Improving Infrastructure: Equipment manufacturers’ views - Power Line Magazine

The expansion of the power equipment industry is being driven by the shift to renewable energy, the need for grid modernisation, and a focus on sustainability. Significant market opportunities are expected to emerge in areas such as renewable energy infrastructure, smart grid technologies and decentralised energy systems. Equipment manufacturers are focusing on innovation and sustainability to capitalise on these opportunities and will play a crucial role in shaping the future energy landscape. Leading manufacturers reflect on the past year’s performance and identify upcoming opportunities and challenges in the market….

What is your assessment of the power sector’s progress over the past year?

Manish Agarwal

The Indian power sector has undergone a remarkable transformation over the past decade, emerging as a beacon of progress in renewable energy and electricity access. As the country strives to meet ambitious targets for clean energy and infrastructure development, it is essential to assess the achievements, challenges and future opportunities within this dynamic sector. Over the past decade, the power sector has showcased significant achievements despite ongoing challenges. The country has made significant strides in renewable capacity addition. It has achieved nearly 100 per cent electricity access and added approximately 200 GW of generation capacity over the past decade, with around 120 GW sourced from renewables alone. Peak power demand has surged to 250 GW, driven by robust economic growth, emphasising the need to meet increasing energy needs while enhancing electricity availability.

India’s power grid, one of the largest unified grids globally, has become a single integrated market. In the past year alone, 14,390 ckt km of transmission lines, 61,591 MVA of transformation capacity and 4,290 MW of inter-regional transfer capacity have been added. The government is committed to expanding non-fossil fuel-based installed electricity generation capacity to over 500 GW by 2030, with a phased transmission plan including infrastructure for evacuating 10 GW of offshore wind energy from Gujarat and Tamil Nadu.

The government has also initiated several ambitious reforms to overcome distribution challenges. These include the launch of the Revamped Distribution Sector Scheme (RDSS) to enhance operational efficiency, and the introduction of the Late Payment Surcharge Rules and the Electricity Amendment Rules 2023 to improve financial discipline among discoms. As per the PFC’s 12th Integrated Rating Report, aggregate technical and commercial (AT&C) losses have dropped to 15.4 per cent, driven by increased billing efficiency. Prepaid smart metering is a critical intervention under the RDSS, with a target of installing 250 million prepaid smart meters.

Sharan Bansal

The power sector has shown commendable progress in the past year, particularly with investments in renewable energy, transmission infrastructure and government initiatives.

One of the most significant trends has been the accelerated transition towards renewable energy. India added about 15.5 GW of renewable capacity in 2023, with solar energy leading the way. At Skipper Limited, we have aligned our projects to support this green transition by focusing on transmission and distribution infrastructure for renewables.

Government initiatives, such as the PM-KUSUM scheme promoting decentralised solar power and the Revamped Distribution Sector Scheme (RDSS) aimed at reducing distribution losses have played a pivotal role in advancing rural electrification, with several villages being electrified under these schemes, improving the overall electricity availability.

One of the most significant developments is IndiGrid’s partnership with British International Investment, Norfund and Techno Electric to develop three key interstate transmission system projects. These projects are Ishanagar Power Transmission Limited (IPTL), Dhule Power Transmission Limited (DPTL) and Kallam Transco Limited (KTCO). These are expected to support the evacuation of up to 6 GW of renewable energy from states like Madhya Pradesh and Maharashtra, further strengthening India’s grid resilience.

Meanwhile, the Green Energy Corridor continues to play a critical role in connecting renewable energy projects to the grid across key states, such as Gujarat and Tamil Nadu, facilitating the country’s ambitious renewable energy targets.

Transmission infrastructure projects are also progressing under the PM Gati Shakti National Master Plan, which aims to complete 27,000 ckt km of interstate transmission lines by 2025 for power evacuation from renewable energy sources. Projects like Powergrid’s Rajasthan Renewable Energy Zone (REZ) Phase-IV are key examples of how transmission investments are aligning with India’s goal of achieving 500 GW of renewable energy by 2030.

These efforts highlight the crucial role of transmission in supporting the country’s clean energy transition and ensuring grid stability as renewable energy capacities increase.

Despite these advances, the sector faces challenges, including financial stress on discoms and the slow pace of grid modernisation in some regions. There is also a need for continued investment in clean energy technologies and enhanced energy efficiency.

In conclusion, the power sector is at a pivotal moment, and the progress made over the past year has laid the foundation for a more sustainable and resilient energy future.

Venkatesh R.

India stands out as one of the few nations worldwide witnessing positive GDP growth. The power sector plays a significant role in driving this progress. Growth in energy consumption both drives and results from GDP growth. The country’s clear policy direction in prioritising renewable energy sources is encouraging. During COP26, though India announced its target to reach net zero in 2070, the country has also talked about a near term target of 500 GW of non-fossil fuel capacity by 2030.

Presently, India holds the rank of the third-largest electricity producer globally. However, its per capita electricity consumption remains below 50 per cent of the global average, indicating substantial room for growth in demand. Recent government initiatives, including the introduction of a transmission plan, support for battery energy storage systems (BESS) through viability gap funding, launch of the green hydrogen mission, and the proposal for a time-of-day tariff regime are all significant steps in this direction. However, an important area still needing attention is the planning of flexible generation capacity.

Flexibility in power generation can help maximise the absorption of renewable energy in the power system. Wärtsilä’s gas-based reciprocating engine power plants can ramp up to full load in two minutes when renewable generation drops and can be stopped immediately when renewable energy is available again. As global energy dynamics shift favourably towards renewables, Wärtsilä is strategically positioned to contribute to this sector transformation and help realise a future powered entirely by renewable sources.

Udai Singh

India, the world’s third-largest energy consumer, has doubled its energy consumption since 2000. In 2023-24, per capita electricity consumption reached 1,395 kWh, an 11.2 per cent increase from the previous year, though still one-third of the global average. This growth aligns with India’s net-zero emissions goal by 2070, necessitating a significant transformation in energy grids.

India has surpassed its 2030 renewable energy target, achieving 40 per cent installed capacity from renewable sources ahead of schedule. This progress is driven by investments in solar, wind, hydropower, green hydrogen and BESS, supported by initiatives like the production-linked incentive (PLI) scheme and the National Hydrogen Mission.

The Government of India has fostered a conducive environment for energy investments through initiatives such as the PM Surya Ghar Muft Bijli Yojana, the Revamped Distribution Sector Scheme (RDSS), the National Solar Mission and the Smart Cities Mission. These efforts aim to enhance the efficiency, reliability and sustainability of the power sector, driving a revolutionary change in electricity generation and distribution.

Impact of prosumers: Prosumers are increasingly shaping the power sector by enhancing grid resilience and promoting decentralised energy generation. They contribute renewable energy through rooftop solar panels and small-scale installations, reducing grid demand and lowering greenhouse gas emissions. However, integrating prosumers poses challenges such as ensuring grid stability and managing bidirectional energy flows. Regulatory frameworks must evolve to accommodate the growing number of prosumers and incentivise their participation in the energy market.

What are the biggest unresolved challenges for the sector? What is your policy wishlist for the government?

Manish Agarwal

Despite the advancements, significant challenges remain. The pace of new renewable energy capacity installation must triple to meet the ambitious target of 500 GW by 2030. A critical concern is whether India’s transmission infrastructure can evolve rapidly enough to support this transition. Without a robust grid, the full potential of renewable resources cannot be harnessed. Investments in grid development are essential for ensuring a reliable low-carbon energy future.

Reconductoring and voltage upgrades present a cost-effective solution for enhancing existing transmission capacity. These projects typically cost less than half of what it would take to construct new lines while minimising disruptions. Therefore, it is critical to prioritise large-scale reconductoring initiatives and establish a national policy on this front.

Another key requirement is a dedicated fund aimed at improving the operation, reliability and security within the power system. The existing Power System Development Fund, which has financed strategic projects — including those focused on reliable communication and congestion relief — has been running low on resources. Recently, 57 projects worth approximately Rs 56.90 billion under evaluation were returned, including more than 10 projects worth Rs 23.85 billion aimed at renovating and modernising transmission and distribution systems to alleviate congestion. A well-structured fund would catalyse initiatives necessary for long-term energy security and the fiberisation of transmission lines up to 66 kV. Ensuring long-term energy security and sustainability is imperative.

Given the expected surge in electricity consumption, it is in the national interest to build the highest capacity transmission lines in every available corridor. Leveraging loss capitalisation can fund these efforts and ensure that the country is equipped to meet future energy demands efficiently.

Sharan Bansal

The power sector, despite its rapid progress, still faces several unresolved challenges that need immediate attention. One of the key unresolved challenges is the weak financial condition of power discoms. Despite government schemes like UDAY and RDSS, many discoms are still saddled with debt and operational inefficiencies, leading to high losses and delays in payments to power producers.

As the renewable energy sector grows, integrating large-scale wind and solar projects into the grid presents significant technical challenges. Intermittency issues (solar power generation drops at night and wind power is unpredictable) and the lack of a smart grid infrastructure to handle these fluctuations remain bottlenecks.

Securing land for power projects, whether for renewable energy parks or transmission lines, also presents a major challenge. Delays in land acquisition, coupled with lengthy regulatory approvals, can push project timelines back by years. Large solar parks in states like Madhya Pradesh and Gujarat have faced delays due to land disputes and bureaucratic hurdles.

While energy storage systems (such as batteries) are essential for managing renewable energy intermittency, their costs remain prohibitively high. This restricts the widespread adoption of grid-scale storage solutions critical for balancing supply and demand in renewable-heavy grids. The high cost of lithium-ion batteries is a limiting factor for both energy storage and the EV revolution in India.

The policy wishlist for the government includes:

The government has taken commendable steps to support the power sector, but a comprehensive approach is needed to address these challenges. Policy interventions focusing on financial health, infrastructure modernisation and technology will be key to ensuring a sustainable, resilient future for the power sector.

Venkatesh R.

India plans for significant renewable energy capacity additions, with renewables expected to play a substantial role in the country’s future energy mix. However, integrating intermittent renewables with inflexible baseload power plants presents significant challenges, including grid instability, unreliability and the risk of renewable energy curtailment. This is the biggest challenge facing the sector.

Moreover, as renewable energy levels increase, the inflexible baseload power plants face the prospect of frequent cycling, leading to accelerated wear and tear, making operations become economically unviable and reducing the asset’s useful life. To address this challenge, the sector urgently needs solutions such as transmission planning, demand-side management, storage technologies and a substantial increase in flexible generation capacity. Addressing this challenge is essential for the power sector to transition effectively towards a more sustainable and resilient energy future.

Udai Singh

Unresolved challenges

Despite these achievements, several challenges persist. The financial health of discoms remains a critical issue. High aggregate technical and commercial (AT&C) losses, delayed tariff revisions and the burden of cross-subsidies continue to strain discoms. These financial difficulties hinder their ability to invest in infrastructure upgrades and adopt new technologies. The sector also faces infrastructural challenges, including the need for grid modernisation to accommodate the increasing share of renewable energy and the integration of electric vehicles (EVs) and distributed energy resources.

Policy wishlist for the government

To address these challenges, the following policy measures are essential:

What market opportunities do you foresee in the power industry in the next one to two years?

Manish Agarwal

Looking forward, despite being a low per capita income nation, India is poised for significant investment in its power equipment industry. An estimated $30 billion will be required by 2030 to integrate 500 GW of non-fossil energy into the grid. This will involve the addition of nearly 50,890 ckt km of transmission lines and almost 400,000 MVA of substation capacity.

India’s infrastructure push presents multi-year opportunities across various sectors essential for economic growth and climate commitments. The Ministry of New and Renewable Energy envisions about 30 GW of offshore capacity, creating immense opportunities for transmission equipment manufacturers. Furthermore, initiatives like the One World, One Sun, One Grid project signify a monumental shift towards global energy sharing.

The transportation sector also presents opportunities as the government aims for 30 per cent electric vehicle adoption by 2030, alongside record investments in upgrading Indian Railways and expanding metro systems across major cities. More than 20 Indian cities are developing metro systems, with around 870 km currently operational and an additional 1,040 km under construction. This urban infrastructure development will create significant demand for power equipment.

In conclusion, India’s power sector stands at a pivotal moment, having made significant progress while facing unresolved challenges that require strategic interventions. Stakeholders must collaborate to enhance transmission infrastructure while capitalising on emerging market opportunities in renewable energy and electric mobility. With concerted efforts and innovative solutions from government bodies, private enterprises and consumers, India can strengthen its position as a global leader in clean energy transition and sustainable development. As we move forward into an era defined by climate responsibility and technological advancement, embracing these opportunities will be crucial to shaping a resilient energy future for India.

Sharan Bansal

The power equipment industry is poised for significant growth over the next one to two years, driven by global trends such as the energy transition to renewables, grid modernisation and increased electrification.

Some of the key market opportunities that I foresee in the power equipment sector are:

Venkatesh R.

The next two years are very crucial for India’s growth story. India’s current installed capacity is approximately 410 GW, of which 110 GW, or 27 per cent, is generated from solar and wind sources. This is expected to grow steadily to reach the renewable energy target of 500 GW by 2030. While a robust transmission system and demand-side management are essential, our experience from global power system studies indicates that managing the intermittency associated with such a large share of renewable energy will also require flexible generating capacities in the overall energy ecosystem. Therefore, planning for these needs in the next one or two years and starting implementation will ensure smooth operations by 2030.

Wärtsilä, with its presence in India since the early 1980s, has delivered about 250 power plants with a total capacity of over 4 GW. With our market understanding and portfolio, we assist countries, cities and customers on their journey towards decarbonisation and net zero. Our flexible engine power plants help support the integration and adoption of renewable energy sources. Earlier this year, we also launched the world’s first large-scale 100 per cent hydrogen-ready engine power plant, further demonstrating our commitment to sustainability and reaching net-zero targets.

Udai Singh

The coming years present significant market opportunities in the power equipment industry, driven by the ongoing energy transition and the push for sustainability. Key opportunities include:

India’s power sector is at a pivotal juncture, marked by significant progress in renewable energy and promising opportunities ahead. Addressing discoms’ financial and infrastructural challenges, promoting sustainability and ensuring a resilient grid is essential for achieving net-zero ambitions. Supportive policies and innovation can position India as a leader in the global energy transition. Active prosumer participation, government support and private investment will drive this transformation.