margin of Rs 2/unit, the net annual revenue will be Rs 1182600.
If the margin is increased to Rs 3/unit, the net annual revenue will be Rs 1773900.
Profit in Best Case Scenario
In this scenario, let’s assume that there are enough electric vehicles in your area and your charging station stays functional 20 hours a day.
This means consumption of 2700 kWh/day.
And with a margin of Rs 2/unit, the net annual revenue will be Rs 1971000.
If the margin is increased to Rs 3/unit, the net annual revenue will be Rs 2956500.
Return on Investment in EV Charging Station Business
With the profit cases discussed above, we can predict that –
- A 6 hours functional charging station can recover your capital in 4-5 years
- A 12 hours functional charging station can recover your capital in 2-3 years
- And with the best scenario where the margin was Rs 3/unit and the station was functional for 20 hours a day, you can get your capital expenditure recovered in just 1-2 years.
Clearance Certificate For EV Charging Station
The best part is, you don’t need any kind of license to run an EV charging station. All you need is the clearance certificate from your area’s DISCOM. DISCOM simply does the inspection to check if your charging station is meeting the guidelines on the technical, performance and safety grounds. If yes, you get the certificate and you can run your charging station business.
This complete process that I’ve explained is for educational purposes and I’ve researched a lot for this. There might be a possibility that this process will change in the future. For example, the government guidelines on minimum chargers requirement like they mentioned in their 2018 circular later they changed it in their revised circular of 2019. So changes in these guidelines are not rare.
You can follow this process if you want to start your charging station right now.
EV Charging Station Business With Solar Farm
As per the government’s circular, you are not bound to get electricity from DISCOM. Now assume, how about if you start a solar farming plant and use the electricity in your EV charging station. How much the profit be when you use the free electricity from your solar farming plant.