– By Indu Shekhar Chaturvedi
India has set for itself the ambitious target of achieving 500 GW of installed electricity generation capacity from non-fossil fuel sources by 2030. The country currently has a total installed electricity generation capacity of 424 GW, with about 180 GW coming from non-fossil fuels. Our targets demand that we speedily build a robust transmission network. A particular challenge in this regard is the transmission infrastructure required for offshore wind projects, which will be implemented for the first time in our country.
To meet the requirements of a modern, reliable and robust transmission network, there is growing emphasis on technological diversity, with a focus on HVDC systems, offshore underwater cable systems, and STATCOMs. These developments are also increasing the sector’s appeal to investors and providing them a variety of opportunities. However, a perceived concern in the transmission sector is over dependence for implementation of projects on a single entity. In the last five financial years, (including FY’25 till date) one entity has garnered a market share of about 65 % by tariff of TBCB projects. This dependence is particularly visible in RE rich zones of Gujarat and Rajasthan where this entity has been entrusted with a market share of over 70 % by tariff of TBCB projects in the last five financial years. This concentration of projects can possibly lead to several problems.
First, if the focus of this entity shifts towards resolving issues with specific projects, it could possibly lead to reduced oversight and thus delays in other projects. This could be particularly problematic when the entity faces penalties for delayed projects as it might then prioritize them over progressing on other ongoing projects. This could, in turn, result in hampering the overall development of the transmission sector.
Second, over-reliance on a single player can possibly reduce competition in the market. When one entity dominates the sector, it stifles innovation and efficiency as there is reduced incentive for other players to enter the market. This possible lack of competition can lead to higher costs and lower quality of service, ultimately affecting the end consumers.
Last, any financial or operational issues faced by the dominant entity can possibly have widespread implications across the sector. For instance, the entity encountering financial difficulties could possibly lead to delays or cancellations across a large part of the transmission sector. The existence of possible financial risk is visible as projects under TBCB have been awarded at tariffs that are 30 to 40 % lower than the tariffs determined under the Regulated Tariff Mechanism (RTM).
To allay these concerns, it is essential to reduce the dominance of the single player in the transmission sector. One approach that could be effective in this regard is the introduction of caps on the number of projects or the market share that any single entity can hold. A similar modality has been successfully implemented in the renewable energy sector where capping has helped diversify the market and reduce dependence on a limited number of players.
Strengthening regulatory oversight and ensuring strict compliance with project timelines would also help in avoiding delays. This approach will also hold all players accountable, ensuring that projects are completed on time and within budget.
(Indu Shekhar Chaturvedi is DG, Electric Power Transmission Association and Former Secretary, MNRE, Government of India.)
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