The Modi government has been successful in bridging the power shortage in the country from 4 per cent levels seen in May 2014 to 2.3 per cent at present. Reform measures in coal, power and renewable energies have helped reduce that gap. Now the government has set an ambitious target to deliver electricity to all census villages by 2018. This will require major investments in the transmission sector.

The main bottleneck that comes in the way of the government's goal is the insufficient transmission capacity the country faces. Power Grid Corporation was the primary transmission-capacity builder in the country before the sector was opened up to private players in 2011 for inter-state and in 2013 for intra-state transmission.

What kind of investments are we looking at?
Over the Thirteenth Plan period, an investment of ₹2.6 trillion may be required (Motilal Oswal estimates), which would be divided into inter-state and intra-state in equal proportion.

This has two implications. First, inter-state transmission systems would likely see a slowdown in growth to 8 per cent in the Thirteenth Plan period (after seeing a 118 per cent growth in the Twelfth Plan period). Second, the intra-state transmission systems are likely to see investments jump 136 per cent as states ramp up investments in building transmission capacities.

Investments in transmission capex to grow
A total transformation capacity addition of 2.88 lakh MVA in the Thirteenth Plan period would require transformer investment growth of 7 per cent higher than that in the Twelfth Plan. Transformer capex in the 400 kv is likely to see an investment growth of 9 per cent in this period (Motilal estimates) as states build up their networks.

The highest investments are likely to be in building transmission capex. Total transmission-line investments are likely to be higher - at ₹1,44,000 crore, that's 36 per cent higher than that in the Twelfth Plan period. As states ramp up their 220 kv transmission lines, intra-state transmission is set to see investments to the tune of ₹60,000 crore - growth of 145 per cent over the Twelfth Plan period. Transmission-line capex is expected to constitute 55 per cent of the total transmission capex in the Thirteenth Plan period.

The second highest investment is in substations, with an estimated 38 per cent of total transmission capex going into building substation capacity. Substations are likely to see investments to the tune of ₹98,000 crore, growth of 32 per cent over the Twelfth Plan period.

Who benefits?
The introduction of the Make in India clause by Power Grid has seen the exit of the Koreans and the Chinese, who had a distinct price advantage over India-based players.

Multinational companies have an advantage as orders move to higher voltage and newer technologies. The table shows the key beneficiaries of the sector.