Power Grid wins Lakadia REZ Phase II 7.5 GW bid

Deal snapshot: LoI for Lakadia REZ Phase II

State-owned Power Grid Corporation of India Ltd (POWERGRID) has emerged as the successful bidder for an interstate transmission project aimed at integrating 7.5 gigawatts (7,500 MW) of renewable power from the Lakadia Renewable Energy Zone (REZ) in Gujarat. The company quoted annual transmission charges of ₹1,152.49 crore for the project. POWERGRID said it received the Letter of Intent (LoI) on Thursday, September 3, as per an exchange filing dated September 3, 2026. The disclosure was made under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations. The project is part of the grid build-out needed to move renewable generation from evacuation hubs to demand centres and the wider network. For investors tracking India’s energy transition, such tariff-based transmission awards signal visibility on regulated-like cash flows tied to long-term usage of grid assets. The update also underlines how competitive bidding continues to shape returns in green energy evacuation infrastructure.

Project name and capacity to be integrated

The scheme is officially termed “Transmission system for Integration of Power from RE Projects in Lakadia REZ in Gujarat - Phase II (7500MW).” Its stated objective is to facilitate the integration and evacuation of electricity generated by renewable energy projects with a combined capacity of 7,500 MW in the Lakadia REZ. In practical terms, it enables power produced by multiple renewable projects to be pooled and transmitted through high-capacity lines into the interstate grid. Such projects are designed to reduce curtailment risk by strengthening the evacuation corridor and improving the ability of the grid to accept variable renewable supply. The project scope, as disclosed, is centred on high-voltage infrastructure to carry bulk power out of Gujarat. It is positioned as an interstate transmission system (ISTS) project, which typically connects generation-rich regions to the national grid. The announced capacity figure of 7,500 MW frames the scale of the corridor and the expected load on associated substations and lines.

BOOT structure and what it means

POWERGRID will develop the project on a Build, Own, Operate and Transfer (BOOT) basis. Under this structure, the company builds the transmission assets, owns and operates them for the prescribed period, and subsequently transfers them in line with agreed terms. The BOOT model is widely used in tariff-based competitive bidding (TBCB) transmission projects, where the winning bidder is selected based on the quoted tariff. In this case, the quoted annual transmission charges are ₹1,152.49 crore, as disclosed by the company. The BOOT framework is relevant for stakeholders because it defines the asset ownership cycle, operating responsibility, and eventual transfer mechanism. It also typically places construction and execution obligations on the developer within a defined schedule. While the filing highlights the tariff and award outcome, the structure indicates the project will be implemented through an SPV route mentioned in related bidding updates.

What Power Grid will build on the ground

The project scope includes establishing a new 765/400 kV Lakadia-II substation in Gujarat. It also involves building 765 kV transmission lines across Gujarat, along with associated equipment and bays. These elements together provide the high-capacity backbone required to evacuate and transmit large volumes of renewable power. A notable technical component is the installation and commissioning of a synchronous condenser at the Lakadia-II substation. Synchronous condensers are used to support grid stability, particularly important when integrating large amounts of renewable energy that can introduce variability in supply. By helping manage voltage and reactive power, such equipment can improve the grid’s ability to absorb renewable generation without compromising operating parameters. The combination of new substation capacity, 765 kV line infrastructure, and stability equipment aligns with the needs of a high-renewables corridor.

How the bidding unfolded: TBCB and e-reverse auction

The project was secured under the Tariff Based Competitive Bidding (TBCB) route. Separately reported bidding-process details indicate POWERGRID emerged as L1 in an e-reverse auction (e-RA) for the Lakadia-II ISTS scheme. Those reports also noted that Reliance Industries was L1 with respect to initial bids, but POWERGRID acquired L1 status in the final price bid post e-RA. Bid-process updates also referenced REC Power Development & Consultancy Ltd (RECPDCL) as the Bid Process Coordinator (BPC) for the scheme. The same updates indicated that the LoI would be issued after the winning tariff was approved by the bid evaluation committee (BEC). The company’s exchange filing confirms the LoI receipt on September 3, 2026, aligning with the expected process flow in TBCB awards.

Bidders and SPV details cited in bid updates

Bidding-stage information also mentioned that the project would be implemented on a BOOT basis through Lakadia II Power Transmission Limited, the project’s special purpose vehicle (SPV). A list of qualified bidders was provided in those updates following the opening of technical bids: Adani Energy Solutions Limited, Dineshchandra R. Agrawal Infracon Private Limited, Megha Engineering and Infrastructures Limited, Power Grid Corporation of India Limited, Reliance Industries Limited and Resonia Limited. The same update said Dilip Buildcon Limited was declared non-responsive because its bid did not meet the technical qualification requirements under the Request for Proposal (RFP). These details matter because they show a broad competitive set across utility and infrastructure players, and underline the qualification filters applied in ISTS-TBCB projects.

Project cost estimates and commissioning timeline mentioned

Separate project tracking updates said the Lakadia Phase II transmission scheme was estimated to cost around ₹7,500 crore and was scheduled to commission in 36 months from the SPV transfer date. Another update said that following a revision, the estimated cost increased to ₹8,238 crore. These figures were described as estimates, not the awarded tariff. The commissioning timeline is relevant because it sets execution expectations for when the transmission corridor is likely to become available for evacuating renewable power. In BOOT projects, timely commissioning is typically essential to align with planned renewable generation build-out in the region. While the exchange filing focuses on the LoI and the tariff, the cost and schedule datapoints provide additional context on the project’s scale and delivery horizon.

Market impact: what the award signals for renewables evacuation

The Lakadia REZ Phase II award adds to the ongoing build-out of India’s green energy transmission backbone. The project is designed to move electricity from renewable projects in the Lakadia REZ onto the wider grid, addressing a key bottleneck for large-scale renewable integration. From a system operations standpoint, the inclusion of a synchronous condenser points to the grid-stability needs that come with higher renewable penetration. For POWERGRID, the LoI at an annual transmission charge of ₹1,152.49 crore reflects a fresh TBCB win that expands its interstate project portfolio. In the broader sector context, the competitive bidding mechanism continues to determine tariffs for new ISTS assets, influencing returns and project economics. The development also indicates sustained pipeline activity in Gujarat’s renewable energy zones, where transmission readiness is critical to converting generation capacity into delivered electricity.

Related TBCB win cited: Jam Khambhaliya and Jamnagar corridor

Alongside Lakadia, a separate update cited another confirmed TBCB work order for POWERGRID with annual tariff of ₹822.91 crore per annum. That contract covers a transmission system for integration of power from Renewable Energy Projects in Jam Khambhaliya REZ in Gujarat Phase II (5,500 MW) and Jamnagar Phase I (1,000 MW), totalling 6,500 MW. It was also described as being awarded on a BOOT basis. Taken together with Lakadia Phase II, the two disclosed awards underline the emphasis on Gujarat-focused renewable evacuation corridors and the scale of ISTS investments being contracted through competitive tariffs.

Key facts table

Why this matters: stability equipment and execution focus

The stated scope highlights that renewable evacuation is not only about building lines and substations but also about maintaining grid stability as the energy mix changes. Synchronous condensers are a sign of the technical measures being deployed to support voltage and reactive power requirements in high-renewable corridors. The project’s 765 kV network build is geared toward bulk transfer capability, consistent with the 7,500 MW integration target. On execution, the referenced 36-month commissioning schedule from the SPV transfer date provides a planning anchor for when the corridor could be available, though the exchange filing itself does not restate the timeline. Investors and sector participants will watch for subsequent milestones such as SPV transfer steps, definitive project agreements, and construction progress updates that typically follow an LoI.

Conclusion

POWERGRID’s LoI for the Lakadia REZ Phase II project in Gujarat, with quoted annual transmission charges of ₹1,152.49 crore, positions it to build key 765 kV infrastructure and a Lakadia-II substation to integrate 7,500 MW of renewable power. The BOOT structure and TBCB award route frame how the project will be implemented and monetised. The next expected steps, based on the disclosed process references, would involve completion of formalities linked to the award and execution under the BOOT framework, including project implementation through the SPV route mentioned in bid updates.