Transmission Expansion: Growth in network and capacity to support shift in generation mix

Growth in network and capacity to support shift in generation mix

India’s power transmission segment is growing at an unprecedented pace, mainly due to the thrust provided by the recent policy and regulatory developments as well as government initiatives. The pace of expansion is expected to continue in the future to help meet the government’s 175 GW renewable energy and 24×7 Power for All goals.

An estimated Rs 2.6 trillion investment is required in the transmission segment to meet the future peak load, which is expected to reach 234 GW by 2021-22. While most of the future investment will be on the expansion of the physical grid infrastructure, utilities are expected to invest significant sums in new technologies to make grids more reliable, resilient, secure and smart.

New demand-supply patterns are emerging, as large amounts of renewable energy comes online. The government’s e-mobility programme is also expected to alter load profiles and significantly impact grid operations. With the increasing adoption of smart technologies, the need for cybersecurity has become paramount.

Greater participation and collaboration will be required from all stakeholders to help build a reliable, secure and smart future grid. In line with this, regulatory and policy initiatives have been taken and several others are under way to fast-track grid development. However, the challenges of right-of-way (RoW), delays in clearances, inadequate planning, etc. continue to impede the timely expansion of the segment.

The following is an overview of key developments that have taken place in the power transmission segment in the past year.

Size and growth

The transmission segment has grown significantly over the past few years led by the need to cater to the growing load and to provide connectivity to generation projects. As of March 2018, the total transmission line length stood at 390,970 ckt. km (220 kV and above) and AC substation capacity stood at 804,458 MVA. While the line length grew at a compound annual growth rate (CAGR) of over 7.3 per cent, AC substation capacity grew at about 11.8 per cent between 2012-13 and 2017-18. In addition, the high voltage direct current (HVDC) substation capacity stood at 22,500 MW as of March 2018.

The share of the private sector in total line length increased from around 2.9 per cent in 2012-13 to 6.9 per cent in 2017-18 while in substation capacity, it increased from only 0.6 per cent to 7.7 per cent. However, Power Grid Corporation of India Limited (Powergrid) continues to dominate the country’s transmission segment with around 145,400 ckt. km of lines and 323,715 MVA capacity.

Interregional transmission capacity has also grown significantly over the years and stood at 78,050 MW, as of February 2018. It increased at a CAGR of over 22 per cent between 2011-12 and 2016-17. Powergrid added a record 15,000 MW interregional power transfer capacity in 2016-17, which further boosted the smooth exchange of power without any price split.

Regulatory update

A conducive policy and regulatory framework has played a key role in the growth of the transmission segment, with the government ensuring that existing policies and regulations are continuously revised to increase participation and facilitate faster completion of transmission projects and enhance grid security.

On June 27, 2017, NITI Aayog released the draft version of the National Energy Policy (NEP). Once adopted, it will replace the Integrated Energy Policy prepared by the erstwhile Planning Commission. Key proposals for the transmission segment include a complete overhaul of the transmission and distribution (T&D) network and the reduction of T&D losses to 23 per cent; the development of transmission corridors in India to facilitate cross-border electricity trade with Bhutan; the deployment of sensors and sophisticated analytical engines for generating real-time, high geographical resolution data on grid conditions, etc.

In February 2017, the  Central Electricity Regulatory Commission (CERC) notified the regulations on cross-border trade of electricity. These regulations define a clear framework for carrying out electricity trade with neighbouring countries.

In May 2017, the CERC notified regulations for a Communication System for Inter-State   Transmission of Electricity in an effort to propose rules, guidelines and standards for continuous availability of data for system operations and control.

The draft regulations on Transmission Planning and Other Related Matters were framed in 2017. These regulations attempt to explicitly define the role and responsibilities of various entities to facilitate and strengthen the transmission planning process as well as lay down the broad principles of transmission planning.

The draft Grant of Connectivity and General Network Access to the Inter-state Transmission System and Other Related Matters Regulations, 2017, introduced in November 2017, have the objective of granting interstate transmission connectivity to renewable projects.

To promote competition in transmission at the intra-state level, the government notified the draft standard bidding documents for intra-state transmission projects in April 2017. The documents will provide a framework for conducting bids and the selection of transmission service providers by state transmission utilities.

Private participation

To fast-track the development of the transmission network, tariff-based competitive bidding (TBCB) was introduced in 2006. In the past 12 years, only 41 projects have been awarded through TBCB, of which 30 projects went to private players and 11 projects to Powergrid.

During 2017-18, only four interstate projects involving an investment of around Rs 38 billion were awarded. Of these, two were bagged by Powergrid — the 765 kV New Western Region-Northern Region Inter-regional Corridor project of 225 km and the 400 kV Eastern Region Strengthening Scheme XXI of 190 km. One project each was won by Sterlite Power Transmission Limited (additional 400 kV feed to Goa and additional transmission system at the Raigarh project, worth Rs 8.6 billion) and Adani Transmission Limited (ATL) (transmission system for the ultra mega solar park in Fatehgarh, worth Rs 5.4 billion). At the intra-state level, three projects involving an investment of Rs 3.9 billion were awarded to ATL by state-owned Rajasthan Rajya Vidyut Prasaran Nigam Limited.

The competitive bidding process for interstate projects has resulted in the discovery of low tariffs and faster project execution. Despite its success at the interstate level, only a handful of states (Uttar Pradesh, Rajasthan and Jharkhand) have adopted the model. Also, recent years have witnessed a shrinking project pipeline of interstate TBCB projects, with an investment outlook of only around Rs 65 billion at both the interstate and intra-state levels.

Strengthening cross-border links

India’s participation in cross-border trade of electricity has been significant, particularly in hydropower. The country has strong ties with the neighbouring countries of Nepal, Bhutan, Bangladesh and Myanmar.

In August 2017, India and Nepal inaugurated two new transmission lines for higher levels of electricity transfer – the Katiya-Kushaha and the Raxaul-Parwanipur transmission lines – which will add 100 MW to the 350 MW power that India already supplies to Nepal.

Keeping in view the number of hydropower projects in the pipeline, India is planning high capacity east-west transmission corridors in Nepal that would connect the projects located in Nepal to the load centres in India. India has also planned several interconnections with Bangladesh including the second Baharampur-Bheramara interconnection. In addition, the two countries have signed an MoU for the supply of 1,600 MW through dedicated HVDC transmission lines. The country is also implementing several interconnections with Bhutan. These include the 400 kV Punatsangchhu-I hydro project-Lhamoizingkha (Bhutan border), Lhamoizingkha-Alipurduar and Jigmeling-Alipurduar lines.

Other initiatives

The Indian Railways unveiled its Railways Mission 41k initiative in January 2017 with the objective of saving Rs 410 billion over the next 10 years through an integrated energy management system. Under this, 38,000 route km of rail track will be electrified between 2017-18 and 2021-22, to ensure 100 per cent electrification of its broad gauge rail routes. In order to meet its targets, it is focusing on the setting up of transmission lines, substations and transformers. This is expected to fuel growth in the transmission segment and create huge opportunities for equipment manufacturers in the country.

The evolution of smart grids and the increasing automation and digitalisation of the power transmission segment have necessitated measures to tackle the threat of cyberattacks. The issue of grid cybersecurity gained greater focus in May 2017 following the WannaCry ransomware attack which affected companies across the world, including, reportedly, the state power utilities of West Bengal and Kerala. The central government has directed the Central Electricity Authority to put in place testing standards for cybersecurity compliance and amend the regulations to ensure that secure equipment is installed in the grid. The government also plans to develop a testing facility where equipment can be tested for malware before installation and periodically after commissioning.

The increasing influx of renewables, and concerns over the environment and energy efficiency have paved the way for the adoption of electric vehicles (EVs) in the country. In March 2018, the government launched the National E-Mobility Programme which aims to increase the share of EVs to 30 per cent by 2030. The programme, aimed at providing an impetus to the e-mobility ecosystem, will be implemented by Energy Efficiency Services Limited, which will aggregate demand by procuring EVs in bulk to attain economies of scale.

Concerns and outlook

However, several issues need to be resolved to ensure that the grid expansion plans are on track. Securing RoW remains a pressing concern of both private and public project developers, with varying policies and regulations being adopted by different states. Environmental and forest clearances continue to remain leading challenges in project development. Interstate projects awarded under TBCB are still being offered on a sporadic basis, and there is no long-term pipeline of projects. Also, states are yet to adopt TBCB for intra-state projects. Further, large-scale capacity addition and connection of millions of new consumers to the grid requires robust grid planning and empowering system operators and regulators to ensure the effective implementation of relevant policies and regulations.

The current pace of expansion of the transmission segment must continue to ensure the government’s renewable energy and 24×7 Power for All goals are met. This will also ensure that a strong and reliable backbone grid is ready to support the shift in generation mix and distribution loads.