The Indian electricity transmission segment has been constantly evolving in line with the increasing power demand and the changing energy mix due to the influx of renewables. Going forward, an investment of Rs 2.6 trillion is required in transmission 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 interstate and intra-state levels.
Advanced technologies are being deployed at various levels to make the grid smarter and robust. The strengthening of power system operations has become paramount for dealing with the intermittency associated with large-scale renewable energy integration into the grid as well as the altered load profiles likely to be triggered by the government’s e-mobility programme. Power Line provides an overview of the recent trends and developments in the power transmission segment…
As of August 2019, the total transmission line length stood at 417,944 ckt. km (220 kV and above), the alternating current (AC) substation capacity at 921,118 MVA and the high voltage direct current (HVDC) substation capacity at 22,500 MW. Between 2011-12 and 2018-19, the line length grew at a CAGR of 7 per cent and AC substation capacity at about 11.9 per cent.
The interregional transmission capacity has also grown significantly over the years to stand at 99,050 MW as of March 2019. Significantly, 24,000 MW of this capacity has been added in the past two years. As a result, interregional power transfer increased from 138 BUs in 2016-17 to 182 BUs 2018-19.
In recent years, private participation in the transmission segment has also increased significantly, with a share of 7.4 per cent in total line length during 2018-19, up from 3.3 per cent in 2011-12, and a share of 3.7 per cent in substation capacity, up from a mere 0.5 per cent. That said, 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 capacity.
Regulatory and policy developments
In August 2019, the Central Electricity Regulatory Commission (CERC) proposed several amendments to the framework for real-time market (RTM). This is an important development given the large-scale integration of intermittent renewable energy into the grid and the changing demand patterns. The proposed RTM as well as security-constrained economic despatch, a pilot under way since April 2019, will help mop up the available cheap power in the system at an all-India level while meeting the sudden changes in demand, thereby facilitating better system operations and energy imbalance management.
In March 2019, the 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 (ISTSs). The post-tax return on equity has been kept unchanged at 15.5 per cent and the method of cost recovery has also been retained. However, changes have been made to some of the operations and maintenance norms. Further, ISTS licensees are now allowed to charge lower tariff during the tariff period under certain conditions to help increase their competitiveness.
The CERC notified the Cross-Border Trade of Electricity Regulations, specifying 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 in Indian companies could export to the Indian market after obtaining a one-time approval from the designated authority in India.
In November 2018, the Forum of Regulators (FoR) adopted the “Capacity Building of Indian Load Despatch Centres” report, which recommends a complete revamp of the way load despatch centres to establish them as sustainable institutions of power system operations and facilitators of a robust electricity market.
Green energy corridors
For the integration of 175 GW of renewable energy by 2022, Powergrid along with other involved state utilities is undertaking the Green Energy Corridors (GEC) project to connect new solar and wind capacity. Under GEC I, where Powergrid received long-term access applications for 12 GW, about 9,400 ckt. km and 19,000 MVA of substation capacity is targeted to be added at the intra-state level and 3,200 ckt. km and 17,000 MVA (across six substations) at the interstate level. Most of the schemes under GEC I have been commissioned at the interstate level while several intra-state lines are under construction.
Under GEC II, transmission schemes for evacuation from 34 ultra mega solar power parks with capacity totalling 20 GW have been planned. Of these, 13 solar parks (9.2 GW) have been identified for evacuation through the ISTS. Further, Powergrid is responsible for the implementation of the transmission system for eight solar parks (7.2 GW) entailing 1,870 ckt. km of lines and five substations of 13,500 MVA. So far, the implementation has been completed for three solar parks (4,250 MW) by Powergrid.
Apart from this, the central government has approved transmission schemes of around Rs 432 billion for renewable energy zones with a potential capacity of 66.5 GW to be achieved by 2022. These will be implemented in two phases. Under Phase I, transmission projects for 28 GW of renewable capacity will be developed at an investment of Rs 168 billion. The remaining 38.5 GW will be developed under Phase II at an investment of Rs 264 billion. Transmission projects under the first part of Phase I are expected to be completed by end-2020.
TBCB update and project pipeline
To fast-track the development of the country’s transmission network, tariff-based competitive bidding (TBCB) was introduced in 2006. As of August 2019, 43 transmission projects (excluding cancelled and under-litigation projects) have been awarded under TBCB. Of these, while 30 projects were secured by private players, 13 projects were awarded 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 14 projects is leading the private sector, followed by Adani Transmission Limited (ATL) with a portfolio of seven projects. Sterlite Grid and ATL added two projects each to their portfolio in August 2019.
Previously, in December 2018, the Empowered Committee on Transmission approved transmission projects worth Rs 169.6 billion in line with the recommendations of the National Committee on Transmission. 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, while Rs 27.27 billion worth of projects will be developed by Powergrid through the regulated tariff mechanism. The remaining projects will be implemented under various upcoming schemes.
The competitive bidding process for interstate projects has resulted in the discovery of low tariffs and faster project execution. However, only 11 intra-state transmission projects have been developed by private players, while another seven projects are under development despite the success of TBCB at the interstate level. At the intra-state level, states such as Maharashtra, Madhya Pradesh, Uttar Pradesh, Assam, Bihar and Jharkhand have adopted the TBCB route to award projects. Uttar Pradesh, which has already awarded projects worth Rs 40 billion, has released a request for qualification (RfQ) for two packages worth Rs 18 billion. Meanwhile, Jharkhand, Maharashtra and Madhya Pradesh have released RfQs for awarding transmission projects worth Rs 42 billion, Rs 7.8 billion and Rs 6.3 billion respectively.
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. ATL now owns 13,450 ckt. km of power transmission lines, including 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 generation, transmission and distribution business in the Mumbai area in a deal worth Rs 188 billion.
During 2018, IndiGrid, India’s first power sector infrastructure investment trust, completed the acquisition of transmission assets of Patran Transmission Company Limited 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 SPVs at an estimated cost of Rs 60 billion. Reportedly, Greenko has been in talks with Megha Engineering & Infrastructure Limited for the acquisition of Western Uttar Pradesh Power Transmission Company Limited. Meanwhile, global investors are lining up to invest in transmission. In May 2019, global private equity major KKR and Singapore’s sovereign wealth fund GIC invested Rs 10.84 billion and Rs 9.8 billion respectively to collectively acquire 42 per cent of IndiGrid’s outstanding units. KKR has also applied for becoming a sponsor of IndiGrid and plans to acquire an additional 15 per cent of IndiGrid’s total units from Sterlite Power. Following the closure of these transactions, KKR and GIC will together own around 57 per cent of IndiGrid’s outstanding units.
In July 2018, Powergrid in collaboration with GE T&D India Limited commissioned the wide area monitoring system (WAMS) for the northern region (NR) grid. This 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 NR 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. Meanwhile, to ensure the availability of uninterrupted quality power, Powergrid commissioned a 400 kV synchronous compensator (STATCOM), with a dynamic swing range of 600 MVAr and 250 MVAr mechanically switched components, at its substation in Rourkela, Odisha, during 2018.
To ensure system stability and grid security, 11 renewable energy management centres are being set up at the regional, state and national levels. Further, 14 STATCOMs (11,350 MVAr) four static VAR compensators (2,500 MVAr), and 48 fixed series capacitors and thyristor-controlled series compensators are planned to be deployed.
Powergrid is also implementing a 1 MW pilot project based on battery energy storage in Puducherry to understand the aspects of commercial feasibility. It includes two 500 kW/250 kWh advanced lead acid and lithium-ion batteries.
The Central Electricity Authority (CEA) recommended that power utilities should consider the installation of high performance conductors (HPCs) in their existing and new power lines to augment their transmission capacity. Although considered to be relatively more expensive than conventional conductors by two to five times, HPCs could be considered economical if other associated costs and loss reductions are accounted for.
Another important initiative by the MoP and the CEA is the preparation of new guidelines regarding greener options for transmission cables such as aluminium for the protection of the environment from 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 facilitate 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 period in the winter season. 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 (Baharampur) interconnection to meet the increasing demand for electricity in both countries.
Challenges and outlook
Several challenges need to be resolved to ensure the timely implementation of grid expansion plans. Due to the lack of harmonisation of policies and regulations across states, securing right of way remains a key concern for all project developers. Environmental and forest clearances continue to be the leading challenges in project development. The projects awarded under TBCB are still being offered sporadically, and there is no long-term pipeline of projects. The large-scale capacity addition and connection of millions of new consumers to the grid requires robust grid planning. Further, system operators and regulators need to be empowered to ensure effective implementation of relevant policies and regulations.
The augmentation of transmission infrastructure, particularly GECs at the intra-state level, must be accelerated 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 equipped to support the shift in generation mix and distribution loads.