A top energy body comprising India's leading private electricity transmission developers has raised the major issue of reliable transmission of electricity throughout the nation, especially in light of the recent focus on power transmission at the G20 Summit.
The Electric Power Transmission Association has said it is imperative to operate and maintain flawlessly various interstate and intrastate transmission systems across a billion-plus people in India on a level playing field. The EPTA has further argued that it is imperative for the Power Ministry to safeguard the interests of transmission companies operating in India and provide a platform for such companies to raise their concerns.
Former Secretary of New and Renewable Energy Indu Shekhar Chaturvedi said some very serious issues existed in India's power sector. And these need to be ironed out fast.
Edited excerpts from the interview:
Climate change and renewable energy are among the key items in the G20 agenda. How should India's transmission sector evolve in the years to come?
Indu Shekhar Chaturvedi: The transmission sector will play a pivotal role in furthering the G20's ambitious agenda to combat climate change and build sizeable renewable energy capacity. For example, India is committed to achieving 500 GW of installed electricity capacity from non-fossil fuels by the year 2030, and this will require a commensurate addition of transmission capacity. Thus, transmission infrastructure in India must undergo significant upgrades and expansions.
In 2021, the G20 countries saw a record investment of $300 billion in transmission projects. This level of investment is expected to persist as G20 members strive to fulfil their commitment to combat climate change. A modern transmission grid infrastructure should not only be able to transport electricity from renewable generation sites to areas of demand but should also show flexibility to enable the integration of electricity from various renewable sources. In addition, it should also be efficient and cost-effective. Innovative technologies will play an important part in achieving these ends.
What is the expected size of investments in the transmission sector between now and 2030? India seeks to build 500 GW of RE power. Do you see big-ticket FDI flowing into India's transmission sector, given the size of the opportunity?
Indu Shekhar Chaturvedi: India's transmission sector presents a multibillion-dollar opportunity for domestic and global players as the government steps up efforts to build a future-ready grid infrastructure. This is well aligned with the government's goal of achieving 500 GW of installed electricity capacity from non-fossil fuel sources by 2030.
The government has also been following the model of competitive bidding for most of the transmission projects, which has led to an increase in participation from the private sector. The prospect of substantial FDI flowing into India's transmission projects appears promising since the sector is favoured among investors for its stable returns in the long run. With the right policies and substantial investment, India has the potential to emerge as a global leader in the transmission sector.
What is EPTA's view on the current regulations governing award of transmission projects in India? Are these encouraging enough for private and overseas investments?
Indu Shekhar Chaturvedi: EPTA is comprised of seven prominent private electricity transmission developers who are actively bidding and developing transmission infrastructure in the country. I think there is genuine recognition and appreciation of a large number of steps that the government has taken toward enabling the building of a modern grid infrastructure. That said, there are some apprehensions among private transmission companies that need to be addressed expeditiously.
Understandably, the dominance of one PSU in the transmission sector is a point of concern. Since inception i.e. January 2011, the PSU has won 44% of the bids (by tariff) and private sector has bagged 56% of the transmission development projects. This is apart from the projects nominated to the PGCIL under the Regulated Tariff Mechanism. Access to funding and legacy projects with a guaranteed rate of return, raises the apprehension that the PSU could possibly undercut TBCB bids, which can eventually crowd out robust private participation in the sector.
A Complete institutional separation between PGCIL and CTUIL (Central transmission Utility) is also an area that needs attention. Also, stricter norms are perhaps needed for giving out nomination projects.
To make the TBCB process more efficient for all players, it is important to address certain issues with respect to the compensation for ROW. The lack of clarity and uniformity with respect to RoW compensation makes it difficult for companies to bid on projects, because they don't know how much money they'll need to pay for ROW. To solve this problem, the Standard Bidding Document could perhaps be amended to require transmission licensees to pay ROW compensation based on the market rate of land at the time of bidding.
One more aspect that requires attention is in the model RfP and model TSA (Transmission Service Agreement) which could be revised to require interconnecting transmission licensees to coordinate with each other and to outline each licensee's obligations and liabilities. At present, there is no binding obligation cast on the incumbent licensee to proactively coordinate and assist the TSP(Transmission Service Provider). If these changes are implemented, it will go a long way in helping the transmission developers from substantial financial liabilities and other detriments.The TBCB model has been a great infrastructure story and greater participation of private sector will augur well for building critical transmission assets in time and at competitive cost toward India's energy transition plans. There has been encouraging movement in this direction which needs to be accelerated.
Private players want a clear line between CTU and PGCIL and to ensure a level-playing field. Will that happen?
Indu Shekhar Chaturvedi: EPTA member companies strongly believe that separation of CTU from PGCIL would allay the apprehension that all transmission companies do not currently have equal access to information on upcoming projects. And this will be good for the health of the transmission sector in India.
Shantanu Guha Ray is the Asia Editor of Central European News. He is author of 'Black Harvest: The India Coal Story' that will hit the stands in a few months.
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