PowerGrid’s higher investment ceiling to fast-track green energy transmission, say experts
By Arunima Bhardwaj
The cabinet’s decision to raise PowerGrid’s equity investment limit to Rs 7,500 crore will allow the state-run utility to take on large-scale energy transmission projects, helping India meet its clean energy goals, experts have said.
On February 24, the government eased Power Grid Corp of India’s (PGCIL’s) Rs 5,000-crore permissible equity investment limit in subsidiaries to Rs 7,500 crore.
“Strengthening the transmission grid is essential for the energy transition, as renewable generation is geographically dispersed and requires robust, high‑capacity networks for reliable evacuation and integration,” said Sambitosh Mohapatra, partner and leader, climate and energy, PwC India.
Permissible equity investment refers to increasing the maximum capital a parent company can invest in its subsidiaries without needing government approval.
For PGCIL, the largest transmission service provider in the country, the move enhances execution capability and competitiveness under tariff‑based bidding, Mohapatra added.
Cheaper clean power
Under the tariff-based competitive bidding (TBCB), transmission projects are awarded to private developers based on the lowest tariff offered.
The move will accelerate grid readiness, improve price discovery, and underpin the integration of 500 GW of non‑fossil capacity, enabling affordable, reliable and clean energy at scale, the government said.
“It will enable PGCIL to invest in projects of larger amounts, which is the intent. Their ability to make SPVs (special purpose vehicles) and scale investments is going to change. The scale of the projects is going to be larger, hence the earlier limit, which might have impacted their ability to participate, is now being relaxed,” an analyst, who did not wish to be identified, said.
PowerGrid holds 80 percent of the country’s transmission projects, even as the share of private companies is increasing through TBCB.
During April- December 2024, it captured 60 percent to 64 percent share, by value, of the Inter-State Transmission System (ISTS) contracts awarded through competitive bidding, with the remaining with private players.
PowerGrid, which transmits about half of the power generated in the country, has been focussing on the evacuation of green energy from solar and wind farms to load centres. India has set a goal of 500 GW of energy from non-fossil sources by 2030.
The approval will enable PowerGrid to expand its investment in its core business of transmission and support the evacuation of renewable energy.
Industry players and stakeholders often flagged challenges in evacuating renewable energy power due to lack of efficient transmission infrastructure.
A boost for grid integration
Grid integration of renewable energy (RE) remains a critical challenge, necessitating sophisticated grid management systems and enhanced forecasting capabilities, analysts said.
According to industry estimates, 40 GW of RE capacity is stuck due to a lack of adequate power purchase agreements or the absence of transmission infrastructure for the evacuation of power.
Now, PowerGrid can bid for capital-intensive transmission projects, such as Ultra High Voltage Alternating Current (UHVAC) and High Voltage Direct Current (HVDC) transmission networks.
UHVAC and HVDC operate at very high voltage levels and enable integration of large-scale renewable energy capacities to the grid while allowing long-distance bulk transmission efficiently.
It will broaden competition in TBCB for the selection of bidders for critical transmission projects, the government said.
“This ensures better price discovery, and ultimately leads to the availability of affordable and clean energy for consumers,” it added.
The company anticipates an investment of about Rs 3 lakh crore till 2032 in its projects, including Rs 2.7 lakh crore in inter-state transmission projects.
The government has envisaged an investment of Rs 9.16 lakh crore under the National Electricity Plan from 2023 to 2032 for central and state transmission systems to meet a peak demand of 458 GW by 2032.
The transmission network in the country will be expanded from 4.98 lakh ckm as of November 2025 to 6.48 lakh ckm in 2032, the government has said.
The plan will help in meeting the increasing electricity demand, facilitate RE integration and green hydrogen loads into the grid, the power ministry has said.
This article has been republished from The Moneycontrol.com.