Transmission infrastructure has become the proverbial missing middle in India. Power Generation Capacity, especially green energy generation, is growing at a rapid pace of ~15- 16% CAGR over the past 5 years. Consumption of power is growing at a rapid pace as well with CAGR of ~7% over the past 5 years. However, transmission infrastructure for connecting the generation sites to the consumption sites hasn’t kept pace, with a CAGR of ~3% over the past 5 years. This problem is getting worse by the day, and the waiting period for Transmission allocation is about 1-2 years now. Naturally, the first question any lender asks a power project developer, is on the readiness of evacuation infrastructure.
Present Transmission Infrastructure and Capacity
As of mid-2025, India’s high-voltage power transmission network—spanning 220 kV and above— extends nearly 495,000 circuit kilometres (ckt km). The alternating current (AC) transformation capacity has reached approximately 1,354,000 MVA, bolstered by a growing high-voltage direct current (HVDC) line capacity exceeding 18,000 MW, enabling efficient long-distance bulk power transfer.
However, In FY2025, only 8,830 circuit kilometres (ckt km). of new transmission lines were commissioned against a target of around 15,000 circuit kilometres (ckt km)., reflecting a shortfall of nearly 40%. Notably, additions to the Inter-State Transmission System (ISTS) hit their lowest level in a decade. The report also highlights that up to 71% of ISTS corridors are operating at below 30% utilisation.
India’s national grid transmission capacity stood at approximately 120,340 MW as of June 2025. Plans are underway to expand this to 168,000 MW by 2032, backed by investments exceeding ₹9 trillion. However, the pace of transmission infrastructure development continues to lag behind the commissioning timelines of renewable energy projects. This delay is largely attributed to the longer time required for approvals, land acquisition, and regulatory clearances associated with transmission projects.
Declared Potential Vs Applied Potential
India’s transmission line network planning for 2030 faces significant delays and mismatches, stemming from discrepancies between the renewable energy (RE) potential declared by states and the actual capacity for which developers seek connectivity. This misalignment complicates transmission system planning, often resulting in either overestimation or underestimation of requirements across various corridors.
Consequently, several power generation projects, despite having connectivity, are unable to fully utilize it due to transmission bottlenecks or blocked corridors. Additionally, new connectivity for upcoming projects remains constrained, with expected delays of two years or more before sufficient transmission capacity is available to evacuate green power. As a result, many renewable energy projects are left stranded or operate below their intended capacity, affecting the achievement of national generation targets.
Key Hurdles for Lenders in TBCB Transmission Projects
A key challenge in transmission line projects developed under the Tariff-Based Competitive Bidding (TBCB) framework is the mismatch between the transmission license period (25 Years) and the Transmission Service Agreement (TSA) tenure (35 Years). This discrepancy complicates risk assessments and financial commitments for lenders, adding another layer of uncertainty to project financing.
Lenders must also navigate persistent issues such as Right of Way (RoW) acquisition delays, slow project execution, and fluctuations in commodity prices—all of which impact project timelines and financial viability. Regulatory delays from commissions/Govt. authorities, and RoW bottlenecks continue to hinder progress, while rising commodity costs often inflate budgets beyond initial estimates. These factors collectively erode lender confidence and slow the pace of transmission infrastructure development, which is critical to keeping pace with renewable energy generation growth.
In a significant move, the Central Transmission Utility of India Limited (CTUIL) cancelled connectivity for nearly 17 GW of renewable energy projects in 2025. This large-scale revocation targeted delayed and stalled projects in renewable-rich states such as Rajasthan, Gujarat, and Madhya Pradesh. The move aimed to prioritize grid access for operational and near-completion projects to better manage surging power demand.
Industry player View
While Right of Way (RoW) challenges persist across the transmission sector, industry players face additional hurdles as India plans significant capacity additions. A key concern is the limited supply chain for long-lead items such as transformers, where timely delivery is critical to ensuring on-schedule project completion. With constrained corridor availability for bulk power transmission, the expansion of the High Voltage Direct Current (HVDC) transmission network is essential. There is a need to promote research and development of new technologies like HVDC within India, as manufacturing timelines for HVDC systems remain lengthy and require early investment to meet future demand.
Another pressing issue for developers is the requirement to quote a single tariff for transmission assets over a 35-year lifecycle, with no provision for escalation related to operations and maintenance (OCM). Under current regulations, any escalation due to a change in law is considered only at the time of commissioning (COD), leaving developers exposed to long-term financial uncertainties. These challenges collectively underscore the need for policy and regulatory reforms to support the timely and sustainable growth of India’s transmission infrastructure.
Opportunities and Strategic Directions
India’s transmission system, if strengthened efficiently and effectively, holds immense promise for unlocking the country’s vast renewable energy potential. The government’s Green Energy Corridor initiative, along with ongoing upgrades to interstate and intrastate transmission networks, aims to expand the transmission line length to nearly 650,000 circuit kilometres (ckt km). and boost transformation capacity to over 2.3 million MVA by 2032.
Recent policy amendments—including updated land compensation guidelines, relaxed norms for substation siting, stricter project timelines enforced through regulations, and a push for better utilization of existing transmission assets—are expected to accelerate new project clearances. These reforms are critical to ensuring timely infrastructure readiness.
The role of State Transmission Utilities (STUs) is equally vital, complementing the efforts of Central Transmission Utilities. Moving forward, STUs are expected to adopt Tariff-Based Competitive Bidding (TBCB) mechanisms for intra-state transmission projects. This shift will help promote competition, attract private investment, and enable faster development of transmission infrastructure across the country.
Conclusion
India’s transmission system currently acts as a constraint for the country’s renewable energy ambitions. With strategic investments, targeted regulatory reforms, and coordinated implementation of initiatives such as the Green Energy Corridor and TBCB projects, India can transform its transmission system into a robust enabler of renewable energy. This will ensure reliable and efficient evacuation and utilization of green power, propelling the nation toward its clean energy transition goals.
The country is in the right path in taking an integrated planning approach to bridge infrastructure gaps. The recent proposal of the Government of India to establish the Integrated Transport Planning Agency (ITPA) to coordinate transportation strategies across all modes – roads, railways, shipping and civil aviation, is a case in point. Similarly, on the Energy side, an integrated planning approach for build-up of capacities across the generation, transmission and distribution is the need of the hour.
(Samuel Joseph is Deputy Managing Director and Homesh Deshmukh is Vice President with the National Bank for Financing Infrastructure and Development.)
Views are personal, and do not represent the stance of this publication.
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