The Indian electricity transmission segment has been constantly evolving in line with power demand as well as the changing energy mix owing to an increasing influx of renewables. Going forward, an investment of Rs 2.6 trillion is required in the transmission segment alone to meet the future peak load, which is expected to reach 234 GW by 2021-22. Grid expansion will also be driven by the government’s ambitious plan to scale up renewable energy to 175 GW by 2022. The private sector is expected to play an important role in achieving the country’s grid expansion targets as competitive bidding gains momentum at both the interstate and intra-state levels.
Advanced technologies are being deployed at various levels to make the grid smarter and more robust. In addition, strengthening of the country’s load despatch centres (LDCs) has become of paramount importance to be able to deal with the intermittency associated with large amounts of renewable energy getting connected to the grid as well as altered load profiles likely to be triggered by the government’s e-mobility programme.
Indian Infrastructure provides an overview of the recent trends and developments in the power transmission segment…
As of March 2019, the total transmission line length stood at 413,407 ckt. km (220 kV and above) and alternating current substation capacity stood at 877,163 MVA. While line length grew at a compound annual growth rate of 7 per cent, AC substation capacity grew at about 11.9 per cent between 2011-12 and 2018-19. In addition, high voltage direct current (HVDC) substation capacity stood at 22,500 MW. Interregional transmission capacity has also grown significantly over the years and stood at 99,050 MW as of March 2019. Significantly, 24,000 MW of interregional transfer capacity has been added during the past two years. As a result, interregional power transfer increased from 138 billion units (BUs) in 2016-17 to 182 BUs 2018-19.
Recent years have witnessed significant increase in private participation. The share of private players in total line length increased from 3.3 per cent in 2011-12 to 7.4 per cent in 2018-19 and that in substation capacity, increasing from only 0.5 per cent to 3.7 per cent. However, Power Grid Corporation of India Limited (Powergrid) continues to dominate the country’s transmission sector with 158,833 ckt. km of lines and 348,356 MVA of substation capacity.
Regulatory and policy developments
In March 2019, the Central Electricity Regulatory Commission (CERC) notified the Terms and Conditions of Tariff Regulations, 2019, for the 2019-24 tariff period. Broadly, the regulations retain most of the terms of the previous regulations for interstate transmission systems (ISTS). The post-tax return on equity has been kept unchanged at 15.5 per cent and the method of cost recovery has been retained. However, changes have been made to some of the operations and maintenance norms. Further, ISTS licensees are now allowed to charge lower tariffs during the tariff period under certain conditions to help increase their competitiveness.
The CERC notified the Cross-Border Trade of Electricity Regulations which specify the procedure for getting access to the network on the Indian side for cross-border trade. The regulations follow the revised guidelines for cross-border trading finalised by the Ministry of Power (MoP) in December 2018. The MoP relaxed several clauses of its 2016 guidelines including repealing the earlier provision under which only companies fully owned by the governments of the concerned countries or those having at least 51 per cent equity investment of Indian companies could export to the Indian market after obtaining a one-time approval from the designated authority in India.
Significantly, in May 2018, the CERC incorporated fresh safeguards for the grant of connectivity to renewable energy projects to the ISTS to ensure that physical connectivity with the grid is granted only to developers who are in possession of land and have achieved financial closure, thereby excluding non-serious applicants from grid connectivity.
In November 2018, the Forum of Regulators approved the report on “Capacity Building of Indian Load Despatch Centres” which recommends a complete revamp of the way LDCs are organised to help establish them as sustainable institutions of power system operations and facilitators of a robust electricity market.
TBCB update and project pipeline
To fast-track development of the transmission network, tariff-based competitive bidding (TBCB) was introduced in 2006. As of March 2019, 37 transmission projects (excluding cancelled and under-litigation projects) were awarded under TBCB. Of these, while 26 projects were secured by private players, 11 projects were bagged by Powergrid. Among the private sector projects, 14 projects worth Rs 175.51 billion have been commissioned and 12 projects worth Rs 149.56
billion are under construction. Sterlite Grid with 12 projects leads the private sector, followed by Adani Transmission Limited (ATL) with a portfolio of five projects.
In a significant boost to private investments, in December 2018, the Empowered Committee on Transmission concurred with the recommendations of the National Committee on Transmission and approved transmission projects worth Rs 169.6 billion. Of these, Rs 87.08 billion worth of transmission projects associated with renewable energy projects in the western (10.5 GW) and northern (8.9 GW) regions will be offered through TBCB, Rs 27.27 billion worth by Powergrid through the regulated tariff mechanism, and the rest under various schemes.
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 11 intra-state transmission projects have been developed by private players, while another seven projects are under development.
Private sector consolidation
With several mergers and acquisitions, there has been consolidation in the private transmission space. In February 2019, ATL acquired KEC Bikaner Sikar Transmission Private Limited from KEC International for Rs 2.28 billion. With this, ATL now owns 13,450 ckt. km of power transmission lines, divided into 10,355 ckt. km of operational assets (including those under acquisition) and approximately 3,095 ckt. km of under-construction assets. Earlier, in August 2018, ATL completed the acquisition of Reliance Infrastructure Limited’s integrated power business of generation, transmission and distribution in the Mumbai area in a deal worth Rs 188 billion.
In 2018, IndiGrid, India’s first power sector infrastructure investment trust, completed the acquisition of Patran Transmission Company Limited’s transmission assets from Techno Electric & Engineering Company Limited at an estimated value of Rs 2.32 billion.
In October 2018, Sekura Energy Limited, a unit of Edelweiss Infrastructure Yield Plus Fund, entered into an agreement with Essel Infraprojects Limited for the acquisition of four power transmission special purpose vehicles at an estimated cost of Rs 60 billion. Reportedly, Greenko has been in talks with Megha Engineering & Infrastructure Limited to acquire Western Uttar Pradesh Power Transmission Company Limited from the latter.
In July 2018, Powergrid, in collaboration with GE T&D India Limited, commissioned the wide area monitoring system (WAMS) for the northern region grid. It marked the first leg of a mega grid stabilisation project (Unified Real Time Dynamic State Measurement) and will enable Powergrid to monitor power flow across 110 substations in the northern region grid and respond to fluctuations within a fraction of a second. Once fully commissioned in all five regional grids, the WAMS solution will be the world’s largest, comprising 1,184 phasor measurement units and 34 control centres, and 350 substations in the national grid. Meanwhile, to ensure availability of uninterrupted quality power, Powergrid commissioned a 400 kV synchronous compensator (with a dynamic swing range of 600 MVAr and 250 MVAr mechanically switched components) at its substation in Rourkela, Odisha in 2018.
Recently, the Central Electricity Authority (CEA) recommended that power utilities should consider the installation of high performance conductors (HPC) in their existing and new power lines to help augment their transmission capacity. Although an HPC is more expensive relative to its counterparts (by two to five times), it could be considered economical if other associated costs and loss reductions are taken into account.
Another important initiative by the MoP and the CEA is preparation of new guidelines for greener options (such as aluminium) for transmission cables for protecting the environment from the adverse effects of lead-based cables.
Strengthening cross-border links
In January 2019, India and Nepal agreed to set up an “energy banking” mechanism to boost a two-way exchange of electricity between the two countries. Nepal can export surplus power to India during the monsoon season and import it during its lean season in the winter. The energy banking agreement will be initiated with the newly constructed 400 kV Dhalkebar-Muzaffarpur transmission line. Besides this, India has agreed to extend the capacity of the 132 kV Raksaul-Parwanipur and Kataiya-Kusaha transmission lines to strengthen Nepal’s electricity system. The two countries are also working on funding and implementation modalities for the proposed 400 kV Butwal (Nepal)-Gorakhpur (India) link.
In August 2018, the 500 MW second block of the HVDC, back-to-back link in Bheramara, Bangladesh, was commissioned as part of the capacity upgrade of the existing 104 km Bangladesh (Bheramara)-India (Berhampore) interconnection to meet the increasing demand for electricity in both the countries.
Challenges and outlook
Several challenges need to be resolved to ensure that grid expansion plans are on track. Due to lack of harmonisation of policies and regulations across states, securing right of way remains a pressing concern for all project developers. Another issue is that the projects awarded under TBCB are still being offered on a sporadic basis, and there is no long-term pipeline of projects. Further, the large-scale capacity addition and connection of millions of new consumers to the grid requires robust grid planning, as well as empowering of system operators and regulators to ensure effective implementation of relevant policies and regulations.
The augmentation of transmission infrastructure must be accelerated, particularly the green energy corridors and those at the intra-state level, to ensure that the government’s renewable energy and Power for All goals are met. This, coupled with the implementation of power system operation reforms at the state level, will help in building a more flexible and robust grid that is equipped to support the shift in generation mix and distribution loads.