1. Madras Chamber of Commerce & Industry & India Energy Forum Optimizing Transmission Sunil Varma Marri Head-Energy Practice Chennai 5 th September 2014

2. © IMaCS 2014 Printed 9-Jun-15 Page 2 Tamil Nadu has faced severe transmission constraints in the recent times 1.Inter-regional  Constraints between SR and NEW-NE grids  TN could not import power from Chhattisgarh 2.Intra-regional  Constraints within the southern region between two areas S1 and S2  Hindered opportunities to procure power from S1 area 3.Intra-state  Transmission constraints in evacuating wind power Consequences:  Resulted in procurement of expensive power (short term/liquid fuel)  Loss of wind energy estimated by industry associations as 20%-30% of energy in the peak generation season worth more than Rs 1000 Cr annually

3. © IMaCS 2014 Printed 9-Jun-15 Page 3 Reasons for the transmission constraints..…. 1.Insufficient attention to transmission sector by the stakeholders Focus on generation and distribution sectors 2.Weaknesses in transmission planning philosophy Need for integrated planning Need for redundant capacity 3.Not conducting regular transmission planning studies Many utilities in India focus on evacuation schemes and specific transmission schemes but not state level planning 4.Delay in project execution 5.Financial constraints

4. © IMaCS 2014 Printed 9-Jun-15 Page 4 Transmission cost is about 10% of ACOS but is very critical to the power sector Particulars2012-13 POWERGRID555 TANTRANSCO2847 Total - Transmission cost3402 Sales (MU)51,949 Transmission cost (Rs/kWh) 0.65 ACS6.58 1.TANTRANSCO was allocated disproportionately high quantum of loans at the time of unbundling of TNEB 2.Need to ensure that TANTRANSCO is well funded to be able to take up addition of transmission capacity 3.Need to ensure adequate investments in the transmission sector

5. © IMaCS 2014 Printed 9-Jun-15 Page 5 TN could have saved more than Rs 1/kWh in the cost of short term power by procuring from NEW-NE grid 1.Per unit cost of SR to NEW-NE synchronous interconnection (Raipur – Sholapur 765 kV) would be less than ten paisa per kWh 2.This interconnection could have saved costly significant cost in terms of power procurement for the utilities in Southern Region

6. © IMaCS 2014 Printed 9-Jun-15 Page 6 Learning from the Southern Region experience -1/2 1.Ten years back, it was thought that SR would be surplus or self sufficient in power capacity 2.Utilities in Southern Region were not enthusiastic about creating additional interregional capacity 3.Several projects like the 4000 MW Krishnapatnam UMPP did not materialize 4.Nearly 3 GW of gas capacity was stranded because of unavailability of gas 5.Now, there is a universal demand for interregional capacity

7. © IMaCS 2014 Printed 9-Jun-15 Page 7 Learning from the Southern Region experience -2/2 1.The realization of the need for interregional capacity is only a reaction to the demand-supply situation 2.This experience highlights the deficiencies in the planning philosophy 3.Need to realize the need for redundancy in transmission capacity 4.Need to plan for different load and generation scenarios 5.Benefits in cost saving in unexpected scenarios would almost entirely cover the cost of transmission redundancy

8. © IMaCS 2014 Printed 9-Jun-15 Page 8 How redundancy in transmission can help ? Intrastate transmission line: It is estimated that about 20%-30% of installed wind capacity remains unutilized due to unavailability of evacuation lines in the wind season Need for adequate transmission corridors Peaking plants/hybrid generation can not only supplement seasonality of wind it will also help in utilising under utilized transmission capacity in non peak seasons State has 858 MW of liquid fuel based generation capacity that can be used for peaking Interregional and interstate transmission lines: Redundant capacity in interregional and interstate transmission line is vital to ensure unhindered import of power from power surplus states PlantFuelCapacity (MW) GMR POWERDIESEL196 SAMALPATTIDIESEL106 PILLAIPERUMALNAPTHA331 MADURAI POWER LTDDIESEL106 BASIN BRIDGENAPTHA120

9. © IMaCS 2014 Printed 9-Jun-15 Page 9 Thank You

10. © IMaCS 2014 Printed 9-Jun-15 Page 10 Disclaimer All information contained in this document has been obtained by IMaCS from public sources and believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and IMaCS in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and IMaCS shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our holding company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued by any entity. For any clarifications on this document, please contact: Sunil Varma Marri Head – Energy Practice email: sunil.marri@imacs.in