Timely availability of a coordinated transmission system important for integration of large-scale renewable energy and vibrant power market

Mr K. Ramanathan Distinguished Fellow, TERI

The panel discussion was moderated by Mr K Ramanathan. He welcomed the speakers and other participants and requested Narayankumar Sreekumar (TERI) to give a brief presentation on the theme of the webinar. The presentation covered a brief overview of the present status of transmission system development in India, its increasing relevance, benefits of competition, policy and regulatory facilitation, the challenges being faced and the issues that merit deliberations in this context.

The invited speakers expressed their learned views on various aspects of the theme, which provided cross-insights into the challenges faced by the transmission sector in transmission system development including competition and private sector participation. At the end of the discussion, he also summed up the key points brought out by the panellists and moderated questions and answers round between the participants and the delegates. Mr AK Saxena (TERI) gave his concluding remarks and thanked all speakers and participants.

Shri Goutam Roy Chief Engineer (Power System Planning & Project Appraisal), CEA & Member Secretary, NCT

Mr Goutam Roy talked about the importance of transmission sector development and underlined the importance of bringing investment in the sector. He gave a brief on the evolution of competition in the segment and highlighted the growth achieved and benefits accrued by competition. He highlighted various issues from the perspective of policy and regulatory angle. In this context, he referred to issues like lack of payment security mechanism for renewable energy related transmission projects, matching gestation period of transmission projects with renewable energy projects, maintaining quality of projects and third party auditing, difficulty in modifying scope, litigation and RoW issues pertaining to of projects under tariff-based competitive bidding route among others.

Shri Ajay Talegaonkar Chief Engineer (Financial and Commercial Appraisal), CEA

Mr Goutam Roy talked about the importance of transmission sector development and underlined the importance of bringing investment in the sector. He gave a brief on the evolution of competition in the segment and highlighted the growth achieved and benefits accrued by competition. He highlighted various issues from the perspective of policy and regulatory angle. In this context, he referred to issues like lack of payment security mechanism for renewable energy related transmission projects, matching gestation period of transmission projects with renewable energy projects, maintaining quality of projects and third party auditing, difficulty in modifying scope, litigation and RoW issues pertaining to of projects under tariff-based competitive bidding route among others.

Ms. Shilpa Agarwal Jt. Chief (Engineering), CERC

Ms Shilpa Agarwal, highlighted the major issues and suggestions from regulator’s perspective, some of them being lack of clarity on transmission charges, clarity on the purpose of project, accuracy of survey report attached as a part of the bidding document, delay in providing gantry co-ordinates in case of multiple lines (the change of scope further will change financial equation and may have negative implication), foreclosure and lack of payment security mechanism for renewable energy related transmission projects, issue of recovery of transmission charges when transmission is developed based on anticipated commissioning of generation but generation does not come up as anticipated.

Dr Subir Sen COO (CTU Planning and Smart Grids), POWERGRID

Dr Subir Sen talked about the importance of transmission sector in power sector in both present context as well as future context; he mentioned that significant capacity (approx. 40% of total installed capacity) is projected to come from renewable sources and would correspond to approx. 20% of total generation. He also pointed out that the per capita electricity consumption is also expected to rise to approx. 1600 units. He highlighted the need for growth and development of transmission system to support these progresses in the power sector. He pointed out that some key issues which hinder the promotion of competition in transmission sector are delays in getting right of way (RoW) at right time, forest clearance and other land acquisition issues, dearth of skilled man power, etc. He also opined that alongside central government, state governments must also issue guidelines to address the issues at hand. He mentioned that technical innovations in the sector such as compact tower, conductors, gas insulated substation etc. are helping in reduce RoW and land requirements for the projects.

Ms Namrata Mukherjee Head (Policy Advocacy), Sterlite Power Transmission Ltd

In continuance, Ms Namrata Mukherjee (Sterlite Power Transmission Ltd) apprised the participants on the accelerated development achieved so far and performance of transmission sector and the flow of investments into the sector. Referring to the impact of COVID-19, she said that the current challenges are mainly related to low revenue recovery due to drop in demand. The pandemic has also impacted ground surveys, uncertainty regarding labour movement and open-ended risks both on upstream and downstream side. She also said that the matching the gestation period of transmission projects with renewable energy projects is getting difficult during these times. She added that the force majeure consideration may only relax the time not the additional expenditure the developer incurs. She also suggested for a national monitoring cell for ‘tariff-based competitive bidding’ (TBCB) projects and liquidity infusion to relax finance implications of COVID-19. Additionally, she highlighted some of the issues such as policy and regulatory framework mismatch, misalignment of regulatory provisions alongside single bidding documents, policy uncertainty for tariff-based competitive bidding route based projects, strengthening of payment security mechanism (especially for renewable energy projects), inefficient processes for permits and clearances, freedom to allow innovations in designing and technical standards. She highlighted the urgency to address these issues to ensure ease of doing business for private players in this sector.

Mr Vivek Singla President (T&D), Adani Tranmission Ltd

Mr Vivek Singla talked about the present status of TBCB and ‘regulated tariff mechanism’ (RTM) projects of transmission sector. He pointed out that majority of the projects as well as total investments are presently through RTM route, despite the fact that TBCB route offers less tariff on case to case basis. He highlighted that the share of private participation has remained on a lower end. Further, he expressed his opinion that many projects are still being allotted to public sector, though private sector performing better or at par with public sector in terms of project execution. He underlined that grid security should not be a concern while promoting competition, as grid security is handled by load dispatch centres (at national, regional and state level) and private sector has no role to play in the same. He was of the view that the proposal of BOOT model is likely to hamper competition and may lead to increase in tariff as it would not allow the developers to claim depreciation under present accounting standards. The risk perceived by the financial institutions may be increased in the process. He referred to the issue related to time taken for getting forest clearance and pointed out that it takes around 15 -18 months to get clearances, which is often much higher than the agreed commissioning time; he underlined the need to synchronize these timings. He also referred to the issue related to guidelines for RoW and land acquisition and pointed out that many states have not adopted or are having huge uncertainty related to this matter and the guidelines. He also highlighted some of the issues faced by developers due to COVID-19 such as financial implications in terms of interest during construction, penalty to beneficiaries among others, affected cash flows, delays in execution of projects, labour issues, etc.

Shri. Sanjay Nayak Vice President, PFCCL

Mr Sanjay Nayak talked about the responsibilities and tasks assigned to an organization as a bid process coordinator. While describing the evolution of transmission sector in India, he pointed out that despite numerous projects being identified under TBCB route, 81% of the total market share in projects is controlled by a few players. Numbers of players participating in the bidding process are also limited. Certain studies have shown that TBCB route has led to a notional saving of around INR 4,000 crores per year on a levelized tariff basis. Along with highlighting some issues, he also suggested a probable way forward for each issue. He highlighted that provisions related to renewable energy based transmission projects. He also brought out the discrepancies in the survey reports attached to the bidding document. He said that survey is a prerequisite to submitting bidding document and must be carried out by the bidder on its own. In regard to challenges faced on account of COVID-19, he felt that treating on-going pandemic as a force majeure and providing time relaxation are under consideration.

Shri Bhupender Gupta Additional CEO, RECTPCL

Mr Bhupender Gupta reiterated the benefits of competition from which both system as well as consumers have benefitted. He also stated currently system is smooth and environment is conducive in the sector. He highlighted various issues faced from the perspective of a bid process coordinator, such as the task of obtaining RoW (which is a time-consuming process), procurement and hand over, project execution timeline, long term access and regulatory approval delay in bidding process, model switching from BOOM to BOOT, foreclosure issue due to uncertainty of renewable energy projects, etc.