India’s power transmission sector is currently facing significant supply-side constraints that threaten the timely completion of critical projects, particularly those involving High Voltage Direct Current (HVDC) technology. This situation is particularly concerning given the urgency of meeting India’s ambitious Renewable Energy 2030 goals. Industry officials have warned that delays in HVDC equipment supply are making it increasingly difficult to efficiently evacuate renewable energy generated across the country.
The supply chain challenges stem, in part, from regulatory restrictions imposed under Rule 144(xi) of the General Financial Rules, 2017, executed by the Department of Expenditure. This rule restricts bidders from countries that share a land border with India from participating in public procurement, which includes key components needed for the HVDC systems essential for long-distance energy transmission. The ramifications of this policy have been profound, with only two Indian Original Equipment Manufacturers (OEMs) supplying the necessary LCC technology, while global vendors are largely booked for years to come. This scarcity is pushing project costs upward and consequently extending the timelines for execution.
In an environment where monopolistic tendencies are beginning to surface, the increase in tariffs associated with these projects—some reaching up to 17%—reflects the strain on resources and the extended turnaround times for project completion, which can stretch to six years. A worrying trend is the predicted shortfall in demand for HVDC equipment, projected to exceed supply by 40-50% in the next two financial years despite existing domestic manufacturing attempts. This gap is anticipated to further widen when considering demand from various sectors, including railways and captive power.
Interestingly, the restrictions under GFR Rule 144(xi) are being interpreted inconsistently by different ministries. While the Ministry of Power imposes strict limitations, the Ministry of New and Renewable Energy has clarified that certain power procurements do not fall under the category of ‘works contracts.’ This ambiguity allows developers in the renewable energy sector to import essential components without the same restrictions, which has implications for timing and efficiency in project execution. However, this inconsistency raises questions about fairness and competitiveness across the transmission landscape.
Industry experts underscore the urgency of addressing these disparities in the application of Rule 144(xi) to facilitate a more synchronized development of generation and transmission infrastructure. The Electric Power Transmission Association has suggested that an extension or exemption from these procurement restrictions until December 2030 would enable transmission companies to access critical HVDC components globally, thereby aligning with national renewable energy targets more effectively.
Amid these supply challenges, key stakeholders have advocated for innovative solutions. India’s Power Secretary, Pankaj Agarwal, has suggested the implementation of a Production Linked Incentive (PLI) scheme aimed at boosting domestic manufacturing capabilities for transmission equipment. Such a scheme could alleviate some of the pressures on global supply chains and enhance innovation within the local industry, as approximately 1,650 gigawatts of global renewable energy capacity waits for grid connections.
Moreover, the International Energy Agency (IEA) stresses that despite significant progress in expanding transmission lines—nearly 180,000 kilometres added over the past decade—the power grid’s growth is not keeping pace with the rapid acceleration of solar and wind projects. Rising costs and prolonged lead times for crucial components like transformers illustrate the need for well-planned regulatory frameworks and proactive investments in grid infrastructure to ensure seamless integration of renewable energy into the national grid.
The challenges posed by global demand for HVDC transformers, which is currently outstripping supply, further complicate the issue. With local manufacturers unable to keep up and many facing long lead times for these critical components, the growth of India’s renewable energy sector remains jeopardised. Internal delays, exacerbated by legal hurdles and land availability issues, hinder timely connectivity crucial for energy projects, especially in key states like Rajasthan and Gujarat.
Given the critical importance of HVDC systems in enhancing India’s renewable energy infrastructure, decisive actions are necessary. The government will need to consider granting exemptions that facilitate seamless procurement and subcontracting from international vendors. A cohesive national strategy that unifies the different regulatory interpretations across ministries could not only mitigate delays but also foster a level playing field for private transmission developers. Failure to act risks the country falling short of its renewable energy ambitions, as a systemic gap emerges between infrastructure readiness and generation capabilities.
Ultimately, the future of India’s power transmission infrastructure rests on the ability of stakeholders to navigate these complexities, advocate for necessary policy changes, and foster a robust domestic manufacturing ecosystem capable of meeting both current and future demands. As the country strives to enhance its renewable energy capacity, a harmonised approach to transmission development could be pivotal in fulfilling its decarbonisation goals and establishing a reliable energy framework for millions of households across India.
Reference Map
- Core focus on HVDC supply constraints and project delays.
- Emphasis on Production Linked Incentives for local manufacturing.
- Mention of the IEA’s call for accelerated grid expansion.
- Highlighting significant HVDC contracts and collaborations.
- Discussion of bottlenecks affecting grid connectivity.
- Further details on Production Linked Incentives for transmission.
- Commentary on global transformer supply issues affecting project timelines.
Source: Noah Wire Services
Subscribe to Industry Updates
