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00:00Hello and welcome to NETV Prophet. You are watching this special interaction. The new
00:13government has come into place and all the ministers are back in charge of various ministries
00:20and within the power ministry we have policy continuity also coming in because the key
00:26focus remains for this government is to increase power generation and power transmission going
00:34forward and joining me today is Harsh Shah who is the CEO of IndiGrid. Harsh, thank you
00:40very much for joining us on NETV Prophet.
00:43Thank you and good morning. We certainly believe that there is a need to be pushing more projects
00:53on transmission side, on battery storage side for the country and let's zoom out a
00:57little bit and consider why we need energy transition. For us as Indians, energy transition
01:04is not just about economics, it's also about geopolitics. It allows us to reduce our dependence
01:11on oil and therefore supports us in geopolitics as well as on financial matters because then
01:19our products would increase if at all we are able to harness the power of the sun and
01:25wind and water completely. So that is the need and the urgency for the country. We have
01:30goals for 2030, 2047, different goals, but the underlying need is that how do we as Indians
01:37become independent for energy, especially when we are blessed abundantly with the renewable
01:42energy sources. Transmission and battery storage plays a crucial link to enable power
01:50to flow from where it is best produced by renewable energy, whether it is solar or wind
01:56or hydro and how do we make it reach the consumer. Our entire historical development on power
02:04transmission side over the last seven decades, out of that six decades, has only happened
02:09towards thermal plants and therefore the energy highways are shifting towards renewable energy
02:16to consumer. And that's not just happening in India, it's happening across the world.
02:20And therefore we do believe that there is a need for further expediting the investments
02:26in transmission and battery storage. Harsh, there's an estimate by rating agency that
02:33nearly 190 to 215 billion dollars of investments would be required in power generation to meet
02:42that 500 gigawatt target that we have set out for 2030. A large portion of that is dependent
02:48on green energy, which you clearly mentioned solar, wind being some of them. But equally
02:55it also mentions that the grid network would need an investment of nearly 150 to 170 billion
03:00dollars as well so that the power which is getting generated can be brought to the grid
03:06or to the national grid and distributed. How do you see investments now taking shape in
03:13the transmission sector? I think as you rightly mentioned, there is a goal, there is a need,
03:20there is a need for investment in transmission. Now everything after that depends on how we
03:25as a country execute, starting from policy to enabling policy to financial policy and
03:31thereby. Till now, the previous government had done a phenomenal job in terms of launching
03:36a variety of schemes for the benefit of more projects coming up. And let me tell you, over
03:42the last 12 to 15 years, since the private sector participation on the transmission space
03:49has happened, and even if we stretch from 2000s where the transmission investment really
03:54picked up pace, right now we are looking at an unprecedented pipeline of about 150 lakh crores
04:01of projects in the market, which was pretty much equivalent to what got built over the last 10 to
04:0715 years. So we are looking at an unprecedented pipeline for investment opportunity for investors.
04:13So we do see that more and more investment will come and more and more CAPEX will happen in the
04:19sector. Which are the geographies where you see maximum CAPEX coming up? Because we understand
04:26that there are some of the geographies, especially linked to solar and wind, where there is a
04:32congestion in the network. Will that be the first one to see major investments and followed by fresh
04:42CAPEX coming in to set up new capacities? Certainly, but it's just not about solar,
04:48right? You need to reach the demand centers as well. But to answer your question, a large amount
04:54of investment on transmission is happening on the western part of the country where the sun
04:59and the geography is apt for solar generation. But that's not about it. There is also Ladakh
05:06that is getting evaluated for mega solar power projects. And that will also make investment in
05:12the northern sector. Also in the northeast, there is not just demand growing, but also the hydro
05:17potential is massive in the northeast. And the south, or I would say southwest and the east part
05:24where there is a lot of wind potential. In addition to that, now we are talking about the offshore
05:28winds. So I don't think that the transmission is geographically focused because we have wind
05:36on west and wind and solar on the west of the country, wind on the southern country, east is
05:43filled with hydro and the north is again solar. So we do see it as scattered across the country.
05:51Okay. Give me a sense of the kind of projects which are pending for tenders,
05:58means in the sense there would be a tender processed for this transmission project.
06:02What is the quantum of that coming up? So yeah, so right now, approximately 1 lakh
06:0940 thousand crores of projects are approved by National Committee of Transmission for tender.
06:14And I'm only talking about the central projects. I'm not talking about the state transfers right
06:18now. That itself is around, already announced identified projects of about 1 lakh 40 thousand
06:23crores. And the tendering should happen in the next couple of months? Oh no, it takes around 12
06:30to 18 month cycle. So it's not for two months, it's an 18 month cycle for all these projects
06:34will come into. So in the next 12 to 18 months, all these 1 lakh 40 thousand crores worth of
06:42projects would be tendered out to players like you and others who are into the transmission
06:47and distribution business. Yes, that's the expectation. One of the biggest challenges
06:52that you know, that you as a sector also look at is low cost and long term capital. How do
07:02you look at this thing? Because these are huge investments and this require and long
07:09tenure investment. So how are you looking at this entire capital race, which is required
07:16to manage this kind of projects? I think we are one of the most successful in the largest
07:23energy transition in the country. So I would say we have a top notch long term capital
07:29in our business. Having said so, we are a very small player in the size of the scheme
07:34of the things. We have just about 40,000 crores in size and there are other players who are
07:392 times or 10 times bigger than us. So I think we have a very good mix in the transmission
07:45business, starting from PowerGrid, who is state owned, to completely financial investors
07:52owned like Indigrid, to promoter owned entities. So we have a very good diversified pool of
07:57capital as a country to take this risk on and really execute these projects. Having
08:02said so, I think eventually the cost of capital of projects is dependent on the risk premium
08:07of the country. And that is what decides the cost of debt, cost of equity and variety of
08:13other factors. And I think that's, as a country, we are moving in the right direction. And
08:18hopefully that will reduce the cost of capital for all of us together.
08:22So what are the policy initiatives that is required from the sector or from the industry,
08:28you know, as far as government is concerned, so that, you know, things become smoother
08:33for you for not only bidding, but also in execution, because execution is a big challenge.
08:39And many of the companies get stuck because of the capital financing requirements, which
08:43are there. So what kind of, you know, policy initiatives would be required for the sector?
08:50I think like any other infrastructure sector, the initiatives are similar to support the
08:55infrastructure financing. On the execution front, yes, there are a lot of initiatives
09:01that the past government and the teams have taken. We just expect that that continues
09:06because it is still one of the difficult projects to execute because it is cross country. There
09:12are issues of right of way, there are issues of forest clearances, variety of things that come
09:16in place. However, I would say that the government machinery over the last 10 years have worked
09:20incessantly to remove these issues, whether it is inter-ministerial, centre-state, a variety of things.
09:28And how is Integrate placed in this entire sector, not only just to grab the opportunities,
09:35but also from a capital point of view, do you have enough dry powder around so that you can
09:41come and bid for the projects and invest in this project for the long term?
09:45Certainly, I think we have enough dry powder and we have built sizable credibility
09:49over the last decade to ensure that we have the right set of investors
09:54supporting us and growing the portfolio.
09:57And what is the kind of target that you have set out maybe in the next few years? What is
10:04the kind of capacity addition that you're looking at?
10:07So, we don't really look at in terms of crores target. We already have a sizable pipeline with
10:12us. For example, for battery storage, we already have around 500 megawatt hour of projects. We
10:18look to increase that to a gigawatt or two gigawatt hour of projects. On the transmission
10:22space, our portfolio is approximately 25,000-24,000 crores. We look to grow it another 20-25%.
10:30And do you think that when you speak about battery storage,
10:34there are enough technologies available now and cost effective as well?
10:40Oh yes, there is sufficient technology available, sufficient proof of concept,
10:45as well as the cost have become at great parity level. And we will see more and more action on
10:50this space because the costs are meeting the thresholds that as a country we could pay.
10:56And the technology is very mature, especially lithium-ion has been implemented at gigawatt
11:01scale across the world. And we are pretty confident of the technology being successful
11:06in India. I'm sure there are emerging technologies like sodium or others which will come into place.
11:11Lithium-ion has been there for almost two decades and we are confident that it will continue to
11:16thrive. Harsh, it was a pleasure talking to you today. Thank you very much for joining us on
11:21NDTV Profit. Thank you.