The transmission segment has witnessed significant growth during the past one year owing to various government initiatives and the increasing focus on renewables. With continuous capacity additions and increased investments, the transmission segment shows potential to drive sector growth. Top managers of leading transcos share their views on the noteworthy achievements in the past year, the key trends to watch and the challenges that lie ahead…
What have been the most noteworthy achievements of the power sector in the past one year?
The most noteworthy achievement in the past couple of years has been the improvement in the power supply position in small towns and rural areas, which are now getting power supply for more than 16-18 hours every day. Till just two to three years ago, most small towns and rural areas in the country were getting only 6-10 hours of supply. The thrust on renewables is another initiative worth mentioning.
A noteworthy achievement over the past one year has been the commissioning of the 800 kV high voltage direct current interregional link between Champa and Kurukshetra by Power Grid Corporation of India Limited (Powergrid).
Ved Mani Tiwari
We have made significant progress in the power sector over the past few years. From a state of power deficit, the government and the private sector have worked well together to make the country power surplus. Currently, our installed capacity exceeds demand and this has been made possible due to positive policy interventions as well as increased private sector participation. Our installed capacity as on June 30, 2017 stood at 330 GW, against 304 GW in the preceding year. Thermal continued to lead with 220 GW of capacity (adding 6 GW during the year), followed by renewables at 58 GW (adding 14 GW) and hydro at 44 GW. The net additions in renewables, which include solar and wind, have been at a much faster pace as compared to conventional sources like thermal or hydro.
Our total transmission line length at 220 kV as of June 30, 2017 stood at 374,706 ckt. km, as against 347,294 ckt. km in the previous year. Good progress was made at other voltage levels as well. Transformer capacity upto 220 kV increased to 764,070 MVA from 675,584 MVA in 2016. Other kV segments also registered good growth.
What are the top trends to watch in the transmission segment in the short to medium term?
In the past two to three years, large investments have been made in transmission schemes. Many of these schemes are now coming into commercial operation. We need to watch for increases in transmission/point-of-contact charges. We should also watch out for the impact of this operational revenue on the financial parameters of transmission companies – Powergrid, state-owned companies and private sector companies.
The top trends that are expected to dominate the transmission segment in the short to medium term are as follows:
- Bidding under the tariff-based competitive bidding (TBCB) route for intra-state transmission schemes.
- Use of drones in construction, and operations and management services.
Ved Mani Tiwari
The Tariff Policy, 2016 lays emphasis on the adoption of TBCB in the state transmission segment too. Earlier, only central projects were coming up under TBCB; however, as per the new policy, the states are to adopt this as well. Jharkhand has been the first state to adopt TBCB and we are confident that other states will also implement this mechanism.
The introduction of infrastructure investment trusts (InvITs) for infrastructure financing has been a big positive for the sector. It is the most cost-efficient route of raising infrastructure capital and we are proud to be the first power transmission company to have listed our InvIt instrument on the bourses.
Giving preference to domestic manufacturers for government purchases, as a part of the Make in India initiative, is also very encouraging. We are amongst the largest manufacturers of power cables and power conductors, and would like to partner with the government in its key initiatives like Power for All and railway electrification. We are also enthused by the government’s progressive steps towards introducing energy storage systems, e-vehicles, etc. which will be game changers in the time to come.
Power transmission is on a very strong footing. With 300 million people to be provided reliable power, transmission bottlenecks will need to be addressed. With 175 GW of renewable energy addition expected by 2022, the transmission segment is expected to receive Rs 2,600 billion worth of investments. The private sector will play a key role in making this investment possible. We are on the cusp of secular growth for the next couple of years.
What are the most pressing issues facing the power transmission segment? What is the way forward?
The first issue is regarding the development of a cost-effective transmission system for the integration of renewable generation. To this end, the line loading criteria must be reworked for improving the utilisation level of transmission elements. In addition, the use of smart techniques for better system reliability and resilience under contingencies must be taken up. The second is to ensure efficient grid operations with the increasing share of renewable generation. In order to achieve this objective, demand participative load despatch management must be undertaken. Finally, there are issues pertaining to security concerns in the context of smart grid systems. These issues can be tackled by means of a comprehensive risk management strategy based on a multi-focused approach through awareness, education, policy, regulations, specifications, and research and development.
One of the important issues that need to be addressed is the right of way (RoW) for transmission lines. For this, it is important to ensure that the policy framed by the Ministry of Power (MoP) is adopted in all states without any deviation. Another issue pertains to the power ministry’s policy on the provision of incentives for early commissioning of transmission projects. In this regard, the Central Electricity Authority has started the process of revision of standard bidding documents for transmission projects.
Ved Mani Tiwari
While the MoP has introduced a policy for incentivising the early commissioning of projects, issues relating to the revised scheduled commercial operation date and upstream/downstream readiness are yet to be resolved. Deliberations on an early commissioning policy and emulation of international best practices will make the standard bidding document more effective. Developers like us who invest a lot in technology and project management to deliver projects ahead of schedule will be greatly encouraged if early commissioning is rewarded.
While the states have, in principle, agreed to move to TBCB, a push is required for its implementation. Competitive bidding will benefit consumers through reduced tariffs. Moreover, defining a threshold limit for competitive bidding is required at this stage.
The key issues faced by infrastructure developers are those relating to RoW and forest clearances. Simplifying these processes will reduce the timelines and expedite project execution.
Players from countries that do not allow Indian developers to participate in their market should face similar restrictions. While foreign direct investment is important for the overall growth of the transmission segment, the government should keep in mind the reciprocity given to the nation by rest of the world.