Power Grid might execute energy interconnection projects in Oman, UAE and Saudi Arabia worth up to Rs 40,000 crore

The allocation to the Ministry of New and Renewable Energy (MNRE) stands at Rs 19,100 crore in the Union Budget. Image: Shutterstock

The Power Grid Corporation of India is exploring energy interconnection projects with Oman, Saudi Arabia and the United Arab Emirates (UAE), chairman and managing director Ravindra Kumar Tyagi said in a media interaction in Mumbai on July 29.

The size of these projects, which are subject to finalisations by the government of India and the governments of the respective countries in the Middle East, will be around 2,000-2,500 MW, which is estimated to be valued between Rs 30,000 crore to Rs 40,000 crore, and is to be executed over the next five years.

In his first interaction with the media since taking over the reins of Power Grid in January this year, Tyagi said the Maharatna public-sector enterprise has existing 4,750MW cross-border interconnections with neighbouring countries Nepal, Bhutan, Bangladesh and Myanmar. 

These projects are part of the One Sun One World One Grid initiative by Prime Minister Narendra Modi to supply energy across borders. According to the Economic Survey 2023-24, India’s power grid has emerged as one of the largest unified electricity grids in the world. 

The Power Grid Corporation of India, as per Tyagi, currently transmits about 45 percent of India’s power. He announced an estimated capital expenditure outlay of Rs 2,07,500 crore up to 2032, out of which Rs 1,90,500 crore will go to the transmission business, and around Rs 17,000 crore to solar generation, smart metering infrastructure, and data centres. The capex for FY25 is an estimated Rs 18,000 crore.

Also read: What Budget 2024-25 says about India's energy security and transition roadmap

According to Tyagi, international interconnections will be a major growth driver for the business, apart from measures including the national green hydrogen mission, energy storage in the form of pumped hydro or battery storage, and India’s goal of building 500GW of non-fossil-fuel capacity by 2030. “Around 80-85 percent of our current work-in-hand [amounting to around Rs 1,14139 crore] is green energy projects,” he said.

The allocation to the Ministry of New and Renewable Energy (MNRE) stands at Rs 19,100 crore in the Union Budget. As of June, about 54.5 percent of India’s power came from thermal sources (like coal, gas and diesel), while 45.5 percent came from non-fossil fuel sources, which includes 1.8 percent nuclear power capacity, according to the power ministry.

Power Grid has the target of meeting 50 percent of its internal energy needs from renewable sources by 2025, and achieve net-zero status by 2047. Tyagi admitted that building India’s arsenal of non-fossil-fuel capacity up to 500 GW will be a challenge. “The timeline of 2030 by the Government of India is not going to be achieved very easily,” he said, adding that, apart from land acquisition, right of way in villages and cities, and forest clearances, “there is challenge for meeting the huge requirements of transformers”.

Also read: How are India's power companies handling the crucial renewables transition?

Transformers are essential components of the electrical infrastructure as they allow renewable energy sources to be seamlessly integrated into the power system. They enable effective connection to the grid, while addressing issues related to decentralised and intermittent supply of renewable energy sources like sun and wind. “It is a big challenge. Manufacturing transformers takes 15-18 months. We are procuring them in advance [and in bulk] for various purposes,” Tyagi said in response to Forbes India. “Capacity addition requirements are there. Various companies are working hard towards that and it will be taken care of.”

Power Grid, which has a market capitalisation of around Rs 3 trillion, reported on July 26 that consolidated net profit rose 3.5 percent to Rs 3,724 crore in the first quarter ended June 30, 2024, from Rs 3,597 in the year ago period. As per media reports, consolidated revenue from operations for the quarter stood at Rs 11,006 crore, compared to Rs 11,048 in the same period last year. On a standalone basis, the first quarter net profit fell to Rs 3,412 crore from Rs 3,543 crore in the year-earlier period. Revenue from the transmission business fell to Rs 10,728 crore from Rs 10,829 crore a year ago, while revenue from the telecom business increased to Rs 254.84 crore from Rs 212.19 crore for the same period, while the consultancy segment saw revenues at Rs 184.21 crore.