Transmission Reform: General network access marks a new paradigm in system planning

General network access marks a new paradigm in system planning

In a significant development, the Mi­nis­try of Power (MoP) has introduced the much-awaited paradigm of general network access (GNA) in interstate tra­nsmission. GNA is not a new concept and has been under discussion over the past few years. To recall, the Central Elec­tricity Regulatory Commission (CERC) had pub­­­lish­ed a staff paper on the subject in 2014 and notified draft regulations on grant of connectivity and GNA to the in­ter­state transmission system (ISTS) in Nov­ember 2017. In a move to ensure that sufficient transmission capacity is built to support future demand growth, the MoP has now introduced GNA under the Elec­tricity (Tran­smission System Planning, Deve­lop­ment and Recovery of Inter-State Transmission Charges) Rules 2021 in a gazette notification dated October 1, 2021. As per the notification, “Transm­i­s­sion planning should be such that the lack of availability of the transmission system does not act as a brake on the growth of different regions. The transmission system shall be planned and developed matching with growth of generation and load, as far as possible and while do­ing the planning, care shall be taken that there is no wasteful investment.”

GNA would essentially overhaul the pro­cess of transmission system planning by giving power sector constituents easier access to the transmission network acro­ss the country. The move is aimed at en­su­­ring adequate development of the tra­ns­­mission system, especially in the wake of increasing renewable energy penetration. The expansion of the country’s re­ne­wable energy programme hin­ges on the creation of matching transmission infrastructure for evacuation of po­wer from large-scale wind and solar parks.

What exactly is GNA? The latest rules de­fine GNA as non-discriminatory acce­ss to the ISTS, as requested by a designated interstate customer (DIC) (all users of the ISTS, including state transmission and distribution licensees) and granted by the central transmission utility (CTU) for a maximum injection or drawal in megawatts and for a specific period. Simply put, GNA enables the planning and implementation of the transmission system based on the power requirement of a generator or a drawee without kno­wing the contracted source of purchase/sale.

This brings us to the next question – so how was transmission planning being do­ne so far? At present, gencos apply to the ISTS for long-term access (LTA), ba­s­­ed on their supply tie-ups with disco­ms/target beneficiaries. Medium-term op­en access (MTOA) and short-termn op­­­­en access (STOA) are carried out with­in the available margins without any system strengthening. The transmission capacity is added to the ISTS only based on the quantum specified in the LTA application.

However, the existing approach to tra­n­s­­mission planning needed to be review­ed, especially considering the growth of STOA/MTOA transactions in recent yea­rs as well as the country’s ambitious re­ne­wable energy drive. The subseque­nt sections discuss the deficiencies in the existing transmission planning methodology and the new rules released by the ministry…

Transition to GNA – Needs and drivers

The present approach to transmission planning, based on LTA, does not ensure the creation of adequate transmission capacity. Since MTOA and STOA are operated using margins in the existing system and do not mandate the creation of additional transmission capacities, there are instances of congestion and curtailment of power. This assumes gre­ater importance considering the growth in electricity volumes traded in the short-term market, which have increa­sed from 65.9 BUs in 2009-10 to 137 BUs in 2019-20 – recording a healthy CAGR of 7.6 per cent.

Further, there has been a change in discoms’ power procurement strategy in recent years. Discoms are hesitant to enter into long-term power purchase ag­­reements (PPAs) with gencos (as is evident from the lack of long-term PPA bids in the market) and prefer shorter-tenure contracts at competitive prices to optimise their costs. As a result, the vo­lumes of short-term transactions have increas­ed and are expected to continue growing in the near term. In addition, the launch of new market-based segments such as real-time markets and green-day ahead markets in recent times and the likely launch of electricity futures in the near term means that STOA/MTOA can no longer be operated within just the margins of the existing transmission capacity.

A transition to GNA would provide the much-needed flexibility to power drawing state entities in purchasing electricity under contracts of varying durations without the limitations of ISTS network availability. GNA is also likely to facilitate power evacuation from merchant capacities and further encourage the growth of the short-term market. S.K. Soonee, adviser, Power System Opera­tion Corpo­ration Limited (POSOCO), says. “Long-term, short-term and medium-term open access would be morphed and would undergo a major chan­ge with GNA. This would be a big change as far as transmission is concerned for those who want to secure access, for planners as well as grid operators.”

For generators too, there will be en­han­ced flexibility in sales since target beneficiaries will not have to be specified. At present, gencos need to declare their point of supply or the target region based on which the transmission network is set up. However, states often do not adhere to their power procurement commitme­nts, compelling gencos to sell on unplan­ned networks, while power-deficit may remain unserved due to transmission constraints. It would help in the planning and development of adequate transmission system capacity, both for generators and for drawing entities.

Soonee adds, “We know that transmission evacuates generation and meets the load, but now transmission is to be seen as an enabler for minimising the cost of power. The ultimate objective is that ev­er­yone should have access to the power market and be able to manage their portfolios properly. To minimise costs, only efficient plants should run and in­efficient plants should be shut down. So, planners need to analyse if the all-India market provides cheaper power, can it be drawn, and the costly units shut down. In another scenario, where prices could be very high in the market and the state has a lot of temporary surpluses, can it sell that in the market? The­refore, planners need to ass­ess the transmission capability, im­port as well as export. This is where the concept of GNA comes in. It is a very big-ticket re­form that will change the way transmission is perceived.”

GNA is also crucial for supporting the country’s renewable energy programme. At present, power evacuation from re­newable energy projects is hampered by transmission constraints in renewable-rich states. For instance, as per a report by the Centre for Science and Environ­ment, the intra-state grid in Tamil Nadu is not capable of accommodating the peak wind generation during the monsoon season due to low demand in the state, while the excess power cannot be transmitted to other states due to the few interconnections with the ISTS, leading to curtailment of 20-25 per cent. GNA is expected to increase investments in the transmission segment by providing hassle-free access to the ISTS network to renewable energy generators. An ICRA note released last year stated that an investment of Rs 1.8 trillion is ex­pected over the five-year period from FY2021 to FY2025 in the transmission segment at the all-India level, driven by the need for evacuation infrastructure for renewable energy projects.

Key features of the new rules

The key features of the new rules are as follows….

Planning and approvals: The Central Electricity Authority (CEA) will draw up short-term electricity system development plans annually, on a rolling basis, for up to the next five years. It will also prepare 10-year perspective plans every alternate year, in consultation with the CTU, the state transmission utilities (STUs), system operators, generation and distribution companies, and other stakeholders, and based on its growth forecast for electricity demand and supply.

After due consultation, the CTU will annually draft the ISTS development plan for five years, identifying the specific transmission projects that need to be implemented after considering the CEA’s plans and examining the progress in generation capacity and demand across the country, the GNA requested by the DICs, signs of congestion in the ISTS, and the difficulties in obtaining right of way (RoW) for the development of transmission corridors. While transmission must be planned and developed to meet generation and load growth, over-investments must be avoided.

The CTU-identified ISTS projects will be placed before the central government-appointed National Committee on Tra­ns­mission (NCT), which will give its recommendations to the central government. The latter will then approve the projects with their implementation timelines based on the NCT’s recommendations or otherwise in the case of strategic transmission projects.

Connectivity: The CERC must notify the GNA regulations, including the duration for which GNA can be granted as well as the procedure and fees. During the transition to GNA, all existing ISTS LTA customers are deemed to be GNA custo­mers. New applications have to be made for a specific capacity and period. The costs of the connectivity system to the network will be borne by the connecting entity and the costs of system strengthening will be part of the system cost and recovered in tariff.

Recovery of ISTS charges: The entire ISTS will be treated as one integrated system. Any DIC seeking GNA has to pay the CERC-prescribed one-time charge plus the per-MW tariff (also fixed by the CERC) as monthly transmission charges. DICs must pay monthly charges for the GNA capacity sanctioned to them at normal rates, and excess drawal or injection will be charged at least 25 per cent higher rates, as determined by the CERC. This will ensure that the entities do not under-declare their GNA capacity. Transmission charges must be levied in a way that they are fully recovered and the CERC will true up the total ISTS charges every month ba­sed on CTU reports regarding additi­ons or reductions in generation or transmission capacity and the number or capacity of GNA consumers.

The liability to pay transmission charges will be effective from the date the GNA gets operationalised. The CTU will be responsible for billing collection and disbursement of transmission charges ba­sed on the CERC’s regulations. The DICs may be allowed to relinquish their GNA (fully or partly) on making advance payment of reasonable relinquishment char­ges (fixed by the CERC) and after en­suring that other DICs are not burdened. Further, GNA capacity can be shared, sold or purchased from any other DIC cus­tomer as per the CERC regulations. The central government may waive ISTS charges and losses for notified sources of energy for a specified duration.

Likely issues and the way forward

While the concept of GNA would bring in various benefits for grid participants, there could be certain issues in its im­plementation, at least in the initial years. Sector experts believe that it may not be possible for states to accurately estimate GNA requirements because of uncerta­inty in the assessment of de­ma­nd, wh­i­ch has become quite variable. Dema­nd fore­casting is becoming inc­reasingly com­plex with the emergence of prosu­mers due to the growth of de­centra­lised generation, net metering and grea­ter fo­cus on energy efficiency. A growing tre­nd to­wards the electrification of transport, agriculture and cooking is further likely to impact demand in the coming years.

State discoms also find it challenging to assess the number of open access customers that may source power from outside the state, thereby impacting accurate assessment of GNA requirements. Similarly, the power requirement or supply of/from captive consumers is difficult to gauge accurately. Demand variability, coupled with supply variability due to the growth of renewables will present a double whammy for system planners and may lead to over-planning of the ISTS. It is, therefore, essential that the cost implications of transmission planning are studied thoroughly for various load-generation scenarios. Also, in case of default by gencos, care must be taken that the additional expenditure on the transmission system is not passed on to the beneficiaries. It is expected that minor modifications arising out of uncertainties in demand estimations will be accommodated in the GNA.

Overall, these challenges are likely to be overcome in the near to medium term as market participants gain greater experience with this new transmission planning paradigm. GNA marks a new era in the transmission planning process and is expected to deliver on its objective of easier access to the national grid to all.

Neha Bhatnagar