The central government has launched several programmes over the years for the power sector, particularly the distribution segment. Programmes such as the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the Integrated Power Development Scheme (IPDS) have played key roles in improving the distribution infrastructure in rural and urban areas respectively. Another big-ticket programme, the Rs 3.04 trillion Revamped Distribution Sector Scheme (RDSS), launched this year, aims to improve the operational and financial performance of discoms with a focus on distribution infrastructure improvement as well as smart metering. These initiatives play a key role in spurring the demand for transmission and distribution (T&D) equipment such as conductors, cables, smart meters, towers and transformers. Likewise, in the transmission segment, equipment demand is boosted by large-scale projects under the Green Energy Corridors (GEC) project as well as the Transmission Scheme for Renewable Energy Zones. In addition, Indian Railways’ electrification drive spells a huge opportunity for T&D equipment, including cables and conductors.
Power Line takes a look at some of these government initiatives…
Programmes in T&D
DDUGJY: Launched in December 2014, the DDUGJY primarily focuses on the separation of agricultural and non-agricultural feeders to facilitate the judicious supply of electricity to rural areas; strengthening and augmentation of sub-transmission and distribution infrastructure; and metering at distribution transformers, feeders and consumer sites. In terms of physical infrastructure, as of October 2021, feeder separation, involving 122,123 ckt. km of 11 kV lines, has been completed. Under the system strengthening component, installation of 481,945 ckt. km of low tension (LT), 182,268 ckt. km of 11 kV and 22,689 ckt. km 33 kV and 66 kV lines has also been completed. Further, all the inhabited unelectrified census villages were electrified under the scheme in April 2018. The scheme will close in March 2022.
IPDS: The IPDS, notified on December 3, 2014, largely envisages the strengthening of sub-transmission and distribution networks, metering of distribution transformers/feeders/consumers in urban areas, IT enablement of the distribution sector and underground cabling. In terms of physical progress, around 20,086 ckt. km of underground cables and 62,218 ckt. km of aerial bunched cables have been laid as of November 25, 2021, against the targets of 65,029 ckt. km and 21,551 ckt. km respectively. Meanwhile, 23,304 ckt. km of high tension (HT) (target 24,262 ckt. km) and 10,378 ckt. km (target 10,769 ckt. km) of LT lines have been laid. The scheme will close in March 2022.
RDSS: The scheme aims to reduce aggregate technical and commercial losses to pan-India levels of 12-15 per cent and the average cost of supply-average revenue realised gap to zero by 2024-25. It involves an investment of Rs 1.5 trillion, including government funding of Rs 700 billion-Rs 730 billion, geared towards strengthening infrastructure. As per the scheme guidelines issued in July 2021, distribution infrastructure works are required for strengthening and modernising the system as well as for loss reduction. These works include separation of agricultural feeders to enable implementation of the KUSUM scheme, aerial bunch cables and HVDS for loss reduction, and replacement of HT/LT lines as required among others. States and discoms have already initiated the process of drafting their action plans under the scheme. In addition, the government’s smart city project is expected to promote large-scale growth in the infrastructure, telecom, power generation, T&D, engineering and automotive sectors. This is advantageous for the wire and cable industry, since growth of the industry is directly linked to the growth and development taking place in other sectors.
Green energy corridors: The GEC project is being implemented in a phased manner by Power Grid Corporation of India Limited (Powergrid) and state transmission utilities. The objective is to integrate large-scale renewable capacity addition into the national grid. Under GEC-I, about 12,600 ckt. km of lines and 37,000 MVA of substation capacity is being added at the inter- and intra-state levels. Under GEC-II, a transmission system is being set up for evacuation from 34 ultra-mega solar parks (20 GW). Under the interstate transmission system project, 3,200 ckt. km of transmission lines and six substations of 17,000 MVA capacity have been commissioned. Another 9,800 ckt. km of transmission lines and 22,700 MVA of substations are under implementation under intra-state transmission systems.
Transmission scheme for renewable energy zones (REZ): The REZ scheme aims to evacuate 66.5 GW of renewable energy capacity (50 GW solar and 16.5 GW wind) at an estimated cost of Rs 432 billion in seven RE-rich states – Tamil Nadu, Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat, Rajasthan, Maharashtra and Madhya Pradesh. A comprehensive transmission system has been planned for integration of potential REZs. The implementation of schemes is being undertaken in a phased manner in Rajasthan and Gujarat.
Comprehensive Scheme for Strengthening of Transmission & Distribution Systems in Arunachal Pradesh and Sikkim: The government-funded scheme aims at strengthening the intra-state T&D infrastructure in the states by providing grid connectivity to remote and distant locations. The scheme was app-roved in October 2014 at an estimated cost of Rs 47.5 billion, with an estimated completion date of December 2018. The cost has been revised to Rs 91.3 billion, and the completion date to March 2024. The project is being implemented by Powergrid. As of October 2021, 64 out of the 292 sanctioned elements have been completed. The overall physical progress stands at 44 per cent.
North Eastern Region Power System Improvement Project: The Rs 67 billion scheme is being implemented for the states of Assam, Manipur, Meghalaya, Mizoram, Tripura and Nagaland. It aims to create a reliable power grid and improve their connectivity to the upcoming load centres. The scheme is being funded by the central government with a loan from the World Bank for 50 per cent of the project cost. The project is being implemented by Powergrid. Of the sanctioned 444 transmission elements, 312 have been completed as of October 2021.
The central government aims to fully electrify the broad gauge network by December 2023. As of March 2021, over 45,000 route km (rkm) or 71 per cent has already been electrified out of the total network length of 64,689 rkm. Another 18,800 rkm remains to be electrified by December 2023. During 2021-21, the Mumbai-Howrah route, known to be one of the busiest routes in the country, was fully electrified. This was one of the lines out of the 6,015 rkm electrified in 2020-21. Notably, it was in 2020-21 that railway electrification took place at the fastest pace. Over the coming year or two, several lines are expected to be electrified to upgrade India’s railway network. This is expected to provide opportunities to overhead line equipment suppliers as well as engineering, procurement and construction (EPC) contractors. By March 2022, the major resource earning states for Indian Railways, namely, Odisha, Madhya Pradesh, Chhattisgarh, Jharkhand, Himachal Pradesh, Haryana and Bihar, will be fully electrified. Notably, in 2021-22, the highest-ever budget allocation of Rs 75.42 billion was made for railway electrification projects.
The demand for cables and conductors largely depends on the capex undertaken by end-user industries and investments for infrastructure development. Government-backed programmes focusing on T&D strengthening and railway electrification have led to increased demand for cables and conductors from utilities. Going forward too, significant investments are expected in the T&D segment as the National Infrastructure Pipeline estimates a capex requirement of over Rs 6 trillion till 2025. A significant part of this investment is likely to be spent on network modernisation and expansion, and will, therefore, lead to sustained demand for cables and conductors while providing opportunities to developers, equipment manufacturers and EPC players in this space.