India should consider a Production Linked Incentive (PLI) scheme or a similar incentive to develop the domestic supply chain of transmission equipment, the Ministry of Power secretary Pankaj Agarwal said Monday. In his address at an event hosted by the Central Electricity Authority (CEA), Agarwal said the cost to develop transmission infrastructure over the next five years will grow at a compounded annual growth rate (CAGR) of 14.5 per cent and called on stakeholders to “optimise the cost of the entire value chain”. “Worldwide, transmission is a major issue. The IEA (International Energy Agency) outlook report says that 1,650 GW of renewable energy capacity is waiting to be connected to the transmission system across the world,” Agarwal said. “We need to think about whether we require a PLI scheme or some other policy driver to develop domestic supply chains (for equipment),” he added. The power secretary also cited an internal estimate on the rising costs of transmission infrastructure, which he said will grow at a CAGR of 14.5 per cent for the next five years. “We need to appreciate the cost of the electricity supplied to the industry and the consumers at large, and to optimise that cost, I think we have to optimise the cost of the entire value chain,” Agarwal said. In its latest Renewables 2024 report, the Paris-based IEA said investment in grid infrastructure is lagging globally as more advanced projects wait to be connected to the grid. “At least 1,650 GW of renewable capacity is currently in advanced stages of development and waiting for a grid connection, 150 GW higher than at this point last year… Queues to integrate energy storage are also significant as deployment rises,” it said. Earlier, The Indian Express reported that booming demand for high-voltage direct current (HVDC) transmission equipment–used to efficiently evacuate green power over long distances–is causing supply chain constraints across the world, including in India. As a result, renewable energy projects are facing delays in getting a connection to the grid. According to energy analytics firm Wood Mackenzie, transformer lead times have been on the rise in the last few years, from around 50 weeks in 2021 to 120 weeks on average in 2024. “Based on conversations with developers and suppliers, we predict that as much as 25% of global renewable projects could be at risk of project delays due to high transformer lead times,” it noted in an April report. Multiple players in the power sector have flagged supply chain constraints. “It’s very well known in the industry that we still don’t have a very resilient supply chain. I think the wait time of inverters and transformers is very high, and there’s a huge opportunity to make investments in that space and solve for it,” Adani Green Energy Ltd CEO Amit Singh had said at the BNEF Summit in New Delhi last month. RK Tyagi, CMD of government-owned Power Grid Corporation of India Ltd, called the supply of gas insulated switchgears (GIS), transformers, and reactors a “big challenge” in an earnings call on August 2. At the event commemorating CEA’s golden jubilee celebrations, the power secretary Aggarwal also flagged the issue of the financial viability of distributing companies (DISCOMs). “They are the source of cash in our energy economy,” he said. At the same time, the accumulated loss of DISCOMs across states is Rs 6.5 lakh crore and the accumulated debt is Rs 6.75 lakh crore, Aggarwal said.
