India’s inter-state transmission system sector is set to witness a capital expenditure (capex) of approximately ₹1 lakh crore during financial years 2026 and 2027, primarily aimed at supporting renewable energy integration, according to a recent report by Crisil. This marks a significant increase from the ₹50,000 crore invested between FY24 and FY25.
Despite challenges such as right-of-way (ROW) constraints, forest clearances, and supply chain disruptions, the financial health of developers remains stable, supported by strong cash flows and funding availability, the report noted. An analysis of three key developers—responsible for 80-85% of the expected capex—highlights the importance of strengthening transmission infrastructure amid growing renewable energy capacity.
Crisil Ratings projects an addition of 65-75 GW of solar and wind capacity by FY26-27, emphasizing the need for timely expansion of transmission networks. Transmission projects typically require 2-4 years for completion, double the time taken for renewable energy projects, making early planning and execution essential.
To accelerate project implementation, the Ministry of Power has revised land compensation guidelines for transmission projects. In June 2024, compensation for high-voltage transmission line tower base areas was increased to 200% of land value from the previous 85%, aiming to minimize ROW-related delays.
Ensuring an efficient supply chain, particularly for sub-station equipment such as transformers and high-voltage direct current (HVDC) components, is also crucial for meeting project timelines. Developers are expected to achieve return on equity in the range of 11-14%, with funding support from recent equity market raises totaling ₹12,500 crore and projected free cash flows of ₹30,000 crore over the next two fiscal years.
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