According to reports, come January 2014, the entire country will be served by one power grid, which means that electricity can flow seamlessly from anywhere it is produced to where it is needed and possibly at a lower price too.
India had five regional grids, but progressively four were linked up to form the North-East-West grid, or NEW. Only the southern region remained isolated which, incidentally, was why the South was not affected on July 30-31 last year when the northern grid collapsed plunging the region into darkness.
Power Grid Corporation of India is building a high voltage (765 kV) line between Solapur in Maharashtra and Raichur in Karnataka, which is expected to be completed by January, according to PowerGrid Chairman and Managing Director R. N. Nayak.
Rajesh Mendiratta, Director, Business Development, Indian Energy Exchange (IEX), says the lack of transmission link to the South from the rest of India often resulted in higher prices of power in the southern region.
Now, there will be a softening of prices, Mendiratta told Business Line.
IEX data show that the southern region, especially Tamil Nadu and Kerala, usually paid a higher maximum and average price than the rest of the country; on occasions the North has paid more.
For instance, on July 5, the maximum and average price consumers in Tamil Nadu and Kerala paid for the power bought on IEX was Rs 17.50 a kWhr and Rs 5.87, respectively. Rest of India paid Rs 3 and Rs 2.38.
On most days, the difference is not this stark but the prices for the South have always been higher.
“One country, one grid, will mean cheaper power for consumers in the South. It will also help power generators in other regions to find buyers in the South and, therefore, help improve their capacity utilisation,” says Santosh Kamath, Partner, Management Consulting, KPMG.
“We have been waiting for this for long,” says B. Santhanam, Managing Director, Saint Gobain India, and Chairman, Southern Region, Confederation of Indian Industry. He, however, cautions that it is necessary to strengthen the intra-region transmission infrastructure.
The linking up of the southern grid with the rest of India is a big positive for the wind power industry.
Half of India’s wind power capacity, of 20,000 MW, lies in the four southern States. Tamil Nadu alone has 7,200 MW, over a third of the country’s installed capacity. It is now well known that due to lack of sufficient transmission lines, the wind mills are asked to “back down” and a sizeable amount of electricity that could be generated is lost.
According to Manikam Ramasamy, Chairman and Managing Director, Loyal Textiles Ltd, which also owns wind power assets, at least Rs 1,000 crore worth of electricity was lost due to ‘back-downs’.
At present, power produced in Tamil Nadu cannot be transmitted outside the State, but this could change soon as the power availability in the State is improving.
“The wind industry has been waiting for this,” says Ramesh Kymal, President, Indian Wind Turbine Manufacturers’ Association. During the windy months of May-September, the southern region can export power to the North and there will be no need to back down wind, says Kymal, who is also Chairman and Managing Director, Gamesa India, a major wind turbine manufacturer. During the other months, he says, hydro power generation in the North will pick up and the surplus can be wheeled down South.
The linking of the southern power grid with the rest of the country, expected to happen in January, is believed to result in lower spot prices of electricity and enable movement of surplus power to electricity-deficit areas.
Today, the southern grid is connected with the central grid through two high voltage direct current lines, but they are direct current lines and hence, not seamless connections. Nevertheless, these lines are capable of carrying 4,000 MW into Andhra Pradesh and Karnataka. Obviously, the capacity is not enough — Tamil Nadu alone has a peak power shortage of 4,000 MW.
Tamil Nadu is particularly affected because the capacity of these lines is fully booked by Andhra Pradesh and Karnataka, as Union Power Minister Jyotiraditya Scindia had said in Parliament on May 2.
Now, the new Solapur-Raichur line will provide some relief, but experts point to two factors in caution. One, this relief will be short-lived once the economy picks up and the demand for energy rises. Second, the States will have to now quickly build more intra-regional and intra-State transmission lines.
“There are bottlenecks in certain States as far as State-level infrastructure is concerned,” notes Santosh Kamath of KPMG. “Until now, they have not been very visible due to generation shortages overriding transmission constraints, but as more generation capacity goes on stream these bottlenecks will show up at the State level.”
A. Mohan Menon of Balsa Consulting observes that the existing transmission infrastructure and what is being built may be enough for the short-term, but as the economy picks up, so would the demand for electricity. States should start planning for more.
PGCIL has big plans. One of them includes an 800 kV DC line between Rajgarh in Chhattisgarh and Pugalur in Tamil Nadu — a project that could cost about Rs 6,000 crore. This will be a big one, capable of carrying 6,000 MW into Tamil Nadu. But intra-region and intra-state transmission infrastructure has always been a laggard.
One industry insider, who did not wish to be named, observed that the infrastructure in Tamil Nadu is antiquated and inadequate.
Beefing up intra-State transmission is a necessary condition for power costs to come down, he said.