Shares of Power Grid Corporation of India Ltd. were buzzing in trade, gaining nearly 5% to hit a record high of ₹366.25 on Wednesday.

The Ministry of Power has finalised National Electricity Plan (NEP) 2023 – 2032 for Central and State transmission systems. The total cost of the national electricity plan is ₹9.15 lakh crore.

The plan is aimed at meeting the growing energy demand, targeting a peak demand of 458 gigawatts (GW) by 2032.

The transmission network capacity is expected to be expanded from 4.85 lakh circuit kilometres to 6.48 lakh circuit kilometres, and the transformation capacity will increase from 1,251 GVA (Gigavolt-Ampere) to 2,342 GVA.

Gigavolt-Ampere (GVA) is a unit used to measure electrical power, specifically the total power in a system.

Additionally, the plan focuses on green hydrogen initiatives and pump storage systems. These developments will benefit major transmission companies, cable manufacturers, and transformer producers as this will give them clear visibility for future orders.

An additional nine transmission lines with a capacity of 33.25 GW will be added on top of the 33.5 GW, which is currently in use. The ability to transfer electricity between regions will increase from 119 GW to 168 GW. A total transmission network of 335 GW is being planned for the future.

This finalisation was an anticipated move in the power sector. The draft of the NEP had been under review, and in the past few days, the government confirmed the plan. The government’s significant investment signals a major push in capacity addition, which includes laying transmission lines and advancing clean energy technologies like green hydrogen.

Overall, this is a positive development for Power Grid, the key player in transmission.

Global brokerage firm Goldman Sachs views the National Electricity Plan as positive for asset developers, particularly Power Grid. GS has maintained a ‘Buy’ rating on the stock, with a price target of ₹370 per share.

As the Central government upgrades its transmission capital expenditure (capex) estimate to $110 billion, the foreign brokerage believes that Power Grid is set to benefit.

Goldman Sachs expects Power Grid to be the largest beneficiary of over $500 billion.

The transformation capacity is expected to see an 8% CAGR.

The brokerage said India’s largest transmission asset developer is a play on grid capex supercycle with large balance sheet.

Additionally, Goldman Sachs highlighted that Power Grid benefits from a structural funding advantage and consistent core regulated earnings.

Shares of state-run Power Grid were trading 3.77% higher at ₹363.30 apiece. With today’s move, Power Grid’s market capitalisation stood at ₹3.37 lakh crore.