New Delhi: India’s power transmission giant Power Grid Corporation of India Limited is facing mounting execution pressure as it manages a massive ₹1.48 lakh crore renewable energy transmission pipeline, according to a report by InGovern Research Services.
The report highlights that the sector’s aggressive expansion plans are stretching organisational capacity, raising concerns over project delays, financial efficiency, and execution risks.
Rising Capex Cycle Puts Pressure on Transmission Sector
India’s power transmission sector is targeting nearly ₹3 lakh crore in capital expenditure by FY32, with about ₹32,000 crore planned for FY26 alone.
Within this, PGCIL holds a dominant position, handling a large share of interstate transmission system (ISTS) projects under both:
- Regulated Tariff Mechanism (RTM)
- Tariff-Based Competitive Bidding (TBCB)
However, its dominance—controlling nearly 84% of inter-regional transmission capacity—also raises concerns about sectoral concentration and systemic risk.
Read also: Power Grid Approves ₹705.30 Crore Investment for Transformers and Reactors to Boost Grid Reliability
Renewable Curtailment Signals Infrastructure Gaps
Execution challenges are already visible on the ground, particularly in renewable-heavy states like Rajasthan.
- Curtailment levels surged from 8.5% to 51.5% between March and August 2025
- Around 4 GW of renewable capacity impacted, which may rise to 6–8 GW
This highlights a widening gap between renewable generation and transmission capacity.
Project Delays Across Key Renewable Corridors
The report flags 6–12 month delays across nine major ISTS projects, including those linked to:
- Renewable energy zones in Rajasthan
- Khavda solar park
In some cases:
- Only ~3% physical progress achieved
- Nearly 28% of project timelines already elapsed
Key bottlenecks include:
- Land acquisition challenges
- Right-of-way (RoW) disputes
- Delays in forest clearances
Financial Metrics Reflect Growing Stress
Execution delays are now impacting financial performance:
- Return on Net Worth declined from 18.5% (FY23) to ~15.3% (9MFY26)
- Capital Work-in-Progress stands at ₹1.2 lakh crore
- Debt-to-equity ratio increased to ~1.45x
Under TBCB projects, revenue begins only after commissioning, meaning delays significantly impact returns. A 12-month delay can reduce equity IRR by ~200 basis points.
Dividend Cuts and Investor Concerns
PGCIL has reduced dividend payouts:
- From ₹14.75 per share (FY22)
- To ₹9.00 per share (FY25)
The move reflects capital retention for expansion, but has also raised investor concerns.
The company’s stock performance shows caution:
- ~12% CAGR (FY20–FY26)
- Compared to ~18% CAGR of Nifty 50
Transmission Becomes Key Bottleneck in Energy Transition
The report underscores a critical structural challenge—transmission infrastructure is lagging behind renewable energy growth.
This could impact India’s ambitious target of achieving:
- 500 GW non-fossil fuel capacity by 2030
Without faster transmission expansion, renewable energy evacuation could remain constrained.
Key Recommendations by InGovern
To address these challenges, the report suggests:
- Limiting project allocation to a single developer to ~50% annually
- Improving transparency in project bidding and identification
- Regular disclosures on project delays and capitalisation
- Adopting a “value over volume” strategy
This approach would align project intake with execution capacity and improve efficiency.
About Power Grid Corporation of India Limited (PGCIL)
Power Grid Corporation of India Limited is India’s largest electric power transmission utility, operating under the Ministry of Power. It plays a critical role in managing the national grid and ensuring efficient transmission of electricity across states. With a vast network of transmission lines and substations, PGCIL is central to India’s energy transition, particularly in integrating renewable energy into the grid.
Read also: Power Grid Acquires NES Pune East Transmission Project to Strengthen Maharashtra Power Network
