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New Delhi/Chennai: In a potential game-changer, South India has joined the national electricity grid, completing the integration of the entire country into one seamless network for delivering power to consumers.

Not only will it provide relief to the power-short southern region, it will also improve transmission and facilitate better management of demand, ensuring the stability of the electricity grid.

Easier availability of power could also lead to lower tariffs in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Puducherry.

Together with a proposal to separate the so-called carriage-and-content operations of existing power distribution companies, the move has the potential to bring about a structural transformation of the power sector.

The Press Trust of India reported on Wednesday that the power ministry will introduce a cabinet note on the carriage-and-content proposal in a month’s time. This will enable people and companies in India to buy electricity from a power company of their choice and have it supplied to them by the distribution network that services the neighbourhood in which they live.

Mint had reported on 27 September about proposed changes in the Electricity Act of 2003 to implement this proposal.

Of the five regional grids in the country—northern, southern, eastern, north-eastern and western—only the southern one had not been connected to the national grid.

The integration was achieved through the commissioning of the Raichur-Solapur 765 kilovolt (kV) single-circuit transmission line by state-owned Power Grid Corp. of India Ltd.

“This line of 208 circuit kilometres (ckm) and 765/400 kV substations at Raichur and Sholapur has been commissioned five months ahead of its contractual schedule, i.e. 31 May 2014 at a cost of approximately 815 crore," the power ministry said on Wednesday in a statement.

“With this interconnection, the Indian power system has entered into a new era and become one of the largest operating synchronous grids in the world with about 232 GW (gigawatts) of installed power generation capacity," the statement said.

Experts welcomed the move. Investments in transmission and distribution have not been commensurate with the investments made in generation.

“Southern region is a region starved of electricity. This will provide a huge benefit as it will help in the reduction of electricity cost which are high due to the transmission constraint," said Shubhranshu Patnaik, senior director, consulting, energy and resources, Deloitte Touche Tohmatsu India Pvt. Ltd, an audit and consultancy firm. “The immediate benefit will be the availability of the power traded on the exchanges."

According to the Central Electricity Authority, India’s apex power sector planning body, Puducherry, Karnataka and Kerala had a peak power shortage of 8.1%, 5.8% and 5.5% respectively in August.

Debasish Mishra, a senior director at the same firm, added: “It is an excellent development, which will help in inter-regional transfer of power from surplus West and East to power-deficit South."

A case in point being Tamil Nadu, where according to Tamil Nadu Generation and Distribution Corp. Ltd, industrial units and commercial establishments have 20% power cuts for 20 hours in a day, and during peak hours (6pm-10pm), the extent of power cuts is 90%.

R. Sethuraman, director (finance) at India’s largest car exporter Hyundai Motor India Ltd, said power shortages had been pushing the overall cost of company’s vendors and hoped that with the national grid coming into play, the situation would improve.

“While we do not face any power shortage as per our contract with the Tamil Nadu government, it is our vendors who were under stress. The new capacity will be helpful and improve the situation. It’s a good news for us as it was a long-pending issue," Sethuraman said.

“It is a welcome thing and should help the auto component industry in a big way," said Harish Lakshman, president, Auto Component Manufacturers Association, and managing director, Rane Group.

While large and medium component suppliers have captive diesel power plants, generating electricity from diesel is at least three times more expensive than buying it from the state, he said. “Therefore, while buying from the national grid will be expensive, at least it will not be a expensive as generating power from diesel gensets."

According to him, buying electricity from the state costs 4-5 per unit while generating power from diesel costs 15 per unit.

In the summers, while power costs range between 4 and 6 per unit on the national grid, on the southern grid it was as high as 20 per unit because of shortages in the regions, said K. Vidyashankar, managing director, MM Forgings Ltd.

“If there is adequate connectivity, it will result in better availability resulting in lesser power cuts, helping us," said Vidyashankar.

The development will also help in grid stability and “work as a better shock absorber", Patnaik of Deloitte said.

A grid collapse is the worst case scenario for any transmission utility. When this happens, states that draw power from a particular network go without electricity.

The creation of an integrated national grid will also help towards interlinking countries of the South Asian Association for Regional Cooperation (Saarc) that groups India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka, Afghanistan and the Maldives.

The Saarc grid envisages meeting electricity demand in the region. India already has power grid links with Bhutan, Nepal and Bangladesh, and plans to develop power transmission links with Myanmar and Sri Lanka.

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