With the Narendra Modi-led government getting a second term, there has been a renewed interest in the renewable energy target of 175 GW by 2022. There was widespread optimism at a recent meeting between the renewable-rich state officials and the Ministry of New and Renewable Energy (MNRE) wherein the roadmap to achieve the target was discussed at length. The deliberations focused on remedial measures to tackle land issues, fast-track the bidding process, bring in flexibility in the wind and solar power mix, etc. The major area of concern, however, is the lack of certainty on the power evacuation front.
Transmission infrastructure has historically been the better performing link in the entire power sector value chain. The state-owned Power Grid Corporation of India Limited (Powergrid), which is also the central transmission utility (CTU), takes pride in mentioning that not even a single megawatt remained unscheduled due to transmission constraints. For promoting renewable energy, the Central Electricity Authority (CEA) and Powergrid planned way ahead of time and in 2012 released the Green Energy Corridors report. It laid out a comprehensive plan for renewable energy integration and evacuation from renewable-rich states. The implementation of the plan is almost complete. So when the bids for solar parks were invited, there was exuberance among private investors and India witnessed the lowest quoted tariffs for solar (Rs 2.44 per kWh) and wind (Rs 2.64 per kWh) projects. Between 2014-15 and 2017-18, the renewable energy sector witnessed an impressive compound annual growth rate of 18.2 per cent. Transmission was an enabler.
Today, the situation is different. We are sitting on 80 GW of renewables and the additional capacity targeted before 2022 is 95 GW. The year 2018-19 saw renewable capacity addition of 9.1 GW, a decline of 27 per cent over the previous year. Many auctions saw weak investor response and were forced to be rebid. The key concern is inadequate transmission. The gestation period of transmission projects is longer (24-36 months) vis-à-vis solar generation projects (12-18 months). It is imperative that the transmission system is developed in time to avoid generation bottlenecks. With the onset of more non-solar park bids, the risks associated with securing connectivity have increased manyfold. The major concerns arising are as follows:
Bottlenecks in getting Stage 2 connectivity: As per the existing procedure, developers first need to apply for connectivity and long-term access (LTA) at the CTU as per the Central Electricity Regulatory Commission’s (CERC) regulations before starting any transmission implementation work. Once the transmission scheme is planned and projects are tendered, they have a commissioning timeline of minimum two and a half to three years. In comparison, solar and wind power developers are generally required to finish the project within 18 months as per the MNRE guidelines. Therein lies the inherent mismatch in the timelines between the transmission infrastructure and the generation project. An LTA application is required as transmission developers have no other mechanism to ensure the use of the infrastructure they are developing and the recovery of investments.
Also, developers are required to construct the transmission lines connecting their pooling station to the grid substation on their own. They are constrained to explore the land parcel for the project in close vicinity of the nearest substation to minimise the length and thereby the gestation time of transmission lines. This is important for them to be able to match the commissioning schedule of their renewable energy plant. Hence, it is imperative that the transmission planning the renewable energy plan. Given that the renewable energy target of 175 GW by 2022 is nearing, the CEA and the CTU must proactively plan transmission systems in renewable-rich states such as Gujarat, Rajasthan, Andhra Pradesh, Karnataka, Madhya Pradesh and Tamil Nadu considering at least a 10-year horizon. For implementation, LTA should not be a criterion. The commercial interests of transmission developers should be protected as was done in the case of the development of green energy corridors. Transmission planning should be done in consultation and collaboration with all the generation and transmission developers.
Mix of RTM and TBCB: Different elements of the same transmission scheme are getting assigned through both the regulated tariff mechanism (RTM) and tariff-based competitive bidding (TBCB) mode with different timelines. This is adding to the lack of integration in the planning and implementation of the same scheme. The generators and funding agencies do not have any visibility about their exact commissioning schedule. To illustrate, in the case of the Bhadla Solar Park, the Bhadla 2 substation is being awarded through RTM and will have a 15-month timeline from the notification of award. But the associated transmission line like the Bhadla 2-Fatehgarh 2 is being constructed through TBCB where the price bid is yet to be issued. Project developers do not have any clarity on the commissioning schedule of the entire system. Likewise, Fatehgarh 2 and Bhadla 2 substations were proposed to be implemented through RTM but the interconnecting transmission line was awarded under TBCB. There are so many agencies involved that even if one of them delays/fails, the entire evacuation system will come to a standstill and hamper project feasibility. This adds to the risk perception of project developers.
Ideally, different elements of the same transmission scheme should be awarded through the same methodology (either through TBCB or RTM) so that accountability can be assigned to the transmission system developer. For example, both the Bhadla 2-Fatehgarh 2 and Ajmer-Phagi transmission lines should be awarded through RTM so that Powergrid is given the responsibility for devising the scheme. There are also other inherent challenges faced by project developers including getting right-of-way and statutory clearances, which may further delay construction.
Stretched bidding timelines under TBCB: In general, transmission development through TBCB entails a bidding timeline of six months as it is a two-stage process. After that bidders lose considerable time in acquiring the transmission licence under Section 164.
Improper project preparation: It has been observed in recent times that projects are being tendered out without proper survey, substation location finalisation, etc., thereby adding to project uncertainty.
Lack of coordination between MNRE/SECI and MoP/Powergrid/CEA/CERC: During the past one year, the Solar Energy Corporation of India (SECI) has come out with umpteen tenders without any clarity on whether there are enough transmission projects under implementation and whether adequate spare capacity is available at various substations for generators to plan their projects. Lenders are also wary of funding such projects where there are evacuation risks. As a result, there has been a muted response to these floated bids. There is a need for symphony between different stakeholders for a definitive future in terms of capacity addition and transmission planning.
Role of CTU: There is no visibility for developers on the availability of uncommitted capacity at Powergrid/state substations. The CTU/STUs need to publish the data on un-committed capacity at Powergrid, state substations and transmission plans, status on their respective websites or on the CEA website for centralised information. The present information on the CTU website is not exhaustive and is for a limited number of substations. This information would help developers in firming up locations of renewable energy projects. The CTU will initiate focused consultations with all stakeholders as per the provisions of the CERC Transmission Planning Regulations, 2018. The CTU must realise that developers’ role as power evacuation service providers is fundamental to the growth of renewables and they should have a single-window helpdesk/grievance redressal mechanism/consultation facilitation in place to address any queries.
There is a need for higher-level intervention to ensure that the challenges enumerated above are overcome in a constructive manner. Transmission capacity additions need to lead renewable energy capacity additions. Going forward, a reduction in bidding timelines and pre-emptive and coordinated transmission planning between different agencies will be necessary for transmission.