India faces an acute deficit of electric power. Almost half of all Indian households do not have access to electricity. Average annual per capita consumption of electricity in India was only about 30 percent of the world’s average in 2007 and 2008. Generation capacity is insufficient to meet the existing demand for electricity, and transmission and distribution networks that carry power to consumers are inadequate. As India’s energy resources are spread unevenly across the country, the efficient transmission of power from surplus to deficient regions is critical. There is, therefore, a pressing need to strengthen and expand the all-India national transmission network—the national grid.
IBRD has been involved with India’s energy program for more than a decade, using innovative financing and technical advice to help the Indian government and POWERGRID address the country’s energy shortages.
Under a series of Power System Development Projects (PSDP), the Bank has provided five direct loans to POWERGRID: PSDP I in 1993, PSDP II in 2001, PSDP III in 2006, PSDP IV and additional financing for PSDP IV in 2008, and PSDP V in 2009. To date, IBRD has provided $3.1 billion in tailored financial and technical support to India’s energy sector.
Between 1993 and 2003, the Bank concentrated its efforts on helping develop the national transmission network by strengthening regional grids, facilitating the transfer of power across the regions through POWERGRID. The next phase of lending started after 2006 when the Bank adopted a balanced approach focused on generation and transmission, with selective engagement in distribution.
In 2007, the Rampur hydropower project marked the first Bank-financed hydropower development in India since 1989. Recently, the Bank has been involved with various central and state sector utilities in capacity building and institutional strengthening exercises.
POWERGRID has successfully achieved all development objective indicator targets in recent years. For the fiscal year ending June 30, 2009, results include:
• 46,027 million kilowatt hours of power exchange between and across the regions against a target of 46,000 million kilowatt hours;
• 71,447 circuit km of transmission capacity against a target of 71,000 circuit km; and
• 79,522 Megavolt Ampere (MVA) of transformation capacity against a target of 75,000 MVA.
Today, hydropower from Arunachal Pradesh in the far east of the country is carried on specially designed transmission lines to light homes in Uttar Pradesh; power engineers in Tamil Nadu in the deep south keep close tabs on the weather forecast for Punjab in the north to assess opportunities for power trading; and the gas-based Kayamkulam power station located at the southern tip of the Indian mainland is activated in winter to warm the freezing nights in Kashmir.
India’s electricity transmission system operator is also consistently maintaining transmission system availability at over 99 percent, which is at par with international utilities.
POWERGRID has tripled its transmission network and is now one of the world's largest electricity transmission system operators.
Toward the Future
In response to the global downturn and at the request of the Government of India, the World Bank extended a loan of $1 billion to POWERGRID on September 22, 2009. The loan will help POWERGRID strengthen five transmission systems to facilitate the transfer of power from energy surplus regions to towns and villages in underserved regions of the country. This will also increase the integration of national grid, resulting in increased system reliability and a reduction in transmission losses.