HSBC said the latest staff paper released by the Central Electricity Regulatory Commission (CERC)—proposing reallocation of transmission connectivity from projects that have not signed PPAs/LoAs to other eligible developers—signals a clear regulatory intent to ensure efficient utilisation of India’s constrained transmission network. The brokerage noted that this development represents a shift toward better optimisation of existing capacity rather than the earlier approach of aggressively building new transmission corridors to meet expected load.
According to HSBC, this move is particularly important given the increasing stress on grid infrastructure arising from the rapid scale-up of renewable energy projects. By reallocating underutilised connectivity rights, regulators aim to decongest priority corridors and improve system readiness without immediately expanding capex outlays. The brokerage said such measures could reduce the need for overbuilding in the medium term and lessen the incremental growth runway for certain transmission utilities.
HSBC reiterated its Reduce rating on PowerGrid, arguing that regulatory tightening on connectivity, coupled with a broader push for optimal utilisation, may structurally limit returns compared with historical averages. While the company remains a critical player in India’s power transmission system, the brokerage believes the risk-reward profile is less compelling in the current regulatory environment, particularly as competition intensifies and policy reforms reshape capacity allocation norms.
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