To enable proper evacuation of renewable energy, India started planning for green energy corridors (GEC) almost a decade back. Ambitious targets have been set over the years in different phases. The implementation of GECs has faced several challenges and delays primarily due to financial, land acquisition and geographical constraints.
Transmission-related issues have been a big concern as these have considerably slowed down renewable energy development in the past, and the problems are only likely to get aggravated with the increase in the quantum of renewables available for grid integration. To address transmission constraints, a comprehensive plan covering transmission and control infrastructure was identified as part of the GEC project. This comprehensive plan includes intra- and inter-state transmission systems to strengthen the infrastructure and the establishment of renewable energy management centres at the state, regional and national load despatch centre levels. However, the progress has not been up to the mark.
At the COP26 summit, India made a commitment to achieve 500 GW of non-fossil fuel energy capacity by 2030. Transmission infrastructure will play a key role in the achievement of this target.
Renewable Watch tracks the key developments related to GEC, intra- and inter-state transmission projects for renewable energy, key challenges in this space and the way forward…
Approval of GEC Phase II for intra-state transmission system
On January 6, 2022, the Cabinet Committee on Economic Affairs approved the GEC Phase II scheme for intra-state transmission systems with the aim of adding approximately 10,750 ckt. km of transmission lines and approximately 27,500 MVA of substation transformation capacity. The GEC project will facilitate grid integration of and power evacuation from approximately 20 GW of renewable energy projects in Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh.
The scheme is targeted to be set up at a total estimated cost of Rs 120.31 billion with central financial assistance (CFA) covering 33 per cent of the project cost of Rs 39.7 billion. The transmission systems will be created over a period of five years from financial year 2021-22 to financial year 2025-26. According to the government, the CFA will help in offsetting the intra-state transmission charges and thus keep power costs down and assist in achieving the 2030 renewable energy targets. The scheme will contribute to the long-term energy security of the country and promote ecologically sustainable growth by reducing the carbon footprint. Furthermore, it will generate direct and indirect employment opportunities for both skilled and unskilled personnel in power and other related sectors.
This scheme exists in addition to GEC Phase I, which is already under implementation in Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu for grid integration and evacuation of power from approximately 24 GW of renewable energy projects and is expected to be completed by 2022. The scheme envisages the addition of 9,700 ckt. km of transmission lines and 22,600 MVA of substation capacity. The estimated cost of the transmission projects is Rs 101.42 billion with CFA of Rs 40.57 billion.
New ISTS projects
On December 8, 2021, the union minister of power and new and renewable energy approved 23 new interstate transmission system projects with an estimated cost of Rs 158.93 billion. Of these, 13 projects with an estimated cost of Rs 147.66 billion will be developed under tariff-based competitive bidding and 10 projects with an estimated cost of Rs 11.27 billion will be developed under the regulated tariff mechanism. The new transmission projects will facilitate the evacuation of 14 GW of renewable power in Rajasthan, 4.5 GW in Gujarat, 1 GW from the Neemuch Solar Park in Madhya Pradesh, and power from feeding areas near Akhnoor and the Jammu region by establishing the Siot substation in Jammu. These projects have been approved after examining the recommendations of the National Committee on Transmission and in accordance with the National Tariff Policy, 2016. Under this policy, ISTS projects are to be developed through tariff-based competitive bidding, except for projects that are strategic, time-bound or are meant for technical upgradation.
At the meeting of the Parliamentary Consultative Committee of the Ministry of Power (MoP), held on December 10, 2021, the power and new and renewable energy minister mentioned the key policy initiatives to promote renewable energy management and strengthen the transmission infrastructure. These include the development of renewable energy management centres for renewable energy integration, allocation of intra-state transmission system projects via the competitive bidding process, implementation of GEC II for Ananthapur (1,500 MW), Pavagada (2,000 MW), Rewa (750 MW), Bhadla III (500 MW), Bhadla IV (250 MW), Essel (750 MW) and Banaskantha (700 MW) at an estimated cost of Rs 43 billion. In addition, 66.5 GW of renewable energy zones have been planned, for which 13,500 ckt. km of transmission lines will be laid. The transmission network expansion will augment the seamless transfer of energy from power-surplus regions to power-deficit regions, and support the growth of renewable energy capacity.
ISTS amendments
The MoP has also announced 100 per cent ISTS charges on the power supplied by solar plants commissioned on or after July 1, 2028. Currently, distribution companies are exempt from paying ISTS charges for solar- and wind-generated electricity, helping incentivise the construction of renewable energy projects. Initially, the waiver was only available for solar and wind projects to be completed by March 21, 2022. The deadline was later extended till June 2023 and then till June 30, 2025. As per the MoP’s recent order, electricity generated by renewable energy projects commissioned between July 1, 2025 and June 30, 2026 will be subject to 25 per cent of the appropriate ISTS rates. Electricity generated between July 1, 2026 and June 30, 2027 will be subject to 50 per cent ISTS charges, and electricity generated by renewable energy plants between July 1, 2027 and June 30, 2028 will be subject to 75 per cent ISTS charges.
The government has also made it easier for pumped hydro storage plants and battery energy storage systems (BESSs) to get waivers on ISTS charges. Previously, these projects were only eligible for waiver benefits if at least 70 per cent of the electricity utilised came from wind or solar power facilities. However, such projects can now qualify for rewards if at least 51 per cent of the electricity generation is from wind or solar projects.
Solar, wind and pumped hydro storage projects will be exempt from ISTS transmission charges for 25 years after commissioning, whereas BESS projects will only be exempt for 12 years. Green hydrogen plants that are operational by July 30, 2025 will be exempt from ISTS charges for the first eight years. Renewable energy-based electricity traded in spot power markets (green day ahead and green term ahead) will be exempt from ISTS charges till July 30, 2025.
Key issues and the way forward
While the GEC initiative is a step towards revamping the country’s transmission system, there have been several challenges in the transmission space. The key challenge has been the slow pace of transmission infrastructure development vis-à-vis the pace of renewable energy project development. Due to this, developers often face difficulties in obtaining authorisation for power evacuation, in turn, suffering significant generation losses. This concern is more for new projects that get commissioned.
For intra-state transmission systems, the issue of delays in commissioning has been more rampant. In fact, intra-state transmission has been dubbed as the weakest link in the grid, hampering the uptake of renewables due to the issues surrounding it.
Another key obstacle is that many utility-scale renewable energy projects are planned in remote areas across the country, which makes power transmission cumbersome and expensive. Renewable energy projects in Leh and Kargil have faced such issues. The transmission space has also seen problems related to financing and land acquisition.
Usually, there is a lag of three years between the construction of a renewable energy project and the development of transmission infrastructure. Therefore, going forward, greater consultation is needed between government agencies and private players to remove the lag and to ensure that power purchase agreements and power evacuation are in sync.
