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Subrata Jana/Mint
Subrata Jana/Mint

Transmission constraints

Lack of sufficient transmission capacities is hampering the growth of India's electricity market

Lack of sufficient transmission capacities is hampering the growth of India’s electricity market. In the last financial year, an estimated 5,591 million units of electricity could not be cleared by the country’s energy exchanges due to the lack of a transmission network, a note from Indian Energy Exchange (IEX) said. That is 16% of what these exchanges could have transmitted if adequate capacity had been available.

Yes, the actually traded volumes on energy exchanges may be just 3% of the total electricity generated in the country. But these 5,591 million units still make up 13% of the 42,428 million units power shortage in the previous financial year.

Secondly, transmission capacity is typically built for power plants which have long-term purchase agreements, thus squeezing short-term market volumes. However, its inadequacy is also the second biggest hurdle affecting upcoming thermal power plants after fuel shortage, according to some estimates. Building of transmission capacities will not only help the government achieve its aim of round-the-clock electricity availability, but will also help remove distortions in the electricity trading market.

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