Amid a global transformer crunch, green energy developers face grid access delays

• Adopting programme-based ordering, a strategy gaining traction in Europe, could provide manufacturers with better visibility and help manage demand more effectively.

Highlights:

• India is facing significant delays in developing transmission infrastructure for renewable energy projects due to a global surge in demand for high-voltage transformers.
• The shortage of equipment, along with legal and land-related issues, is delaying grid access for renewable energy projects in states like Rajasthan and Gujarat, potentially stalling India’s renewable energy goals.

Supply Constraints for HVDC Transformers:

• India relies on just three domestic manufacturers for high-voltage direct current (HVDC) transformers, all of which are owned by multinational conglomerates. These companies are struggling to meet rising global demand.
• As a result, wait times for transformers have increased dramatically from 50 weeks in 2021 to 120 weeks by 2024. This surge in demand is putting many global renewable energy projects, including those in India, at risk of delays.

Impact on Renewable Energy Goals:

• The delays in equipment supply could derail India’s ambitious target of adding over 50 gigawatts (GW) annually through 2030, as part of its goal to achieve 500 GW of green energy.
• Developers have warned that critical evacuation systems for upcoming projects may not be ready until 2029, especially in key renewable energy states like Rajasthan and Gujarat.

Challenges in Sourcing and Manufacturing:

• The government-owned Power Grid Corporation of India Ltd (PGCIL) is constrained by a mandate to source transformers domestically with at least 60% local value addition.
• Additionally, legal challenges like the Supreme Court ban on transmission lines in the habitat of the Great Indian Bustard (GIB) have contributed to delays, although this issue was partially resolved in March 2024.

Shift in Ordering Strategy:

• One potential solution to these supply constraints is adopting a programme-based ordering strategy, similar to what is being practiced in Europe.
• This strategy would allow manufacturers to plan more effectively by receiving orders for multiple projects over a few years, instead of dealing with sudden demand surges from individual projects.

Growing Export Market for Indian Manufacturers:

• Domestic HVDC manufacturers are also focusing on exports, further straining supply for domestic projects. Indian companies like Siemens and Hitachi Energy are trying to capitalize on global demand, especially from developed economies, which is booming.

Prelims Takeaways:

• Great Indian Bustard (GIB)
• Power Grid Corporation of India Ltd (PGCIL)