Business Economy

‘Transmission sector needs ₹5 lakh crore investment for future needs’

One of the key requirements for a $5-trillion economy is an investment of about ₹5 lakh crore in the power transmission sector over the next few years, in order to cater to the 1.8 lakh crore units of electricity that India is likely to consume by 2025, according to a White Paper released by the Confederation of Indian Industry (CII).

“Prime Minister Narendra Modi’s vision of a $5-trillion economy will require an estimated investment of ₹5 lakh crore in the transmission sector over the next few years,” CII said. “As per estimates, India will be consuming 1.8 trillion units by 2025 as India’s growth trajectory accelerates, and this requires large investments in the transmission sector, particularly at the State level.”

The transmission sector, CII added, had seen a reduction in investments to below ₹1.8 lakh crore in the last five years. The White Paper goes on to enumerate eight action points that the government must work on to enhance the transmission sector in line with the growth of the economy that is envisaged.

“Traditional coal-fired power plants took 5-6 years to build compared to three to four years for construction of transmission lines required for power evacuation,” the White Paper said. “In comparison, wind or solar plants take 12-18 months to build, implying the need for advance planning of transmission projects.”

CII also recommended the separation of the Central Transmission Utility from the Power Grid Corporation of India since the set up is currently creating a conflict of interest between the two.

The paper also called for improved reliability of the transmission network through the development of contingencies in the system.

Huge time overruns

“Currently, the average time taken from the notification of a project to the start of its construction is around 760 days, caused by huge time overruns in the bidding and forest clearance process,” the paper said.

“More efficient modalities of the bidding process and forest clearance procedures will need to be adopted while preserving the integrity of the original process.”

The industry body also highlighted the fact that current guidelines for the construction of transmission lines, as laid out by the Central Electricity Authority, did not leave enough scope for adopting new technologies. This increases the capital expenditure and the per unit tariff.

“Hence, RFPs (Requests for Proposals) must specify the technical performance matrix instead of specifying materials and designs,” the paper said.

“Increasing urbanisation, evolving demographics, expanding renewables and changing market dynamics have placed extraordinary pressure on utilities to solve energy-delivery challenges in an economical manner in the shortest possible time with minimum disruption,” the paper said. “It is important for system owners, operators and planners to consider increasing capacity of existing infrastructure.”


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