Regulator CEA asks states to seek private capital for $107 billion transmission grid expansion

Power lines and transmission towers at the site for Pharma City in Hyderabad, India, on Tuesday, March 22, 2022. On the edge of Hyderabad in southern India, a vast patch of arid shrub-land the size of about 14,000 football fields is becoming a testing ground for a model that could help wean the world off its dependence on Chinese drug ingredients.

India is asking states to attract more private capital to accelerate the expansion of its power transmission network, part of a plan to revamp the country’s grid and accommodate more clean power.

States should monetize their transmission assets by transferring ownership to businesses for a period of time, and re-invest the proceeds into new projects, according to a report by the Central Electricity Authority. Power regulators should design a pricing system that guarantees predictable revenues for investors, it said.

The nation is planning to invest 9.2 trillion rupees ($107 billion) through 2032 to build more transmission lines, as it seeks to nearly triple its clean power capacity by that time. New networks are also needed to haul power from coal plants being set up to meet rising demand.

A third of the investments needs be spent into regional networks, where the grid is mostly controlled by state-run firms.

“Given other social and economic needs, it may not be feasible for governments to continue this high level of public financing of infrastructure,” the report said. “As such, there is a need to increase private investment. Monetization of brown-field assets offers a less risky and more attractive way for private investment.”

Predictable cash-flows would be key to attracting private capital, the agency said. That might mean a departure from the prevalent regulations where most intra-state networks see transmission charges revised every five years. Investors would also look for payment security and a pipeline of assets to be privatized, the report said.