Growth Positive: Transmission improves on the back of policy and regulatory developments

Transmission improves on the back of policy and regulatory developments

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 the government’s 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 for the expansion of 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 capacity 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. Also, the Ministry of Railways Mission 41K would require dedicated transmission lines to be set up.

Power Line provides an overview of the recent trends and key developments that have taken place in the power transmission segment in the past year…

Network 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, high voltage direct current (HVDC) substation capacity stood at 22,500 MW as of March 2018.

The share of the private sector in the total line length increased from around 2.9 per cent in 2012-13 to 6.9 per cent in 2017-18, while substation capacity 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 of capacity.

The 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.

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 42 projects have been awarded through TBCB, of which 30 projects went to private players and 12 projects to Powergrid. Sterlite Grid with 12 projects leads the private sector, followed by Adani Transmission with a portfolio of five projects. However, the pipeline of upcoming interstate transmission projects to be awarded under the TBCB route is fairly small, with only six projects involving an investment of about Rs 23 billion in the pipeline. In addition, the bidding process is yet to be initiated for two more projects with Rs 4.5 billion investments that were approved in October 2017 by the empowered committee for award through the TBCB route.

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 (Rajasthan, Uttar Pradesh, Madhya Pradesh and Jharkhand) have adopted the model. Of the 12 intra-state projects awarded so far, Adani owns six projects involving an investment of Rs 11 billion.

In February 2018, Jharkhand launched mega tenders for the selection of private players for constructing a transmission network in the state. The investment cost for these projects stands at about Rs 52 billion. Following this, in June 2018, Uttar Pradesh initiated the tender process for awarding two transmission schemes in the state.

Strengthening cross-border links

India’s participation in the 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.

The capacity of the existing Bangladesh (Bheramara)-India (Berhampore) grid interconnection project is being upgraded by 500 MW. 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-Lhamoizingkha (Bhutan border), Lhamoizingkha-Alipurduar and Jigmeling-Alipurduar lines.

Rail electrification

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.

According to estimates by Edelweiss Research, around 8,000 km of transmission lines will be needed by Indian Railways to provide reliable and secure supply for the Golden Quadrilateral in the first phase. This is expected to fuel growth in the transmission segment, and create huge opportunities for equipment manufacturers in the country.

Other initiatives

Another key area for transmission infrastructure expansion would be smart grids. An initiative to make the transmission grid smarter has been the Unified Real Time Dynamic State Measurement project, which is being implemented by Powergrid. Under the project, Powergrid is installing approximately 1,700 phasor measurement units (PMUs) at all HVDC and 400 kV and above voltage level substations. Under Phase I of the project, around 1,200 PMUs will be installed along with computer hardware and software at 34 control centres. These will pave the way for remote communication and management of power supply. Powergrid has already installed more than 900 PMUs and developed three of the six analytical tools planned under the project.

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 wherein equipment can be tested for malware before installation and then periodically, post-commissioning.

Further, with the increasing penetration of electric vehicles (EVs) in the grid over the next few years on the back of the government’s ambitious plans to move to an all-electric fleet, the Indian grid will experience some serious challenges due to EV charging. These are increase in harmonics, line losses and increased reactive power consumption, among others, which could potentially impact power system equipment and create voltage stability issues. This would necessitate investments in grid monitoring and automation, besides investments in reactive power compensation capabilities, which would prevent overloading of the grid.

Concerns and outlook

However, several issues need to be resolved to ensure that the grid expansion plans are on track. Securing right of way remains a pressing concern for 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 through the TBCB route 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 that 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.