Transmission Needs Rs 5 Lakh Cr Investment to Meet $5 Trn Economy’s Energy Needs

According to the estimates, India will be consuming 1.8 trillion units by 2025 as the country’s growth trajectory accelerates, and this requires large investments in the transmission sector, particularly at the state level.

In order to fulfill the Prime Minister Modi’s vision of a USD 5 trillion economy over the next few years, it will require an estimated investment of Rs 5 lakh crore in the transmission sector, says the Confederation of Indian Industry (CII) report.

CII has released on Thursday a white paper “New Age Power Systems: For 21st Century India Challenges, Solutions and Opportunities” with an aim to partner with the government in developing a blueprint for efficient transmission system.

The report seeks to draw up a blue print for India’s vision on power for all and electric mobility which is a stated goal of the government.

According to the estimates, India will be consuming 1.8 trillion units by 2025 as the country’s growth trajectory accelerates, and this requires large investments in the transmission sector, particularly at the state level.

The transmission sector has seen a fall in the investments to below 1.8 lakh crore in the last 5 years but this will need to see a significant jump as 500 GW of renewable energy will be added to the grid by 2030.

The report indicates eight-point agenda for a robust transmission system including recommendations on planning, operations, costs etc.

Speaking at a media briefing soon after the report was released, Co-Chairman of CII National Committee of Power and Managing Director, CLP India, Rajiv Ranjan Mishra said, “There is a need to recalibrate our power systems in line with the changing energy scenario. With more than 90 percent of the capacity addition in the renewable sector, there is a need to make transmission grids more suited to handle the intermittent power while adhering to the challenges of urbanization and paucity of land.”

The major recommendations of the CII report included urgent need to upgrade capacities within existing infrastructure, clearly distinguishing the role of the central transmission utility from the functions of the developer, redefining the scope of planning for the center which should be based on the capacity of the transmission line instead of the geography where the same is located, and finally the need to bring in competition and move away from the cost-plus approach or regulated tariff mechanisms.

Commenting on the report, Chairman of CII’s Core Group on Transmission and the Group CEO of Sterlite Power Transmission Ltd, Pratik Aggarwal said, the report illustrates that competitive bids have ensured tariff reductions by almost 30 per cent compared to projects awarded on a nomination basis that follow a cost-plus approach.

“This becomes a huge differentiator in the renewable sector. As opposed to a transmission cost of 7-8 per cent the same cost per unit in renewables goes up substantially as operational efficiencies in the renewable sector is far lower,” Agarwal said.

He, further added that, “transmission is the backbone of the power sector and has a significant role to play in enabling Government’s vision of 24×7 Power for All, and meeting our renewable energy targets as part of global climate change commitments”.