The power transmission segment has witnessed robust growth in the past year, mainly due to the push provided by recent policy, regulatory and government initiatives. Over the next few years, significant grid expansion is expected to help meet the future power demand and accommodate the increasing influx of renewable energy in the country’s energy mix. By end-2022, the grid is likely to register an addition of 105,580 ckt. km of lines and 292,000 MVA of substation capacity at the 220 kV and above voltage level, requiring an investment of around Rs 2.6 trillion.
Greater participation and collaboration from all stakeholders and agencies will be required to help build a reliable, secure and smart grid future. To help the country achieve its 175 GW renewable energy generation target by 2022, the central transmission utility (CTU) is setting up green energy corridors (GECs). At the state level, investments are being made for building modern grid infrastructure. To further boost private sector participation, projects worth Rs 46.8 billion are expected to be awarded over the next few months. Several regulatory and policy initiatives are also under way to fast-track grid development. Despite these positives, the transmission segment continues to be plagued by issues and challenges such as right of way (RoW), congestion and inadequate planning.
Power Line looks at the key developments that have taken place in the power transmission segment in the past year.
Size and growth
As of August 2017, the country’s high voltage network comprised 378,087 ckt. km of 220 kV and above lines. Of this, 43.6 per cent was operational at the 220 kV level, 43.5 per cent at 400 kV, 8.8 per cent at 756 kV and 4.1 per cent at 500 kV and 800 kV high voltage direct current (HVDC). In terms of transformer capacity, India had a total capacity of 755,855 MVA at 220 kV and above voltage levels as of August 2016. Of this, 42.4 per cent was at the 220 kV level, 34.3 per cent at 400 kV and 23.3 per cent at the 765 kV level. The country also has 21,000 MW of HVDC capacity at converter/back-to-back terminal stations. The interregional transfer capacity stood at 76,550 MW as of June 2017. During the period September 2016-August 2017, around 27,295 ckt. km of lines and 85,971 MVA of transformer capacity was added at the 220 kV and above voltage levels, representing a year-on-year growth of 7.8 per cent and 12.8 per cent respectively.
In the past year, the Ministry of Power (MoP) announced several policy and regulatory measures to increase transparency, integrate renewable energy and expedite project implementation.
In July 2016, the MoP released recommendations for the revision of standard bidding documents for the development of the interstate transmission system under the tariff-based competitive bidding (TBCB) process. The key changes recommended include switching to the build-own-operate-transfer model from the build-own-operate-maintain model; including experience in the core sector as a criterion in technical experience requirements; allowing tariff to be earned from the commercial operation date of the first element of the transmission project; and reducing the equity lock-in period.
The “e-Trans” web portal was launched in August 2016 to introduce electronic bidding and electronic reverse auction for the TBCB of transmission projects. At present, six transmission projects are planned to be awarded through reverse auction. The MoP released the Guidelines on Cross Border Trade of Electricity in December 2016 to provide a policy framework for accelerating power exchange across the South Asian region. Following this, the Central Electricity Regulatory Commission (CERC) notified the draft regulations for cross-border electricity trade in February 2017. The guidelines were issued in response to petitions filed by the Indian Energy Exchange and Tata Power Trading Company Limited with the CERC, seeking approval for enabling cross-border transactions through the power exchanges.
The CERC notified the draft transmission planning regulations in April 2017 with the aim of defining the roles and responsibilities of various entities in order to strengthen the transmission planning process. Once the regulations are framed, the Planning Code defined in the CERC (Indian Electricity Grid Code) Regulations, 2010, will be removed. In July 2017, NITI Aayog released the draft National Energy Policy (NEP), which puts forth the actions needed to enhance energy independence, increase access at affordable prices, ensure greater sustainability and achieve higher growth. With respect to transmission, the NEP has proposed several strategies to facilitate the integration of renewables into the grid.
The MoP is also looking to hive off the CTU function of Power Grid Corporation of India Limited (Powergrid) to attract private investment in the segment. Although the proposed unbundling was announced in mid-2015, not much progress had been made. The government is now considering distributing the CTU functions to other public sector organisations under the MoP.
Between April 2016 and August 2017, five projects involving an investment of Rs 52 billion were awarded through the TBCB route. Of these, two projects worth Rs 34 billion have been won by Sterlite Grid Limited, and one each by Adani Transmission Limited, Powergrid and Kalpataru Power Transmission Limited.
In addition, five projects worth Rs 39.5 billion and involving 1,420 ckt. km of line length and 6,000 MVA of substation capacity are at various stages of bidding. The key among these are the Eastern Region Strengthening Scheme XXI involving 380 ckt. km of lines and 4,900 MVA of transformer capacity; and the 450 ckt. km New Western Region-Northern Region 765 kV interregional corridor. Further, the Empowered Committee on Transmission, during its 37th meeting scheduled in September 2017, is expected to identify more projects to be awarded through the TBCB route.
While the government’s intent of increasing private sector involvement in expanding the country’s high voltage grid is clear, the pace of project awards through the TBCB route has been slow. In 2015-16, nine projects entailing an investment of over Rs 118 billion were awarded through this route. In comparison, only five projects worth Rs 52 billion were awarded in 2016-17, with no project having been awarded in 2017-18 so far.
The government has announced its plans to award transmission projects worth Rs 300 billion-Rs 500 billion associated with 33 new solar parks coming up in states like Andhra Pradesh, Madhya Pradesh, Karnataka, Rajasthan and Gujarat under the TBCB route. Some of these projects continue to be assigned to Powergrid on a nomination basis for implementation under a stringent time schedule.
Further, several projects for which the bidding process had been initiated/or planned had to be left in abeyance due to slow progress in the development of the associated generation capacity. Cases in point are the Transmission System for Phase I Generation Projects in Arunachal Pradesh, and the Scheme for Connectivity System for Lanco Vidarbha Thermal Power Private Limited and the Inter-state Transmission System Strengthening project in Chhatarpur in Madhya Pradesh. Moreover, the Associated Transmission System for the Tanda Thermal Power Station Expansion Scheme, which was awarded to Essel Infraprojects Limited in 2016, has been cancelled due to the non-signing of transmission service agreements by the respective long-term transmission customers. The above challenges highlight the need for having a proper transmission planning process in place.
Grid expansion programmes
Substantial progress has been made on the high capacity power transmission corridors (HCPTCs) being developed for evacuating power from independent power producer projects aggregating 62 GW. While Powergrid is implementing the majority of the HCPTC projects, a few of them have been awarded or are proposed to be awarded through the TBCB route. Of the 11 corridors, four have been commissioned, implementation of one is uncertain, while the remaining are under implementation and are expected to be commissioned by early 2018.
The GEC scheme, which aims to create an intra-state and interstate transmission network to connect upcoming renewable energy projects across the country, is making steady progress. Under GEC I, around 17,000 ckt. km of lines and 34,650 MVA of substation capacity is expected to be added at the interstate and intra-state levels while the GEC II project envisages the construction of transmission infrastructure for the evacuation of 20 GW of solar capacity by 2021-22. For the Rs 430 billion GEC project, the KfW Bank and the Asian Development Bank have committed to extend loans worth Euro 1.15 billion and $500 million, respectively, for financing various components of the GEC. The World Bank is also considering providing a $500 million loan for the implementation of transmission systems associated with these solar parks.
Construction works for 1,529 ckt. km of transmission lines and 11,000 MVA of transformer capacity for the interstate components being implemented by Powergrid under the GEC projects were under way as of August 2017.
At the state level, several utilities have formulated plans for strengthening their state networks under the GEC project. These include Madhya Pradesh Power Transmission Company Limited, which intends to invest Rs 21 billion over the next five years to construct around 3,000 ckt. km of lines and 10 substations to connect 5,850 MW of renewable capacity. Other states that are involved in the GEC project include Tamil Nadu, Andhra Pradesh, Gujarat, Maharashtra, Rajasthan, Karnataka and Himachal Pradesh.
Strengthening cross-border links
India is emerging as the frontrunner in developing cross-border interconnections for the trade of electricity. Currently, India’s power grid is linked with Nepal’s via 12 lines, with Bhutan’s via five lines, with Bangladesh via two lines and with Myanmar via one line. These links enable the exchange of around 2,400 MW of power between India and its four neighbours.
In the near term, five more interconnections – two each with Bhutan and Nepal, and one with Bangladesh – will be commissioned. In addition, 11 high capacity cross-border interconnections from different pooling points in Nepal are envisaged by 2035. These will help in the evacuation of power from about 280 hydro projects in Nepal to India, totalling 45 GW of installed capacity. Further, an HVDC subsea link is under study with Sri Lanka. These links are a part of the country’s larger plan of creating an integrated South Asian Association for Regional Cooperation power market. An integrated regional grid will help improve the system load factor by utilising load diversity, enhance the efficiency and reliability of power supply, lower the reserve margin, and provide economies of scale in power generation.
The pace of grid expansion has increased over the past few years with the smart policy and regulatory decisions taken by the government to promote competition and ease project execution. Despite significant growth, the segment continues to be plagued by challenges such as RoW, transmission congestion, poor project pipeline for TBCB projects and inadequate investment in sub-transmission networks. The government must ensure that these issues are addressed at the earliest so as to keep the grid expansion plans on track.