With an addition of 20,000 MW every year, a lot of stress has been put on electricity transmission. But investments in transmission and distribution have not kept up with investments made in power generation.
Despite having installed power generation capacity of 225 GW and power demand of 135 GW (as of May 2013), India faced a peak power deficit of 9 per cent (12 GW). Power shortages have adversely affected the country's economy. In 2012-13, power shortages in India accounted for a GDP loss of $68 billion (0.4 per cent of GDP), impacting multiple industries like agriculture, manufacturing, services etc.
According to a recent FICCI study, in the last 5 years, power generation capacity has grown by ~50 per cent, whereas transmission capacity has increased by ~30 per cent. As per the 12th Five Year Plan, the future expansion in power generation capacity in India is planned at around 88 GW. In order to meet this capacity, investment in the transmission sector needs to be increased. Overall, an addition of 90,000 km of 765-220 kV lines, 154,000 MVA of substation capacity and 27,350 MW of national grid capacity is required in order to meet the 12th Five Year Plan requirements. For this purpose, an investment of $ 35 billion is planned in the power transmission sector. Of this, about $19 billion is planned to come from Power Grid Corporation of India Limited. The remaining $16 billion,~46 per cent of the total investments, needs to be secured from private players.
While plans have been put in place, as many as 120 transmission projects have faced delays because of the developer's inability to acquire land and get timely clearances from all stakeholders. There have been instances of transmission lines being forced to take a different route than planned, resulting in the entire project budget going out of control. The report indicates that there is an urgent need to synchronise the policy framework with a new reality of wider participation by private players under competitive bidding regime. Earlier rules were designed to only cater to government companies under the cost plus regime. PPPs are a much needed catalyst in reviving this sector and in order to make this successful, policy reforms are necessary. Once PPPs are able to thrive successfully, we will be able to achieve the common objective of building the grid, meeting demand requirements and optimally utilising generation capacity. As far as T&D segments of the sector are concerned, there was little that actually happened in FY13. The country continues to reel under the pressure of higher T&D losses (about 26 per cent) and with the government going very slow with the reforms process in these segments, the long-term sustainable growth of the sector seems doubtful. A big factor affecting the T&D system in the country is the long process time for concept to commissioning (C2C). Average time for C2C is about 60 months. Industry experts have recommended this period to be pruned down to 40 months for the growth of the sector. Smart grids are also being deployed in electricity networks to bring about a change in the energy delivery system, seeking to bridge the demand-supply gap by reducing transmission and distribution losses and through integration of renewable energy sources into the grid networks. Through proper implementation of Smart Grid solutions, the possibility of providing uninterrupted electricity to consumers across India to a larger extent, even in remote locations, while eliminating wastage of power units seems a likely possibility. This technology impacts all components of the power system and distribution losses to 5-10 per cent annually.
The Restructured Accelerated Power Development Programme (R-APDRP) introduced by the GoI was aimed at reducing the network losses to 15 per cent. A FICCI report says that part-A of the programme is aimed at creating IT infrastructure and automation systems within utility operations, missing in most distribution utilities in the country. And part B is aimed at strengthening the physical network. R-APDRP completion is expected during the 12th Five Year Plan. The programme would provide a strong foundation for evolution to smart grids in the power distribution segment.
Current Transmission Market Structure
Ministry of Power (MoP)
(Perspective planning, policy formulation, processing of projects for investment decision, monitoring of the implementation of power projects, training and manpower development and the administration and enactment of legislation in regard to power generation, transmission and distribution)
Central Electricity Authority of India (CEA)
(Advises the government on matters relating to the National Electricity Policy and formulates short-term and perspective plans for the development of electricity systems) Central Electricity Regulatory Commission (CERC)
(Regulates tariff; formulates policies regarding subsidies, and promotion of efficient and environmentally benign policies at central level)
State Electricity Regulation Commission (DERC)
(Regulates tariff; formulates policies regarding subsidies, and promotion of efficient and environmentally benign policies at state level)
Central Transmission Utility (CTU) (Ensures development of an efficient, coordinated and economical system of inter-State transmission lines and undertakes inter-state transmission)
(Develops transmission lines on BOO model and charge for wheeling electricity within the tarrifs specified by CERC/SERC)
State Transmission Utility (STU) Challenge faced across the transmission project cycle
(Ensures development of efficient, coordinated and economical system of intra-State transmission lines and undertakes intra-state transmission)
Relaxed qualification requirements
No requirements on technology & innovation, HSE in the bid document. Planning & Award
Under-utilisation of resources/technology during planning
Lengthy conceptualisation & award phase.
Overburdening of PSUs with projects Project Execution & Commissioning
Difficulty in obtaining ROW/ forest clearances
No impetus on technology & innovation
Lack of transparent redressal (unforeseen) mechanisms
No incentives for early commissioning O&M
No impetus on technology & innovation
Limited O&M capabilities.Project Exit
Failure to attract FDI
Discouraging holding requirements