With the expected surge in electricity demand over the coming decade and the rapid installation of solar and wind, India’s transmission and distribution system will require significant expansion sooner than later.
India is working on all fronts to reduce its reliance on traditional fossil-based fuels, replacing them with renewable energy. According to the Central Electricity Authority (CEA), the total installed power capacity by the end of 2021-22 is projected to be around 480 GW.
As of March 2019, cumulative solar installations reached the 30 GW mark, according to Mercom’s India Solar Project Tracker. Cumulative wind installations totaled 36 GW in May 2019, according to the MNRE.
Lack of transmission infrastructure has been a growing concern for solar, and wind companies, and Mercom has been reporting on this issue. With a plethora of mega solar tenders announced in the solar sector, including interstate transmission system (ISTS) connected projects, the evacuation infrastructure availability has been the biggest challenge.
About 33 GW of renewable capacity addition has been envisioned in the 12th Plan for the eight renewable energy-rich states of Rajasthan, Gujarat, Tamil Nadu, Maharashtra, Karnataka, Andhra Pradesh, Himachal Pradesh, and Jammu & Kashmir through the wind, solar, and small hydro generation.
As renewable resource-rich states are not absorbing the renewable energy produced locally, and considering the intermittency of wind, and solar, the requirement for strong transmission infrastructure and grid stability is vital.
For the distribution of power, the high capacity transmission corridor (part of ISTS) connecting major renewable pockets is being proposed right from the Bhuj Pooling Station in Gujarat (Western Region) to Moga in Punjab (Northern Region) via Chittorgarh, Ajmer, and Bikaner in Rajasthan (Northern Region).
A PGCIL report states that with the expected doubling of electricity demand over the coming decade, India’s transmission and distribution system will also require significant expansion. A $200 billion (~₹13.8 trillion) investment program through 2030 would create the opportunity for India to establish an internationally connected smart grid capable of managing increased power demand and incorporating much greater diversity in electricity generation, including distributed rooftop solar and battery storage.
The Green Energy Corridor (GEC) project, is one such dedicated transmission network for renewable energy, conceptualized by state-owned Power Grid Corporation (PGCIL) at a whopping ₹400 billion ($5.8 billion) in 2011.
“An efficient and robust evacuation mechanism or grid infrastructure is one of the key drivers to support the scale-up of renewable energy in the country. The amount of renewable energy generation capacity coming online would prove beneficial only if it has an accessible, reliable and healthy transmission infrastructure to support the huge capacity infusion,” said Pinaki Bhattacharyya, CEO, AMP India, speaking to Mercom.
“And this is the basic premise of the Green Energy Corridor. It would strengthen the inter and intrastate transmission system to accommodate increasing intermittent generation from renewable energy and thereby making it accessible throughout the country,” added Bhattacharyya.
The Asian Development Bank (ADB) has approved a loan of $500 million (~₹33.4 billion) to PGCIL for the development of the Green Energy Corridor, according to a PGCIL BSE filing. The bank is supporting the project with a financial assistance of $1 billion ($500 million sovereign loan and $500 million non-sovereign loan).
The CEA has estimated that a ₹2.69 trillion ($39 billion) investment is needed to revamp India’s transmission infrastructure.
PGCIL is already constructing the inter-state transmission network to connect renewable energy-rich states (Green Corridor-I). The work is underway on Green Corridor-II (for solar parks) which will connect six solar parks in Andhra Pradesh, Madhya Pradesh, Karnataka, Rajasthan, and Gujarat. To expedite the transmission development for the upcoming solar parks, transmission projects have now been awarded to private companies through a transparent bidding process. The move is in line with the government’s plan to open the power transmission sector for private investment.
Eight transmission lines totaling ₹200 billion ($2.9 billion) were awarded to private companies through the tariff-based competitive bidding (TBCB) route. PGCIL was picked for two major lines totaling ₹300 billion ($4.3 billion).
There is a large gap between the goal setting and executing. The Standing Committee on Energy said last year that more funding is needed for India to install enough physical transmission infrastructure to meet its ambitious timeline for creating such a corridor. The committee had presented its findings to the Lok Sabha in its 39th Parliamentary Report, titled “Demands for Grants of the Ministry of New and Renewable Energy (MNRE) for the year 2018-19.”
The committee pointed out the mismatch between the yearly goals set and funds allotted. It cited the example of the target for transmission line installation for 2018-19 being more than five times the cost from 2017-18, whereas the budget was increased by only 20%. The report stated that ₹6 billion (~$92 million) was allocated toward the GEC in the 2018-19 period with a targeted cumulative physical goal of 3,000 circuit kilometers (ckt-kms) of transmission lines.
For 2017-18, ₹5 billion (~$77 million) was provided for the installation of 350 ckt-kms of transmission lines and 2018-19, ₹6 billion (~$92 million) was allocated for the installation of 1,900 ckt-kms of transmission lines.
‘‘There are positives, the biggest being the serious intent of the government in achieving the 100 GW target by 2022. However, several things need to be streamlined. Take, for example the Bhuj II substation, the solar project gestation period is 18 months (time given to commission), but the transmission infrastructure takes two to two and a half years to complete. Though solar projects are completed, they will not be connected to the grid for another six months. You can imagine the losses, and how can the loans can be serviced?” asked an executive with one of the largest renewable energy project developer in the country.
Another big developer with significant installed capacity pointed out that the transmission lines from Fatehgarh -I to Bhadla-I and from Fatehgarh-II to Bhadla-II are delayed by both PGCIL and FBTL, due to which all the developers associated with these substations and the transmission corridor will miss their Commercial Operation Date (COD) due to this delay.
Recently, Mercom reported the Minister of Power, R.K. Singh, stating that “A ‘Working Group’ for the expeditious implementation of renewable energy generation and associated transmission system has been constituted by the government.”
Singh informed the House that a comprehensive transmission program had been planned for integrating the identified renewable energy zones of 66.5 GW, which will be implemented in two phases. About 28 GW of renewable energy projects are planned under Phase-I (up to December 2020), and the balance of 38.5 GW will fall under Phase-II (December 2021).
According to Singh, the government has asked the Central Transmission Utility to expedite the compliance of regulations passed by the Central Electricity Regulatory Commission (CERC).
The process of bidding for the transmission system associated with 12.4 GW of renewable projects are currently underway and are expected to be complete by September 2019. Singh also said that the transmission system related to these renewable projects are being bid out with the scheduled date of completion likely to be December 2020.
Answering a question regarding the progress of the Green Energy Corridor Project, Singh commented that overall, 2,168.20 ckm of intrastate transmission had been laid under the Green Energy Corridor which supports 4,757 MVA of substations, along with 2,467 ckm of interstate transmission laid out to support 13,000 MVA of substations. So far, 10,261 MW of renewable energy capacity has been added to the Green Energy Corridor.
Singh added that so far, 140 programs have been approved for the Power System Development (PSDF) funding with a grant of ₹112.82 billion (~$1.65 billion).
“The Green Energy Corridor is being implemented in eight renewable rich states of Tamil Nadu, Rajasthan, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Himachal Pradesh, and Madhya Pradesh by their respective State Transmission Utilities (STUs) to support large scale renewable energy evacuation. The projects must be completed within FY 2019-20”, said Pinaki Bhattacharyya, CEO of AMP India.
“There has been a lot of project revisions in terms of location changes and the latest project list was issued by the MNRE in June 2019. Although much progress has been made and funds allocated, factors such as huge capacity target sets and a mismatch in capacity and corresponding fund allocation might shift the deadline further away,” he opined.
There is also the USAID’s ‘Greening The Grid’ (GTG) program, a five-year program implemented in partnership with India’s Ministry of Power under the Asia EDGE (Enhancing Development and Growth through Energy) Initiative. The GTG program aims to support the government’s efforts to manage large-scale integration of renewable energy into the grid.
“While there are catchy slogans and impressive goals set for renewable installations, transmission is often overlooked. But, the renewable story in India can easily derail if transmission infrastructure is not built quickly to absorb solar and wind installations,” said Raj Prabhu, CEO of Mercom Capital Group.