GEC-III sector-positive, but execution depends heavily on state utilities

The ₹1.86 trillion scheme could benefit transmission, renewable energy and battery firms, but its implementation will depend on state utilities and their ability to scale up

The Cabinet approved the Green Energy Corridor Phase-III (GEC-III) on September 30. This scheme is designed to strengthen the intra-state transmission system (InSTS) and facilitate the transmission of up to 135 gigawatt (Gw) of renewable energy (RE) by financial year 2032-33 (FY33).

 

GEC-III estimates a total project outlay of ₹1.86 trillion — ₹1.36 trillion for InSTS infrastructure, and ₹50,000 crore for 50 gigawatt-hour (GWh) of battery energy storage system (BESS). Capex in GEC-III is in addition to the inter-state transmission system (ISTS) projects awarded under the tariff-based competitive bidding (TBCB) route. GEC-III will have ₹54,080 crore of financial support from the Centre to offset intra-state transmission charges.

 

Transmission utilities of the states will be the implementing agencies. The scheme envisages that greenfield transmission projects will be implemented through TBCB, under the build-own-operate-maintain (BOOM) model. Brownfield transmission assets will be upgraded. Other network-strengthening projects will be done on a cost-plus basis.

 

GEC-I & II were designed to support 44 Gw of RE evacuation, with 26 Gw successfully integrated as of the first half of calendar year 2026 (H1CY26). But as RE capacity has increased to 263 Gw and is targeted to exceed 500 Gw by 2030, serious bottlenecks are emerging in intra-state transmission while solar and wind capacity builds up. The ISTS is in better shape, and capacity has built up.

 

This has led to stranded RE assets. Moreover, given the intermittent nature of generation, BESS capacity needs to be shored up. While the gaps in InSTS and BESS are obvious to stakeholders, the scheme articulates them, and policy support from the Centre should help kick-start activity.

 

GEC-III will strengthen intra-state infrastructure — such as high-voltage lines, substations, and pooling stations — for efficient evacuation from RE-rich places. GEC-III creates a big opportunity, with stated policy support from the Centre.

 

The TBCB structure for greenfield transmission projects will create a pipeline for transmission players like Power Grid Corporation of India Ltd (PGCIL) and Adani Energy Solutions. The creation of 50 GWh of BESS will support higher RE integration by improving grid flexibility, easing congestion, and enabling RE to be used as baseload or during periods of peak demand. The GEC-III could also create additional annual project opportunities of ₹20,000-24,000 crore for PGCIL and Adani Energy.With the government  now envisaging large capex and providing substantial financial support for InSTS projects, these should also gather momentum, providing fillip to the order inflows of transmission companies such as PGCIL, points out JP Morgan Research

 

Battery deployment reinforces the opportunity for domestic battery manufacturing, and for designing and executing BESS. Greater policy focus could lead to higher domestic content requirements eventually, although initial imports may be high, especially in batteries. RE developers have faced project delays due to evacuation constraints, which have also led to lower participation in bidding due to transmission-related execution risks. This situation could change if GEC-III is executed well, leading to a boost for RE equipment makers and developers.Nomura Research highlights that the sharply higher outlay, addition targets, central financial assistance and inclusion of the BESS component under GEC-III boosts the demand visibility for transmission equipment manufacturers and players providing BESS solutions. Furthermore, greenfield projects under GEC-III will be awarded under the TBCB route, which is likely to augur well for private transmission companies, it adds. Companies in its coverage which will be the major beneficiaries are GE Vernova T&D India, Hitachi Energy India, and CG Power.  

 

In addition to them, transmission utilities such as Power Grid Corporation (PGCIL), Adani Energy, Torrent Power and RE developers such as Acme Solar, JSW Energy and BESS manufacturers like Premier Energies will benefit from the scheme. 

 

A large number of players could benefit from GEC-III. This is positive for transmission utilities like Power Grid, Adani Energy, and Torrent Power, as well as for RE developers like Acme Solar, and JSW Energy. BESS manufacturers like Premier Energies would also benefit from GEC-III. GE Vernova, Hitachi Energy, and CG Power too should benefit by supplying critical transmission equipment.

 

The outlay for GEC-III is considerably higher than that of GEC-I (₹10,141 crore) and GEC-II (₹12,031 crore) put together, and it could lead to faster additions of transmission lines and substations. The central support is around 29 per cent of estimated expenditures.

 

GEC-I focussed on 24 Gw of RE evacuation with central support amounting to about 40 per cent. The deadline was extended from December 2020 to March 2023 due to Covid, and targets were eventually largely achieved. The GEC-II looked to evacuate 20 Gw of RE and is 33 per cent funded by the Ministry of New and Renewable Energy (MNRE). While most projects under GEC-II have been tendered out and awarded, no GEC-II RE projects have yet been connected.

 

The Centre’s policy support is highly useful, but execution depends heavily on state utilities, whose efficiencies can vary. InSTS projects have been talked about for a long time, but have not contributed meaningfully to TBCB awards so far, given cash crunches at state level and also slow decision-making in some states. The scaleup for GEC-III may create challenges for state utilities since it is more than three times the previous two schemes combined.

 

If GEC-III clears the intra-state bottlenecks in evacuation and solves the storage issue to some extent, it could trigger another burst of activity in the RE space where players have been cautious due to the lack of connectivity. Storage and access to customers via reliable grid connectivity are all critical for monetising RE capacity.

 

Likely beneficiaries

PGCIL, Adani Energy could see higher order inflows

GE Vernova, Hitachi Energy, CG Power to benefit

BESS makers stand to gain from storage push

Private transmission firms to benefit from TBCB route

RE equipment makers may see a pick up in project activity

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The writer is a New Delhi-based independent journalist