In an interview with Power Line, Pratik Agarwal, Managing Director, Sterlite Power Limited, spoke about the performance of the power sector, transmission constraints and his outlook for the sector. He also talked about the plans and priorities for Sterlite Power. Excerpts….
How do you rate the performance of the power sector in the last one year or so?
India’s transition from a power-deficit to a power-surplus nation is a remarkable achievement. With the addition of over 183 GW of generation capacity in the past nine years, India has become a net exporter of electricity. In addition, the government’s laser focus on growing renewable energy capacity in the country has resulted in an 80 per cent rise in renewable energy since 2013. This remarkable growth was supported by a robust policy framework, a structured tendering mechanism, and measures to establish the country as the go-to destination for clean energy investment in the world.
On the transmission front, a record Rs 754.08 billion worth of transmission projects have been approved by the 14th National Committee on Transmission and are likely to be awarded this year through the bidding route, making it the largest tranche under tariff-based competitive bidding. Before this, the largest tranche of transmission projects offered to the private sector was in 2015, when eight projects totalling Rs 500 billion were tendered. To ensure that transmission is never an afterthought in India’s 500 GW vision, the system planners have started on a five-year rolling network planning exercise. This is expected to be a more anticipatory planning philosophy with the operationalisation of the general network access regime, as opposed to the need-based approach followed till now. The government’s roadmap for investing Rs 2.44 trillion in transmission infrastructure by 2030 also provides clear visibility to the private sector on the investment opportunities available in the transmission space.
Another noteworthy regulatory development for the renewables sector is the Green Energy Open Access Rules. Multiple states – including Haryana, Karnataka, Punjab, Rajasthan and Telangana – have adopted this policy. The coupling of the power exchanges is another remarkable step taken by the Ministry of Power (MoP). This regulatory update has allowed neighbouring countries to operate in the real-time market. Together, these initiatives are expected to deepen the markets and ensure more optimal price-volume matching. In summary, the power sector has grown from strength to strength, allowing India to continue on the path of sustainable development.
How can the transmission constraints faced by new renewable energy projects be resolved?
As India ramps up renewable energy capacity, planning and execution of transmission lines must be initiated well in advance, in consonance with the development of renewable energy assets. However, the timeline, from the regional power committee identifying the need for transmission lines to the project being awarded, needs to be brought down to 30-40 days from the current average of over 300 days. To avoid stranded renewable energy capacity in the country, certain critical renewable-linked lines must be planned and built well in advance.
While renewable energy-coupled storage may be useful for smoothening the intermittent renewable energy generation, a grid-scale battery energy storage application has the potential to service the multiple needs of a reliant and robust grid. The MoP recently released a comprehensive framework to transform India’s energy storage landscape, which is a step in this direction. Initiatives such as peer-to-peer trading of smaller storage capacities; the mandatory inclusion of storage under resource adequacy; capex planning exercises; and demand response to reduce load on the grid, reflect the forward-thinking approach of the government.
What is the potential for transmission line reconductoring in the country?
Today, some 56 per cent of the world’s population – 4.4 billion inhabitants – live in cities. This trend is expected to continue, with the urban population more than doubling by 2050, at which point nearly seven out of 10 people will live in cities. I see reconductoring as a critical element of the transition to cleaner energy. While our current transmission infrastructure is the cornerstone of the power sector, the shift to renewable energy necessitates addressing the issues related to ageing transmission lines. Green power, primarily solar and wind, differs from conventional thermal power in terms of speed and intermittency. Renewable sources require a more agile and robust transmission network to ensure efficient power evacuation.
Reconductoring, can enhance the efficiency and carrying capacity of existing transmission lines without the need for any additional right of way (RoW). In essence, it future-proofs our infrastructure, allowing us to accommodate the increasing share of renewable energy. The market for reconductoring has been growing at a CAGR of 17 per cent, and substantial orders for transmission network uprating and upgrades are expected through financial years 2024 and 2025.
What is your outlook for the power sector?
We are witnessing the golden age of transmission. Not just in India but globally, the success of the energy transition story hinges on the presence of a robust transmission network. India is already a step ahead. As per the central transmission utility’s rolling plan 2027-28 for India’s interstate transmission system (ISTS), released in March 2023, about 41,000 ckt. km of transmission lines and a cumulative transformation capacity of 3,90,000 MVA are expected to be added to the grid by 2027-28 at an estimated cost of Rs 2.23 trillion. This, along with the government’s recently announced transmission roadmap for integrating 500 GW of renewable energy by 2030, involving an investment outlay of Rs 2.44 trillion, certainly presents an exciting opportunity for players like us.
What is your wish list for the government with respect to the power transmission segment?
The government has been very supportive and proactive in clearing any challenges or impediments to ensure that the overall target of installing 500 GW of renewables by 2030 is achieved. The transmission sector, which has emerged as the single biggest enabler of energy transition, needs active government support and streamlined process definitions, particularly for acquiring RoW. RoW issues often arise due to the high degree of uncertainty surrounding the compensation methodology, leading to substantial time and cost overruns. To address these issues, the introduction of adequate benchmarks that accurately reflect the prevailing market rates for RoW acquisition could be a possible solution.
There is also an opportunity to increase efficiency gains by encouraging and enabling the development of power transmission infrastructure while utilising the RoW of other linear projects, such as highways and pipelines, wherever feasible. It has been suggested that the MoP may consider liaising with the Ministry of Road Transport and Highways to streamline the RoW acquisition process through the issuance of analogous guidelines.
For the decarbonisation of the commercial and industrial (C&I) segment, the primary need for round-the-clock (RTC) renewable energy becomes even more important. Measures such as waivers in transmission charges for RTC renewable energy projects could be introduced to incentivise C&I customers. Moreover, to ensure a focus on pumped storage hydro projects, “mega project” status can be accorded to projects of a certain size, with specific concessions.
What have been the key business highlights for Sterlite Power in the past year?
We have a portfolio of 18 transmission projects in India, spanning 10,143 ckt. km, with a total capex of about Rs 300 billion. We recently commissioned India’s largest green energy corridor project, the Lakadia Vadodara Transmission Project in Gujarat. This ISTS was built at an investment of Rs 20.24 billion and can evacuate up to 5,000 MW of power to the national grid. It is also a vital component of the upcoming 30,000 MW hybrid renewable energy park in the region, which will be the world’s largest such park.
This year we also won two big green energy transmission projects in Rajasthan. Cumulatively, Parts F and E will involve laying a 700-km-long transmission line to evacuate over 20 GW of green energy from renewable energy zones in Rajasthan.
Our flagship project, Mumbai Urja Marg, is another critical ISTS project that’s coming up in the heart of Mumbai. It has the potential to bring in 4000 MW of green power into the region, while allowing Mumbai to stop operating the thermal power plants in the heart of the city.
Our products and services business lines are also showing promising growth. The global focus on decarbonisation is increasing the demand for our products and services, such as conductors, cables and optical ground wire, and the company is building a large order book for exports to developed markets. On the other hand, unprecedented growth in demand for data has put our convergence business on a high-growth trajectory. The overall value of new order wins in our products, master systems integration and convergence business units during the fourth quarter of financial year 2023 was Rs 14.38 billion.
Sterlite Power’s reach is not limited to India alone. In the past six years, we have significantly increased our footprint in Brazil. Today, we have a portfolio of 13 projects in the country with a total capex of roughly Rs 150 billion. This year, we celebrated an important milestone by commissioning our sixth power transmission project, a 500 kV transmission line. This project is instrumental in integrating renewable energy sources into Brazil’s power grid, facilitating the nation’s transition to cleaner and more sustainable energy solutions. We will continue to look at growth opportunities, and hope to make a vital contribution to the Brazilian energy market.