India needs $60-80 billion investments over the next five years to strengthen its grid transmission infrastructure. The scale of investments envisaged is needed to address the continued structural growth in power demand and overcome operational limitations of the country’s national transmission grid, a study by US-based Institute for Energy Economics & Financial Analysis (IEEFA) suggested.
Under the Pradhan Mantri Sahaj Bijli Har Ghar Yojana or Saubhagya scheme, the central government has successfully electrified 99 per cent of the households. As a follow-up, there is an urgent need for considerable investments in grid transmission infrastructure to keep pace with growing low-cost renewable capacity so that new households can afford to buy electricity, the IEEFA report noted.
“The flow-on effect of mass electrification, coupled with the accelerated deployment of renewable energy, is the increase in demand for inter-regional transmission lines and the need for capacity enhancement of power evacuation infrastructure. The need for inter-regional grid connectivity will increase with growth in the demand for power in economically poor regions, particularly as India’s economy is foreseeably set to grow at 7-8 per cent per annum over the coming decade”, said Tim Buckley, director of energy finance studies (Australasia) at IEEFA and co-author of the report.
The country has expanded its transmission network capacity at a compound annual growth rate (CAGR) of 12 per cent over five years between 2012-13 and 2017-18. With respect to circuit kilometres (ckm), the transmission lines expanded at a CAGR of seven per cent in the period from 274,588 ckm to 390,970 ckm.
“This rate of growth needs to be maintained, or even accelerated to accommodate the rapid modernisation and expansion of India’s electricity sector capacity, a core underpinning of sustained economic growth,” said Buckley.
IEEFA notes that national expansion and then progressive international grid interconnectivity will help reduce existing and developing congestion zones.
A greater emphasis on faster ramping, flexible generation combined with a nationally enhanced grid system will be the key to diversifying away from India’s growing over-reliance on expensive imports of high-emission fossil fuels.
According to IEEFA, the simultaneous digitalisation of the grid is equally important to provide greater transparency across the value chain in terms of building an intelligent system that better incorporates asset monitoring, consumer behaviour and demand loads.
“Despite the enormous progress achieved over the last decade in reducing costs and upscaling capacity, coupled with ambitious renewable energy targets, India’s renewable energy investment ambitions are stalling,” said co-author Kashish Shah, IEEFA research associate.
IEEFA further notes that likely benefits to India of expanded competition in the grid transmission sector includes the rise of private companies led by Adani Transmission and Sterlite Power becoming increasingly competitive against the state-owned Power Grid Corporation of India Ltd (PGCIL).