New Delhi: The Union Cabinet on Wednesday approved a Rs 1,86,405-crore scheme to expand state transmission networks so they can evacuate up to 135 gigawatts (GW) of renewable energy. Union Minister Ashwini Vaishnaw announced the decision after the Cabinet meeting at a press briefing. He said "today's initiative represents a structural step — specifically, how to strengthen the grid to evacuate renewable energy."
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The Green Energy Corridor Phase-III scheme has two parts: the third phase of the Green Energy Corridor (GEC-III), and 50 gigawatt-hours (GWh) of battery energy storage systems (BESS). According to the government's statement, Rs 1,36,378 crore of the outlay is for intra-state transmission systems under GEC-III and Rs 50,000 crore is for battery storage. The scheme is to be completed by 2032-33. Over that period it is to add 51,126 circuit kilometres of transmission lines and 2,28,903 megavolt-amperes (MVA) of transformation capacity.
"The primary objective of this project is to develop harmonised and accelerated renewable energy access, essentially creating grid connection points, while designing the grid to accommodate the inherent variability of renewable energy sources," said Vaishnaw.
Vaishnaw set out the problem in terms of how a grid behaves. "Consider a grid with a steady current flow... one without significant fluctuations; that would be a very stable grid," he said. Solar and wind do not supply power that way. "However, if fluctuations are high, for instance, with solar power (available during the day but not at night) or wind energy (which varies by season and even throughout the day), the grid must be designed to handle that variable load. Managing such fluctuations becomes a major challenge," he said.
Geography adds to the difficulty, because the best renewable sites are often far from demand. "For instance, regions like Ladakh and the Rajasthan desert have the potential to meet a significant portion of the country's renewable energy needs. To achieve this, it is crucial to properly design the power evacuation infrastructure," Vaishnaw said.
A presentation shared by the government on the scheme puts the timing problem in numbers. Transmission takes four years to build, while a renewable energy project takes two. The Ministry of New and Renewable Energy (MNRE) states the principle behind the scheme as "transmission must precede renewable energy generation." The presentation gives three other reasons for the scheme. It aims to avoid curtailment of renewable energy and to help states meet their Renewable Consumption Obligation (RCO). The third reason is that the waiver of Inter-State Transmission System (ISTS) charges will no longer be available after June 2028.
Vaishnaw linked the scheme to the country's capacity targets. On the 2030 goal of 500 GW of non-fossil capacity, he said: "Given the current growth trajectory, we will definitely achieve the 500 GW target by 2030; furthermore, the plan is to reach 786 GW by 2035-36."
The Centre will provide Rs 54,082 crore of the total as Central Financial Assistance (CFA). The largest share, Rs 45,005 crore, goes to intra-state transmission, and Rs 6,000 crore is viability gap funding (VGF) for battery storage. A further Rs 3,050 crore covers committed liabilities from earlier phases of the Green Energy Corridor. The remaining Rs 27 crore is for programme management and grid studies.
The government says this support will reach consumers' electricity bills. "The Central Financial Assistance (CFA) will help in offsetting the Intra-State transmission charges and thus keep the power costs down," its statement said. MNRE expects the Central funds to leverage about Rs 1.32 lakh crore of investment in transmission. It also expects the scheme to enable an estimated Rs 4.6 lakh crore of investment in the 135 GW of renewable capacity itself.
The 50 GWh of battery storage is meant to deal with variability at the source. The government's statement says the batteries will be placed "at the Renewable Energy (RE) developer/generator end or any other location of importance for grid flexibility to address intermittency, congestion, peak-hour curtailment and meet non-solar hour demand."
"With battery storage, fluctuations and variations are obviously smoothed out," Vaishnaw said. He added that storage is only one part of the programme. "Apart from battery storage, the project also encompasses improvements to the grid, transmission systems, and load dispatch centers," he said.
New and existing lines will be handled differently. All new greenfield lines will be awarded through tariff-based competitive bidding (TBCB). Transmission service providers will then build, own, operate and maintain the assets under what is called the BOOM model. Upgrades and strengthening of existing brownfield networks will be carried out on a cost-plus basis. State transmission utilities (STUs) will be the overall implementing agencies.
"Greenfield projects will be taken up, as will brownfield ones," Vaishnaw said. He described the delivery structure as a joint effort. "So, this is going to be a collaboration involving the Ministry of Power, Power Grid, the state transmission company, and the state government; all of them will have a role in this," he said.
Funds will not be divided evenly among states. Under a challenge mode, states that show they are ready will get priority. According to MNRE, a state shows readiness by keeping to its RCO trajectory and by having a renewable energy policy and a land compensation mechanism in place. States will also be judged on whether they have assessed their renewable energy potential and signed memoranda of understanding. Securing right-of-way and forest clearances in advance counts too. The list ends with rationalised registration fees for developers and "efforts by the states for listing of State Transmission Utilities."
Central assistance will be released only as projects reach defined milestones. A dedicated project monitoring unit will track physical and financial progress on an online dashboard. The Cabinet Secretary will chair half-yearly reviews.
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The Cabinet also allowed projects to be moved within and across states. It permitted projects in new states to be sanctioned from unallocated funds, with the approval of the minister in charge, as long as the total stays within the approved Central assistance. MNRE said the scheme is meant to extend renewable energy development to newer regions, including the North-East and the Himalayan states.
