In a recent interview with Indian Infrastructure, Ghanshyam Prasad, Chairperson, Central Electricity Authority (CEA), shared his views on the state of the power sector, the challenges in the ongoing energy transition, the country’s net zero goals and the reforms being introduced to accelerate this shift. He also talked about the renewed focus on hydropower and renewable energy expansion, and the strategies to meet the growing demand for green power. Excerpts…
What is your view on the current state of the power sector?
The power sector is going through a challenging phase, particularly on the energy transition front. India has committed to achieving net zero emissions by 2070, although other countries have set earlier targets. Given the current situation and the growth of the sector, it is important to be practical rather than set unachievable deadlines. However, efforts will be made to accelerate the energy transition, with the aim of potentially achieving net zero earlier than 2070.
In the energy transition, certain segments are harder to decarbonise. Specifically, for the electricity sector, India aims to reach net zero earlier, possibly by 2050 or 2060. Plans are being made to determine the capacity mix for 2047 and 2070. However, predicting this far ahead is difficult due to uncertainties in demand growth and potential advancements in technology. As seen in the past, power sector technologies used 20-25 years ago have become obsolete, with newer technologies such as solar, wind and battery storage emerging significantly over the past decade.
Despite the current challenges, India is well-prepared to pursue a pragmatic approach to energy transition. Efforts are underway to implement necessary reforms to accelerate this transition. Over the past three to four years, several reforms have been introduced to support the energy transition and ensure sector viability, benefitting consumers. Timely reforms have enabled the country to supply electricity to consumers at reasonable prices.
What are the major unresolved issues and key challenges in the sector?
The emerging challenges in the sector are largely a result of the ongoing energy transition. We are adapting to new dynamics within the electricity grid. Initially, our focus was on plain solar and wind energy, followed by the development of hybrid solar-wind systems. Currently, we are exploring options for round-the-clock power, firm despatchable renewable energy sources and peaking supply solutions. Various strategies are being devised to meet grid requirements and consumer demand. In addition, efforts are underway to improve connectivity and install transmission lines for renewable energy projects.
While solar and wind projects typically have a gestation period of 18-24 months, transmission infrastructure takes longer to build. So the planning mantra has shifted to “transmission ahead of generation”, with dynamic, six-monthly updates. This ensures timely adjustments to plans and supports renewable energy developers. In states such as Rajasthan, where large amounts of renewable energy need to be evacuated but right of way is limited, high voltage direct current (HVDC) systems have been planned. However, supply chain constraints mean HVDC systems have a lead time of four to five years, causing delays. Efforts are being made to find alternative solutions to maintain the pace of renewable development and ensure continued power evacuation.
What is your outlook for the hydropower segment, especially pumped storage projects? What are the measures needed in this segment?
After a long period of decline, hydro and pumped storage projects (PSPs) have received renewed focus. Although solar capacity is increasing, it can only provide electricity for about six to seven hours a day, making reliable balancing power essential for non-solar hours. Hydro PSPs are critical for this role as they can be controlled to supply power when needed.
To facilitate hydro and hydro PSP development, several measures have been introduced. The Ministry of Environment, Forests and Climate Change (MoEFCC) has relaxed the norms for closed loop and off-stream hydro PSPs, in line with mining project norms. This will save time on environmental clearances and initial investigations. Additionally, incentives are being provided for hydro PSPs, including support for the development of roads, bridges, transmission lines and associated infrastructure. These amount to Rs 10 million per MW, with a cap of Rs 15 million per MW.
The focus on hydro and hydro PSP projects is helping mitigate costs and expedite development. Off-stream closed loop hydro PSPs, with minimal construction needs, can be commissioned in 42-50 months, faster than thermal plants. The current storage costs of Rs 3.50-Rs 4.50 per unit make it an attractive option for supplying power during non-solar hours when electricity costs are higher.
The pipeline of hydro and PSP projects is growing daily, with self-identified projects now permitted. Approximately 180,000 MW of potential hydro PSP capacity has been identified. The MoEFCC has issued the terms of reference for around 120,000 MW of capacity, of which 60,000 MW is under survey and investigation. Efforts are being made to streamline the approval process, including the introduction of a single-window clearance system involving multiple organisations. To improve transparency and reduce delays, a new portal, “Jalvi Store”, has been launched, allowing real-time tracking of the status of detailed project reports.
Recent reforms have reduced approval timelines and allowed early excavation, potentially saving 6-12 months. The aim is to accelerate the development of PSP projects, with a target of approving 23-25 GW or more of hydro PSPs annually.
What are the key bottlenecks in expanding renewable energy capacity and how can they be resolved?
Expanding renewable capacity involves addressing several challenges pertaining to land acquisition, the development of transmission infrastructure and the maintenance of supply chains. Both developers and the government need to ensure that these elements are in place and resolve any policy issues to effectively support renewable energy developers. Past policy issues have largely been resolved through frequent interactions with renewable energy developers and state governments.
The CEA has prepared resource adequacy plans for discoms up to 2031-32, and is revising them for 2034-35. These plans, which include renewable purchase obligations, must be approved by the state commissions, ensuring regulatory oversight. Discoms are expected to meet these obligations and supply green power, especially to consumers with green energy preferences, such as industrial and commercial users.
Efforts to integrate renewable energy include encouraging discoms to actively participate in green power auctions and enhancing transparency in procurement processes. The aim is to foster a competitive market and accelerate the deployment of renewable energy projects by refining regulatory frameworks and providing incentives for green power adoption. This holistic approach ensures that renewable energy expansion is supported by strong infrastructure, regulatory oversight and market incentives, creating a sustainable and reliable energy future.
What is your expectation of power demand going forward, and what measures are needed to meet the growing demand for green power?
Unfortunately, despite our best efforts, predicting power demand remains a challenge, primarily because it is influenced by many unpredictable factors. One major factor is the weather, which creates uncertainty in demand. For example, there are cycles of drought, good monsoon years and variations in hydroelectric generation, all of which affect power needs. The good news is that our economic growth provides a trajectory for demand, but uncertainties from uncontrollable factors still need to be considered.
Power demand is influenced by both controllable and uncontrollable factors. For the past 10-20 years, the CEA has been revising projections regularly, and these revisions need to be conducted even more frequently, ideally on an annual basis, to quickly adapt to variations in demand.
For instance, the 20th Electric Power Survey (EPS) projected a demand growth of 6.4-6.5 per cent. However, in the past two years, we have observed growth rates closer to 10-11 per cent. The question is whether this trend will continue or moderate, as historically, demand has fluctuated. Over a 10-year period, the compound annual growth rate has been 5-5.5 per cent.
A significant challenge is that if demand spikes in a particular year, we cannot afford to be unprepared. To address this, we have contingency plans to cover various scenarios, such as drought, low hydro availability, or heatwaves. These plans help determine the right capacity mix to handle these situations.
We are also working on a resource adequacy plan to ensure that the country has enough capacity to meet future demand. This is being developed alongside enhanced load projections, and we are collaborating with the Indian Meteorological Department to incorporate long-term weather forecasts, which will help us improve our planning.
Last year, during August and September, we saw extremely high demand, but this year, the demand was lower. This variability caught us off guard. Companies were prepared to sell more electricity, and we had anticipated needing even gas-based power plants to meet the demand. However, this year, even coal-based plants have been operating at minimal capacity due to a decline in demand.
Given these uncertainties, we aim to avoid over-planning while still preparing for worst-case scenarios. Sometimes, this requires having slightly more capacity than necessary, ensuring we can always meet the power demand. High-demand periods are often limited to 20-30 days per year, so we also need to determine the right type of capacity to install without overburdening consumers. Overall, we expect demand growth to be slightly higher than the 6.4 per cent projected in the 20th EPS, potentially reaching 7-8 per cent. We are actively working on refining these projections, and our planning will continue to evolve as we adapt to these uncertainties.
What are some of the key initiatives the CEA has taken in the past year? What new studies and regulations are currently under preparation?
One of the most significant initiatives has been the development of resource adequacy plans, which were long overdue. The discoms had not been preparing these plans properly, especially with a 10-year feasibility outlook. Now, it has been mandated, with guidelines in place. The CEA has been working closely with discoms, guiding them through this process to build their capacity. This support will continue until discoms can independently conduct these assessments. This initiative has provided much-needed visibility into capacity requirements, including the type and timing of capacity additions, while also enhancing regulatory oversight and national-level optimisation.
In addition, we have provided guidelines for operations and maintenance practices to help discoms maintain their equipment effectively. We are now working on resource adequacy planning for transmission, although this has not yet been mandated like it has for generation. Currently, we are piloting this in three states and plan to roll it out nationwide to ensure a seamless flow of power from generation to the consumer level.
In the pipeline is an intra-state resource adequacy plan for transmission. We have already notified the National Electricity Plan for Generation, and the National Electricity Plan for Transmission will be notified within 15-20 days. For the first time, we are also preparing to notify the National Electricity Plan for Distribution. Previously, discoms were responsible for creating their own distribution plans, but we have found that they lacked long-term visibility, often planning only for the next two to three years.
Extending the planning horizon offers several benefits. We are also working to incorporate the N-1 contingency principle into the distribution plan, which is already used in transmission. This means that even if one part of the system fails, power supply will continue uninterrupted. We aim to apply this philosophy gradually across the system, from 33 kV to 11 kV lines, and ultimately at the consumer level. The ultimate goal is to ensure reliable, high-quality power supply, supported by a robust and redundant network, and a solid contingency plan.
What are the key focus areas and priorities for the CEA in the next few years?
In the coming years, we are focusing on new areas, particularly advancements in transmission technology. To highlight a few, hybrid HVDC and 1,200 kV HVAC are in the pipeline, with the latter expected to be the world’s highest voltage level in the AC segment. There is also an innovative concept of tapping high voltage AC lines directly to 440 volts to serve local consumers.
I recently saw this piloted by a couple of companies at CIGRE. If this takes off, it could revolutionise the entire electricity sector. Currently, we see kilometres of high voltage lines, with benefits reaching endpoints, but local communities, especially those whose land has been taken, often feel short-changed. I have organised a meeting with developers and a few discoms in the next 10 days to explore implementing this technology in India. If successful, it would significantly reduce costs and transmission losses by avoiding multiple step-downs in voltage.
At the CEA, we aim to explore such innovations, positioning ourselves as the fulcrum of the power sector by coordinating efforts with the ministries of power, renewables, coal and petroleum, the MoEFCC, and related state agencies.
We are seeing large loads concentrated in specific areas, particularly with green hydrogen, green ammonia and data centres. These are established trends, but new developments may emerge. In addition, electric vehicles are growing in number, and we need to adapt to their charging behaviours. Implementing a time-of-day pricing structure will be essential, especially after the installation of necessary smart meters.
Another disruption to consider is the rise of prosumers — individuals who generate their own power. If battery costs decrease significantly, homeowners may be able to rely solely on their rooftop solar panels and batteries, potentially reducing their dependence on distribution companies.
However, due to reliability needs, especially of industrial and commercial consumers, all these elements will coexist. Large industries will still require the support of discoms for backup power, as will households. While these systems may present challenges to one another, they can also create new opportunities.
What is the outlook for the sector?
The coming years are set to be particularly exciting for young professionals entering the sector. This is a great opportunity for them to adapt to the evolving landscape and take advantage of new possibilities. In a stable sector, there is little room for learning; however, a dynamic environment fosters growth and encourages individual contributions. It is an opportune time to reflect, act and deliver meaningful results.