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Few takers for renewal energy! Power transmission capacity addition down 31% in 2019

Few takers for renewal energy! Power transmission capacity addition down 31% in 2019


Decline due to few takers for renewable energy, which is main driver of transmission connectivity

Capacity addition in power transmission has slowed considerably in 2019, with 13,200 circuit kilometres (ckm) of new lines having been built in January-November, 31.6% lower than in the corresponding period in 2018. The sudden decline is being attributed to uncertainties faced by upcoming renewable energy projects, as well as the rapid pace of transmission capacity addition in recent years.

Several states, including Andhra Pradesh, began exhibiting reluctance in procuring power from renewable energy sources in 2019. Experts pointed that this uncertainty at the state-level has taken the pressure off the need for transmission connectivity, leading to deceleration in transmission capacity addition. “Also, with tepid growth in per-capita power consumption (2.8%) and low utilisation levels of power plants, there is no burning platform for this (transmission capacity addition),” Kameswara Rao, leader, PwC India, told FE.

The Central Electricity Auth-ority, in its national electricity plan, has estimated the requirement of 1.1 lakh ckm of new tra-nsmission lines to cater to ann-ual peak load demand of 225.7 GW by FY22-end. Power Grid Corporation of India (PGCIL), the central transmission utility, told FE that of this, about 52,000 ckm has already commissioned and the balance is under various stages of implementation.

Renewable energy is seen to be becoming the driving force behind addition of power transmission capacity. To achieve the target of having 175 giga-watt (GW) of renewable energy capacity by 2022, the government has identified transmission schemes for 66.5 GW green energy capacity, which would require 16,000 ckm of transmission lines, over and above the 1.1 lakh ckm mentioned above. In one of the recently concluded transmission bidding for green energy plants, projects worth `11,000 crore were awarded through competitive bidding framework, the largest investment till date.

“It is expected that in the next round of bidding, transmission projects worth Rs 25,000 crore would be awarded in the next 12 months through the competitive bidding mode,” Pratik Agarwal, managing director, Sterlite Power, told FE.

Apart from the perennial issue of receiving statutory clearances on time, a section of the industry thinks that many private players in the transmission segment found it difficult to raise equity in the current market condition. Explaining the issue, Pawan Singh, CEO of major power sector lender PTC India Financial Services (PFS), said “some groups in the sector have got into trouble and the infrastructure investment fund (InvIT) model has not taken off in a big way”.

InvIT is a special mechanism which enables investment from various sources in infrastructure projects. However, there are only three InvITs in the country right now and one of them — India Grid InvIT Fund — has helped private transmission Sterlite Power to fund its projects. “A strong appetite for transmission projects in the developer and investor community was clearly evident with the transaction involving private equity giant KKR and sovereign fund GIC, which together invested more than Rs 2,000 crore in 2019 to co-sponsor India’s first power sector InvIT, IndiGrid, alongside Sterlite,” Agarwal added.

Source: financialexpress
Anand Gupta Editor - EQ Int'l Media Network


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