DESCRIPTION

The project will finance high voltage transmission systems to evacuate electricity generated from the new mega solar parks to the interstate grid, and improve reliability of the national grid system. The project will be based on the sector loan approach, which will include subprojects in various locations throughout India. It will also use the country safeguard and procurement systems at an agency level of POWERGRID.

PROJECT RATIONALE AND LINKAGE TO COUNTRY/REGIONAL STRATEGY

Sector background. India is experiencing both base load and peak power deficits. The lack of reliable electricity supply constrains India''s economic growth, and makes it difficult for around 311 million citizens to have access to electricity. Under such supply constraints, electricity demand still continues to increase along with sustained industrialization and expanded economic development. The power demand is projected to more than double from 300 gigawatt (GW) to over 700 GW by 2030. It will be a challenge to meet this size of capacity addition through any conventional power supply approach. While India''s power system is dominated by thermal generation from coal-fired plants, fossil fuels have been problematic with shortages from domestic production, volatile prices from increasing imports, and adverse climate impacts. To ensure energy security in a sustainable manner, the Government of India thus shifted its strategies in planning for the future additional generating capacity through an energy mix, and has increased its target for renewable energy by 2022. In 2015, the government announced at the Conference of Parties 21 in Paris that it aims to increase to 40% cumulative power capacity from non-fossil fuel based energy resources by 2030.

ADB interventions. ADB was the frontrunner to develop solar parks' transmission systems for Gujarat and Rajasthan state utilities. While various donors and multilateral development banks are widely involved in renewable energy development projects, CTF has been allocated to ADB and the World Bank to support solar rooftop, solar parks, and their relevant transmission infrastructure.

Project Design. The government requested ADB for continued support for the interstate transmission system for solar parks since it aims to drastically scale up the country''s installed solar capacity in a phased manner. A series of solar parks have been identified, but their development and preparation processes are different. Therefore, the sector lending approach is considered suitable as it will enable POWERGRID to undertake transmission line expansion to individual solar park sites according to planned commissioning of solar parks based on their readiness. The sector lending is warranted on the government's development plan, policies and strategies and POWERGRID''s implementation capacity.

Adoption of POWERGRID safeguard and procurement systems. As a special feature, the project will pilot the adoption of POWERGRID safeguard and procurement systems that have been assessed and deemed satisfactory to ADB with agreed action plans to achieve full compliance with ADB''s safeguard and procurement requirements. The agency's system adoption is expected to improve the operational flexibility and autonomy, and reduce the transaction costs and time required for the safeguard and procurement processes of subsequent subprojects, in conjunction with the sector loan approach.

Value added by ADB assistance. Supporting construction of interstate transmission systems for the Ultra Mega Solar Power Projects, the project will provide a means to export excess solar energy from states that have surplus power supply to power-deficit states and those seeking to meet their renewable purchase obligation requirements. As such, the project will directly support India''s continued solar energy expansion and will also contribute to strengthening the integrated interstate and interregional grid, thus allowing for power trading across larger geographical areas, which is considered a prerequisite to effectively deploying high penetrations of variable renewable energy. The resultant power output profiles will differ greatly from India''s current generation mix that is dominated by thermal plants, and substantiate India''s contribution to climate mitigation activities.

IMPACT

Increased share of clean energy in the power mix, increased overall efficiency of the power system, and enhanced energy security in India.

OUTCOME

Clean power supply expanded to the national transmission system.

PROCUREMENT

PGCIL will be the EA for the interstate transmission projects. A project management unit (PMU) is in place at PGCIL, headed by a project director. The PMU will oversee implementation of their respective projects under the ADB loan. It is expected that the project will adopt the existing PGCIL's safeguard and procurement systems, subject to in-depth equivalence and acceptability assessments and their approval.

ACCOUNTABILITY MECHANISM OF ADB

The Accountability Mechanism is an independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an Asian Development Bank-financed project. If you submit a complaint to the Accountability Mechanism, they may investigate to assess whether the Asian Development Bank is following its own policies and procedures for preventing harm to people or the environment. You can learn more about the Accountability Mechanism and how to file a complaint at: http://www.adb.org/site/accountability-mechanism/main

CONTACTS

Responsible ADB Officer Ogino, Kaoru
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies Power Grid Corporation of India Limited
PGCIL@VSNL.COM.
SAUDAMANI
Plot No. 2, Sector - 29
Gurgaon - 122 001 Haryana, India