In India's power transmission sector is mostly controlled by government

29 Jan 2023

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.

Electric power network is an interconnection of generation, transmission, and distribution systems. In the traditional grid, the generation was centralized to large power plants such as coal, nuclear, and hydroelectric. With the advancement of technology, renewable energy resources such as wind, solar, and biomass are becoming more popular and widespread. Renewable energy resources are small in capacity compared to coal and nuclear plants but are spread in the transmission and distribution system and located closer to the load centers. The transmission system is used to transfer electrical energy from generation to load centers. This system consists of transmission lines and the substations with transformers and other components used to maintain the voltages as well as the active and reactive power flow. Transmission lines are characterized based on their line resistance, inductance, and shunt capacitance. The power flow analysis is used to analyze the active and reactive power flow in the power system from generation to load centers. This article discusses different types of generation in the power system. Transmission line characteristics and power flow analysis techniques are also presented with the different technologies used for reactive power control.

Consolidation Phase for Private Power Transmission

Recent media reports suggest that Mumbai-headquartered Kalpataru Power Transmission Ltd, T&D space, was keen on selling all its power transmission concessions. This development is in line with the trend, observed over the past two-three years, where developers are seen divesting stake in their power transmission assets.

According to reports, Sekura Energy and CLP India are in independent discussions to acquire all the four power transmission assets of Kalpataru Power Transmission Ltd (KTPL). Sekura Energy is promoted by Edelweiss Infrastructure while CLP India is backed by Canadian pension fund CPDQ. The total investment involved is likely to be in the region of Rs. 3,200 crore, including Rs. 349 crore of equity.

KTPL owns four transmission lines—two (Haryana and Madhya Pradesh) in operation and two (West Bengal and Bihar) are under construction. In Jhajjar KT Transco Ltd (See Box: Kalpataru Power: Assets under operation, at the end of the story), KPTL has a 51 per cent equity stake while in Kalpataru Satpura Transco Pvt Ltd, it owns 100 per equity.

KTPL has also won two interregional power transmission projects awarded under the tariff-based competitive bidding (TBCB) route. Both these projects are under construction. The first is Alipurduar Transmission Ltd that is building infrastructure to transfer power from Alipurduar in West Bengal to the Eastern Region Grid. This line is associated with importing electricity from upcoming hydropower projects in Bhutan, which are being developed with assistance from India.

The second project, under construction, is Kohima-Mairani Transmission Ltd. This Rs.653-crore project involves strengthening of the 400kV network in the northeastern region. The anticipated project completion date is July 2020.

 Core EPC business

Although Kalpataru Power officials were unavailable for comment, it strongly appears that the rationale behind the proposed sell-off was the company’s decision to stick to its core business of EPC contracting—not just in India but abroad as well. Cementing this proposition is the fact that in late March 2019, KTPL signed a definitive agreement to acquire 85 per cent equity stake in Linjemontage I Grastorp AB (LMG) for an enterprise value of $24 million.

LMG is an EPC firm headquartered in Grastrop, Sweden. It specializes in power supply solutions and services for electricity networks within the voltage range of 0.4-400kV. LMG has an active presence in Sweden and Norway, and this acquisition will help KPTL to gain footprint in other Nordic countries like Finland and Denmark, as well as Western Europe.

Selling power transmission assets to focus on core EPC business was also seen in the case of KEC International. In November 2018, the Mumbai-headquartered company signed a purchase agreement with Adani Transmission Ltd for selling its entire stake in KEC Bikaner Sikar Transmission Pvt Ltd (KBSTPL) at an enterprise value of around Rs.227.50 crore. KBSTPL owns an operational 400kV double-circuit transmission line of 344 ckm, running from Bikaner to Sikar, in Rajasthan, operational since December 2017. This sale was in line with KEC’s strategy to focus on its core EPC business.

Commenting on the development then, Vimal Kejriwal, MD & CEO, KEC International Ltd had noted, “We are happy to inform that in line with our strategy of being an asset light company focused on providing turnkey services to infrastructure sector, we have decided to sell our holding in KEC Bikaner Sikar Transmission Private Ltd to Adani Transmission Ltd.”

 Business Restructuring

While the aforementioned cases of KEC International and Kalpataru Power represent cases of sticking to core EPC business, selling of power transmission assets was seen for very different reasons also. For instance, there are at least two instances where infrastructure developers were seen exiting the power transmission space, so as to maintain their focus on other segments.

In October 2018, Sekura Energy Ltd agreed to acquire two operating power transmission schemes owned by Essel Infra projects Ltd, the infrastructure arm of the Essel Group. The two assets are Darbhanga-Motihari Transmission Ltd and NRSS XXXI (B) Transmission Ltd. Sekura is also set to acquire Warora-Kurnool Transmission Ltd and NRSS XXXVI Transmission Ltd—the two under-construction assets. The stake in the two will be acquired post commissioning. According to a recent report by CEA, the NRSS XXXI (B) scheme and the Warora-Kurnool project are likely to be commissioned by December 2019. The total deal is estimated to be worth around Rs. 6,000 crore. According to reliable information, two transmission schemes (names unknown) of Essel have been acquired so far by Sekura Energy.

Essel Group, according to reliable media reports, is facing financial difficulties and has planned to divest its assets in the fields of power transmission, renewable energy and roads.

GMR Group, over the years, has been divesting some of its assets in the power generation and transmission space, with a view to focusing on other businesses—principally airports. During 2014, GMR Energy had developed two transmission projects in Rajasthan State of India during FY 2014 awarded on a BOOM basis by Rajasthan Rajya Vidyut Prasaran Nigam Ltd, the state transmission utility.

The first project, Maru Transmission Services Ltd, involved a 270-km network comprising 400kV and 220kV lines apart from associated substations. This system was commissioned in October 2013. The other project, Aravali Transmission Services Ltd, involving mainly the 400kV single-circuit Hinduan-Alwar transmission line (85 km) was commissioned in July 2014.

Adani Transmission Ltd, part of the Adani Group, has since acquired controlling stake in these two projects.

A good time for T&D sector

The Indian economy is observing signs of restitution & so is the power sector. A shift in the GoI’s focus to reinforce the power T&D system opens profuse opportunities for the transformer market too. GoI is encouraging investments at the T&D level to boost access to reliable & continuous power supply through schemes such as DDUGJY which scheme aims to provide power for every village & hence provide power to all. This necessitates huge investments in the T&D sector including use of energy efficient transformers, besides renovation, modernization, restructuring, & upgradation of the sub-T&D infra. Major manufacturers have geared up their manufacturing facilities to meet the surge in demand. Bureau of Indian Standard & MoP are keenly working to ensure that quality products are procured by the electricity boards & have consequently fixed mandatory Level-II rating for DTs for DDUGJY scheme. As power is one of the most essential components of infrastructure vital for the economic growth, the existence & development of sufficient infrastructure is important for continual growth of the Indian economy. GoI has foreseen an invest’ plan of ? 2.6 lakh Cr. in T/R sector during the FY’17-22, of which estimated ? 1.3 lakh Cr. has been allocated for intra-state T/R capacity. Apart from this governments focus is on railway electrification & providing last mile connectivity & electrifying villages so that it can accomplish the set target. Few years since, Indian power T&D sector has observed rise in activities, with government pushing programs such as electrifying villages, railway electrification & enhanced public pvt’ participation & electricity for all by 2019.GoI has introduced policy reforms to boost pvt’ participation that has activated a fresh thrust for buying & sales of transmission (T/R) assets. CoS having core business in EPC or power generation & won electric T/R projects are now ready to monetize such assets to follow new projects. Invest’ firms have also revealed interest & adding to this, there are some CoS, with core business in renewable, now eying T&D assets.

With a huge buyer interest from T/R CoS & yield-based invest’ firms, industry experts say it may be a good time for T&D sector. Financial health of the discoms has enhanced due to lower T&D losses, tariff hikes & cost rationalization. Traditionally known to be the weakest link in the energy value chain, the hinge of discoms is also being driven by volume growth. Discoms have also gained from healthy tariff hikes allowed in most states b/w 2011-12&2015-16 apart from cost rationalization initiatives. Electricity regulator had lowered the incentive income available to thermal generators for the period b/w 2013-14&2018-19, which resulted in a dip in per unit costs. GoI also worked on coal linkage rationalization, which has led to lowering of fuel cost for some plants. Mode of development of T/R projects is as important as planning for the expansion of the future grid. Report by Crisil has rated the power T/R sector as the most attractive for infra ’invest’ in India. The success of inter-state T/R system PPP projects on the tariff-based competitive bidding model is testimony to the stoutness of the PPP model of the sector. In some cases, tariffs have reduced by 30% & project execution time by 40%. Besides, the Revised Tariff Policy of 2016 has suggested the competitive bidding model for intra-state projects. A big measure of success for the T/R grid is the formation of intra-state n/w’s that will bring electricity closer to the consumer.

Power Sector – Government Initiatives

PSDF: To be utilized for the projects proposed by state utilities to create necessary T/R systems of strategic importance. Install shunt capacitors for improvement of voltage profile. Install standard& special protection schemes. Renovate & modernize T&D systems for relieving congestion, etc.

Fuel supply: Coal usage flexibility / coal swapping from inefficient plants to efficient plants. Rationalization of coal linkages to optimize transportation cost & materialization of coal at thermal power plants. Introduction of a new & more Transparent Coal Allocation Policy for Power Sector, 2017 – SHAKTI scheme. GoI targets to produce 1 BT of domestic coal by 2019-20. 24x7 Power for ALL: Joint initiative by the GoI& the state governments, aiming to achieve 24x7 availability of reliable power to all households, industrial, commercial & all other electricity consuming entities by the end of FY’19. Preparation of state specific action plans for24x7 Power for All covering adequacy of generation, T/R capacity & distribution system. 24x7 Power for All documents have been signed for 35 States/UTs. All states have been on boarded. Total generation capacity by 2019: 389 GW. Total invest’ in system strengthening: ? 3,15,582 Cr’s. No of household to be provided access: 60.5 mn.

UDAY: MoP, GoI launched Ujwal DISCOM Assurance Yojana which was approved by the Union Cabinet on 5 Nov’15. Under UDAY schemes states will take over 75% of the DISCOM debt as on 30 Sep’15 (50% in FY’16&25% in FY’17), to give a fresh opportunity to debt trapped DISCOMS to transform. Till date, 32 states & UTs have joined this scheme for financial & operational turnaround. About 97% of total outstanding debt of all state Discoms has been covered under this scheme, paving the way for financial turnaround. Financial Turnaround of DISCOMs Operational improvement; Reduction in cost of generation of power; Development of RE; Energy efficiency & Conservation.

IPDS: Aims at providing quality & reliable power to urban households. Financial assistance to strengthen urban infrastructure including sub-T & Dn/w’s in urban areas & metering of DTs/ feeders/ consumers. IT enablement of distribution sector & strengthening of distribution n/w component has been subsumed under IPDS. Projects worth ? 24,836 Cr. have been sanctioned for 3486 towns. Total outlay of ? 32,612 Cr. aimed at ensuring 24X7 power for all.

DDUGJY: Launched in Dec’14 with a goal to provide continuous supply of electricity to rural India. Key areas include separation of agriculture& non-agriculture feeders, strengthening & augmentation of sub-T&D infrastructure including metering at DTs, feeders & consumers & rural household electrification. 590,791 villages (98.8%) in India have been electrified. Free electricity connections provided to 2.5 Cr. BPL households (Out of total 4.27 Cr. connections sanctioned).

SAUBHAGYA: Launched by the MoP to achieve universal household’s electrification by providing last mile connectivity & electricity connections to all households in rural & urban areas. Solar photovoltaic based standalone systems to be provided for remote &inaccessible villages. Total cost of ? 16,320 Cr’s including Gross Budgetary support of ? 12,320 Cr’s from the GoI.

DSM & Energy efficiency: There is sig’ push for increased adoption of energy efficient products through schemes, directives/ regulations & policies. National LED program was launched on 5 Jan’15. DELP &SLNP have been initiated through which household lighting & streets are being replaced with LEDs. Over 18.5 lakh LED tube lights distributed as of May’17. Over 20 lakh LED street lights installed under SLNP as of May’17.

Green Energy corridors: Launched by the GoI in 2013; envisages grid connected n/w for the T/R of RE produced from various RE projects. Involves construction of the inter-state T/Rn/w for connecting 43 GW of RE capacity under Green Corridor-I. Green Corridors-II Program involves connectivity for 20 GW solar parks in different states including AP, MP, KA, RJ & GJ. Total expected invest’: ? 43,000 Cr’s in intra & inter-state T/R systems.

Smart Grids / Automation: NSGM established for planning & monitoring of implementation of smart grid related activities. Provides capital subsidy support to larger implementation projects; 4 projects at bidding stage, 20+DPR shave been received for approval. Inclusion of Smart Grid / Smart Metering investments in IPDS, UDAY, other schemes & mandates of GoI are accelerating early adoption of new tech solutions.

Transparency & Monitoring initiatives: GARV (Rural Electrification) App: Provides updates related to the electrification of villages & households in India. Ujala App: Provides real-time updates on the LED distribution. Vidyut Pravah: Gives real-time information on electricity price & availability. URJA App: Helps enhance consumer connect by showing DISCOM's performance in cities & gives data of the IPDS. TARANG (T/R System Monitoring) App: To monitor the progress of T/R System in India. UDAY: Gives the progress of the UDAY yojana. Urja Mitra APP: Enables consumers to access real time & historic outage information for DISCOMs. DEEP: e-Portal for short & medium-term power procurement through transparent bidding & e-reverse auction.

Outlook 2025

Power transmission is an integral part of the power sector and is as vital as power generation; there is no value for generating power until the power reaches to the destination for final consumer. The huge amount of power generated in power station is to be transported over a long distance to the load centers to cater to the consumers with the help of transmission lines and transmission towers. Though India has adequate power generation capacity, it has a substantial proportion of population having limited access to electricity mostly because of lack of proper transmission infrastructure. In order to achieve target of affordable electricity for all by 2019 or even by 2022, India serious needs to have robust power transmission network.

Evacuating power safely was the main focus of India's power transmission sector during the initial years. But as the need for electrification of more areas were realized for economic growth, the role of transmission sector changed a lot. As with the changing scenario, the transmission sector started to move towards integrated system planning because generation capacities are distributed unevenly in different regions. While thermal capacity is in the coal rich eastern region, hydro capacity is concentrated in the hilly regions of North and North-Eastern regions while renewable sources like wind or solar are concentrated in west and south regions.

Building on massive power transmission sector thus addressed this issue and helped providing power to regions across the country. Thus power transmission in India is in the integrated system planning of power sector and in last one decade this sector has been getting substantial investments to scale up the infrastructure. Now power transmission is considered as important as power generation.

India's power transmission sector is mostly controlled by government – both the central and various state governments and various institutions to work in the transmission sector. Till now, with respect to the size of the sector, presence of private sector is negligible though the private sector participation in power transmission is growing gradually with recent policy reforms. In the central sector, the central transmission utility (CTU), known as the Power Grid Corporation of India Ltd (PGCIL), is responsible for national and regional transmission planning while the state sectors have separate State Transmission Utilities (STU).

Power transmission was opened up to the private sector in 2010 with the award of the western regional system strengthening to Reliance Infra and the east-north interconnection line to Sterlite Energy. The CERC in 2011 ruled power transmission projects should be awarded through competitive bidding like generation projects. Power Grid was the only company operating in this area till then. The recently amended National Tariff Policy requires projects apart from those of strategic importance, which are to be nominated to Power Grid, be auctioned. Till now, Tala Transmission Project has been the biggest entry of private sector in power transmission though based on public-private partnership.

Power distribution system is the last stage of electricity sector value chain as it provides power generated in the power generating plants to the final consumers. The main function of an electrical power distribution system is to provide power to individual consumer premises. Distribution of electric power to different consumers is done with much low voltage level. Power distribution in India has more presence of private sector than the transmission sector. Until some time back, the State Electricity Boards (SEBs) used to handle the distribution segment completely. But in last two decades power distribution in a few regions/areas, particularly in large cities has been privatized, however the SEBs or the state DISCOMs are still handling a large part of power distribution.

The sector has started receiving greater attention and investment with the restructuring of the state electricity boards (SEBs). Several new initiatives have been introduced to reduce aggregate technical and commercial (AT&C) losses along with a definitive regulatory framework. Electricity Act 2003, National Electricity Policy 2005 and National Tariff Policy 2006 are important regulations governing the sector today with an aim to bring competition in the sector and improve the services to the end consumers.

Indian government has also made heavy investments in the distribution sector through the Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY) (now replaced by Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Accelerated Power Development and Reforms Programme (APDRP) during the Tenth Plan and has continued to extend the same in the Eleventh Plan as well.

The aim of these programs is to provide access of electricity to all and bring down the AT&C losses to a level of around 15% across the country. The various policies and regulations introduced by the government are set to increase competition and bring about commercial viability. Participation of private players into the Distribution Sector has also been encouraged through various models such as Public Private Participation as in case of Delhi and Orissa and more recently through input based distribution franchisee models in Maharashtra, Madhya Pradesh and Uttar Pradesh.