There has been a noticeable revival in the number of interstate transmission system (ISTS) schemes awarded under the tariff-based competitive bidding (TBCB) route, in recent months.

Going by recent trends, the ongoing fiscal year FY24 will most likely to see the highest number of ISTS-TBCB schemes ever awarded in any year so far. During the period April 1, 2023 to around December 7, 2023 (roughly first three quarters of FY24), a total of 15 ISTS-TBCB schemes were awarded, according to an analysis by T&D India. At least six more schemes are likely to be awarded in the remaining period of FY24. This compares very favourably with 18 schemes awarded in FY23, nine in FY22 and three in FY21.

What is also conspicuous is that the power transmission developer base is witnessing increasing engagement from the private sector. In recent years, entities like GR Infraprojects, Megha Engineering and ReNew Power, to name a few, have joined the power transmission development space. It is also very heartening to note that a seasoned utility like Tata Power, which was largely away from the competitive bidding arena, recently made its debut by winning an ISTS-TBCB scheme in Rajasthan.

Most of the ISTS-TBCB schemes currently being awarded are related to renewable energy evacuation from RE-rich destinations like Gujarat, Rajasthan and Karnataka, among others. These projects, with a typical gestation period of 24 months, are being developed to support India’s massive RE ambition of 500 GW of installed power generation capacity from non-fossil fuels.

Today, there is much euphoria surrounding the 500-GW RE target – both on the generation and transmission side. However, it must be borne in mind that RE is a tricky business. From the generation perspective, the plant load factor is intrinsically low. This means that a given RE installed capacity will not result in the same electricity output as that of comparable conventional thermal power capacity. Besides, RE generation, due to its inherent intermittency, requires much technological intervention on the transmission side.

The true and full potential of renewable energy can therefore be realized only if RE generation is backed by grid-scale batter energy storage systems (BESS). India is making a sincere beginning in this domain but it will take some time before BESS establishes itself as an integral component of the T&D value chain.

It is therefore imminent that despite all the traction that RE is gaining, there will have to be a fast-track build-up of conventional (thermal) power generation capacity so as to forestall a shortfall in medium-term electricity demand.

The author of this article, Venugopal Pillai, is Editor, T&D India, and may be reached on venugopal.pillai@tndindia.com. Views expressed here are personal.

First a bit of a background: KPS1 Transmission Ltd is a project special purpose vehicle (SPV) that was incorporated by bid process coordinator REC Power Development & Consultancy Ltd (RECPDCL) to develop an interstate transmission system (ISTS) scheme officially termed as “Transmission scheme for injection beyond 3 GW RE power at Khavda PS1 (KPS1)”.

After adopting the regular tariff-based competitive bidding (TBCB) procedure, Megha Engineering & Infrastructures Ltd (MEIL) was declared as the successful bidder, and the project SPV “KPS1 Transmission Ltd” was transferred to MEIL The transfer of the SPV took place around April 21, 2023, and this transfer symbolizes the formal “zero date” for the project that was expected to commissioned in 21 months thereafter.

In August 2023, Adani Energy Solutions Ltd (AESL), formerly Adani Transmission Ltd, announced that its board approved the proposal to acquire “KPS1 Transmission Ltd” from its original owner MEIL. As of September 30, 2023, this acquisition was complete as AESL showed KPS1 as one of its under-construction transmission projects, in an investor presentation filed on stock exchanges.

The takeover of TBCB assets is not new but the acquisition of KPS1 Transmission is unique in many respects. It is for the first time that a TBCB project has been acquired so early in its life. As of September 2023, when the acquisition was completed, MEIL had barely begun pre-project activities.

So far, acquisitions of TBCB projects are seen to have taken place after project was operational. Developers like Larsen & Toubro, Kalpataru Projects International Ltd, Techno Electric & Engineering have sold their operational TBCB assets as they wanted to exit the power transmission development space, and focus on EPC contracting.

There have also been cases where developers have sold their operational TBCB assets to infrastructure investment trusts like India Grid Trust (IndiGrid) and Powergrid Infrastructure Investment (PGInvIT).

There have also been instances where the developer was fraught with financial difficulties and the projects were stranded. This was the case with Essel Infraprojects, for example. These stranded assets were then acquired by other developers as part of the debt restructuring package worked out by lenders.

The acquisition of KPS1 Transmission by AESL, barely when the project has taken off, therefore stands out remarkably.

This acquisition has another dimension to it. In the initial bidding stage of KPS1 Transmission, four bidders had qualified – MEIL, Adani Transmission, Power Grid Corporation of India Ltd and Sterlite Power. However, in the final bidding stage, only three were qualified for submission of final bids, and in this, Adani Transmission did not feature. It is therefore interesting to see that a company that did not qualify to submit its bid for a project ultimately ended up acquiring it from the winning bidder.

In many respects, therefore, the case KPS1 Transmission AESL is strangely unique.

The author of this article, Venugopal Pillai, is Editor, T&D India, and may be reached on venugopal.pillai@tndindia.com. Views expressed here are personal.

Very recently, Power Grid Corporation of India Ltd (PGCIL) completed an intrastate scheme in Madhya Pradesh that it had won under the TBCB modality. In most likelihood, for Madhya Pradesh, this is the first or amongst the early transmission schemes developed using the TBCB philosophy.

PGCIL, the Central power transmission PSU, is already very active in the TBCB-based interregional/interstate power transmission landscape. That PGCIL is also taking keen interest in the intrastate network is a favourable augury to the state-level power grid, in general. PGCIL currently has three intrastate schemes — two in UP and one in MP. It plans to participate in more schemes in these and other states, as and when they come up for bidding.

The disconcerting point however is that not many states are coming forward in adopting the TBCB culture. Even progressive states – Maharashtra and Gujarat to name just two – have not featured the TBCB modality in their transmission network upgrade plans.

The TBCB intrastate transmission scheme that PGCIL recently completed in Madhya Pradesh (Bhind-Guna transmission project) had attracted big names. In fact, all the leading transmission developers showed interest. The e-reverse auction saw as many as 52 rounds, demonstrating the aggression that potential developers evinced. All this goes to prove that there is developer interest but there is a very limited project shelf currently available.

TBCB-based interregional transmission schemes are progressing quite well. PGCIL along with leading private developers like Sterlite Power and Adani Transmission are making useful contributions in enhancing this network, which ultimately adds to the National Grid capacity.

For electricity to reach the end-consumer, it is very important that intrastate grids are also developed concurrently. State power transmission utilities must appreciate that the TBCB route gives ample scope for induction of technology and managerial expertise, apart from project finance. These utilities can be assured of projects completed within the time and cost estimates. Uttar Pradesh, it may be recalled, had invoked the TBCB modality for developing an intrastate transmission scheme, involving 765kV lines, over a decade ago.

Meanwhile, under the Revamped Distribution Sector Scheme (RDSS), private entrepreneurs have a solid opportunity to contribute to upgrading the power distribution network, mainly through smart meter deployment. It is widely expected that the private sector will play a very important role in this Rs.3-trillion RDSS venture.

While power distribution is indeed the weakest link in the power value chain, power transmission is not much better off. The private sector can definitely play an important role if given the opportunity.

State transmission utilities will therefore stand to benefit if they open up a platform for seasoned transmission developers. And what platform could be better than TBCB?

(The author of this article, Venugopal Pillai, is Editor, T&D India. He may be reached on venugopal.pillai@tndindia.com.)