India is set to become the biggest demand centre in the world by 2030 with about 1.5 billion people, surpassing China’s population to become the most populous country in the world. In terms of GDP growth, India is one of the fastest growing economies. Though India’s per capita electricity consumption annually is about 1,122 kWh/year, much lower than the world average of 2,674 kWh/year, this number too is one of the fastest-growing, per the United Nations.
India set an ambitious target of 175 GW of renewable energy capacity addition by 2020 – and rightly so. This is a nation rich in availability of sun, wind, biomass and water. The Prime Minister’s call for ‘One Sun, One World, One Grid’ set the tone for a strong transmission system that will support India’s renewable energy growth, integrating the growth of renewables across the world. India is already well-positioned in the subcontinent, being surrounded by the SAARC nations, and is therefore an important faculty in planning grid interconnections with these countries to optimize regional resources and look at inclusive growth and development of the region.
The power sector in India is undergoing several shifts as it moves from a traditional energy-deficit position to an energy-surplus one. Fewer long-term power purchase agreements (PPAs) are being signed between discoms and IPPs, with discoms increasing their procurement through shorter tenure PPAs or day/week ahead market. The share of renewable resources is growing in India’s generation mix (up from 12.3% in 2013 to 22% in 2018), a significant move away from coal-based power. Distributed solar in the form of rooftop and ground-mounted modules is also expected to grow rapidly. The private sector is playing a greater role across the generation and transmission value chain, representing around 45% of total investments over the past six years. The Government of India is pushing for 100% household electrification through programs such as ‘Saubhagya’ which aims to provide electricity to 20 million new households. Electricity is expected to penetrate sectors such as transportation, with growth in electric buses, two-wheelers, fleet cars and e-rickshaws.
The transmission sector must respond to and take advantage of these shifts to achieve the twin objectives of energy access and affordability in the country.
Transmission is a self-sustaining and profitable business in India – one of the promising sectors in the electricity value chain. A blueprint for efficient transmission system is necessary for power to be disseminated effectively to the end-consumer. The electricity transmission and distribution network traverses the length and breadth of the country to connect every Indian household, industrial facilities, a host of essential amenities like schools, hospitals etc., and the vast expanse of agricultural lands. The last decade saw electricity in India striving to reach the farthest of India’s households in the remotest of villages. With steady national efforts, the country is at the threshold of 100% electrification of households. Nevertheless, the larger goal of the Government of affordable, secure, ‘24×7 Power for All’ remains on the horizon. Electricity is vital for the livelihood of our diverse, young and ambitious population. Economical prices and sound commercial viability is important. India having become a power-surplus nation, this is dream is not too far away either.
Yet India continues to be an importer of electricity. One of the key challenges in the linkage between electricity generators and electricity consumers, is that the sources for electricity generation are not uniformly located across India. But electricity must be evacuated to all consumers, uniformly. So far thermal power generation has been more than 80% of India’s power mix. But renewable energy sources are catching up fast owing to reduction in solar and wind tariffs, and India naturally being an RE-rich nation.
At present the transmission and distribution (T&D) losses in power is around 22%. While some of this loss is inevitable owing to technical losses, some of this loss is because of pilferage. A new and efficient transmission system can be the final linkage for optimized distribution of power, reduction of emissions, and demand management.
CII’s white paper, ‘New-Age Power Systems for 21st Century India’, developed in partnership with McKinsey and Company, culls out eight short-term and seven medium-term imperatives and action-points for nurturing a competitive transmission sector in India. The Electricity Act, 2003 is at the heart and essence of the recommendations. This report paraphrases some of the key issues that can efficiently realize planning, award and execution of transmission projects. These include tackling grid performance, contingency planning, determining project timelines, freedom of design, energy storage and so on.
Eight critical essentials that could shape the trajectory of India’s transmission sector with near-term options:
- More flexible transmission network planning
- Separation of Central Transmission Utility (CTU) from Power Grid Corporation of India Limited (PGCIL)
- Tightening of grid performance parameters in the context of increasing renewable energy (RE) integration
- Improved reliability of the network by developing contingencies in the system
- Compression of project timelines from notification to start of construction by 40%
- Promotion of innovation through greater freedom of design
- Capacity augmentation of existing transmission
- Incorporation of energy-storage solutions as transmission system elements to meet flexibility requirements
Medium-term suggestions for policymakers:
- State Transmission Utilities (STUs) to make underground intracity power transmission to be made mandatory in top 50 Cities
- Central Electricity Regulatory Commission (CERC) to bring policy for shareability and transferability of the Long Term Open Access (LTOA)
- State Electricity Regulatory Commissions to create a pooling method for states (similar to Central POC pooling concept) so that developers feel more comfortable investing in states
- Ministry of Power (MoP) to issue guidelines for mandatory representation of major power transmission asset developers in the National Committee on Transmission (NCT), Empowered Committee on Transmission (ECT) under the MoP, and RPCs
- CERC to create a framework for creation and maintenance of ancillary services market in India by POSOCO
- Central Electricity Authority (CEA)/MoP to create a framework for monetization footprint of urban transmission and distribution assets
- Facilitate use of innovative models of ownership and financing
Capitalising on these opportunities for substantive policy reform and infrastructure expansion to support futuristic T&D policies will help forge the growth of a strong nation and lay the bedrock for a ‘National Transmission Mission’. For the detailed analysis, please download CII’s white paper, ‘New-Age Power Systems for 21st Century India‘.