On September 30, 2026, the Union Cabinet approved PM-DHARA, the third phase of a programme called the Green Energy Corridor. It will fund power lines and substations needed to carry electricity from solar and wind farms to the towns and factories that consume it.

The price tag is Rs 1,86,405 crore, to be spent by March 2033. Of that, Rs 1,36,378 crore is earmarked for transmission inside states and Rs 50,000 crore for 50 GWh of batteries that store daytime solar power for use after dark, according to the government's release.

Most of the debate since has been about who will build the lines. Within a day, market stories were naming private developers and the contractors that may be hired. The government says new lines will be auctioned to private developers, while upgrades will be left to state-owned transmission utilities. It has not specified how the money will be divided between the two.

A bigger question has drawn less attention, which is who pays for the transmission. Regardless of who builds the lines, their costs will be recovered through charges levied over 35 years, with electricity distribution companies, or discoms, bearing the bill. These state-run companies sell power to homes and businesses.

Discoms are already the weakest link in India’s power sector, carrying about Rs 6.47 lakh crore in accumulated losses. PM-DHARA adds the cost of a much larger grid to their obligations.

Why The Wires Matter Now

India has become very good at building solar and wind farms, and much slower at building the transmission lines needed to carry their power. Over the past five years, the country has met only about 80% of its annual transmission targets, according to the energy think tank Ember.

The shortfall is already translating into wasted electricity. In the first three months of 2026, about 300 GWh of renewable power was switched off because the grid could not carry it, nearly two-thirds of all such losses in the period.

On March 30 alone, about 34 GWh was turned away, roughly what 5 million urban middle-class households use in a day.

Ember estimates that about 20 GW of new renewable capacity faces connection delays of more than four months this financial year. Those figures cover only the national, inter-state network. PM-DHARA is aimed at the layer below it, the lines inside each state.

India's target of 900 GW of clean power capacity by 2035 depends on those lines being built, and on someone being able to pay for them.

Every Line Ends Up On A Discom's Bill

The payment mechanism is broadly the same whichever route a state chooses. An auction winner builds, owns, and operates a line, earning a fixed annual fee over 35 years. A state utility building on a cost-plus basis recovers its costs along with an approved return.

In either case, the state’s transmission utility collects the charges from discoms every month, and the discoms pass them on to consumers.

The Centre will contribute about Rs 54,082 crore, about 29% of the total outlay. That money will offset transmission charges, reducing what discoms pay for the new lines.

The remaining outlay — about Rs 1.32 lakh crore — along with interest and the builders’ returns, will have to be recovered from users, largely through charges that discoms pay over as long as 35 years.

Of the Centre's contribution, about Rs 45,005 crore is for the transmission lines, Business Standard reports. That is 33% of their cost, the same share as in phase two. The release says the money will reduce the charges discoms pay, but not how it will be paid or to whom. MNRE's scheme guidelines, still to be issued, might settle that. The builder's fee, meanwhile, will be fixed through the auction.

Paying towards the running charge is a change from the past. In the first two phases, the Ministry of New and Renewable Energy (MNRE) paid part of the construction cost up front: 40% as a grant in phase one, approved in 2015 at Rs 10,142 crore, and 33% in phase two, worth Rs 12,031 crore.

State utilities borrowed the rest from state-owned lenders. These included the Indian Renewable Energy Development Agency (IREDA), which lends to clean-energy projects, and REC and Power Finance Corporation (PFC), the two biggest financiers of India's power sector.

The model is harder to apply when private companies own these assets.

Bidders compete on the fee they will charge, and that fee is meant to repay the whole cost of building the line. A grant would either pay private companies to build assets they then own, or arrive as a windfall on top of a fee already set to cover the cost.

The Central Electricity Authority (CEA), the power ministry's technical adviser, noted in a May 2025 review that phase three would need a different way of paying.

The new scheme is also far larger. Its transmission budget is about six times the combined cost of the first two phases, which were designed to connect about 44 GW of renewable capacity. PM-DHARA is meant to carry 135 GW.

Per GW of renewable capacity, the new lines cost about Rs 1,010 crore, against Rs 423 crore in phase one and Rs 602 crore in phase two. The Centre's share works out to about Rs 333 crore per GW, against Rs 169 crore and Rs 199 crore earlier. The comparison is rough, since the earlier figures are in rupees of several years ago, but connecting each GW now costs far more.

The Weakest Link

That bigger bill falls on companies that already struggle to pay the bills they have.

At the end of FY25, discoms had piled up about Rs 6.47 lakh crore of losses and owed about Rs 7.26 lakh crore, according to Power Line figures.

The states expected to lead the auctions are among the most stretched. On its July earnings call, Adani Energy Solutions (AESL), the Adani group's transmission and distribution company, said it expects Rs 20,000-25,000 crore a year of state projects to come up for bidding, led by Maharashtra, Rajasthan and Uttar Pradesh.

Rajasthan's discoms ended FY25 with about Rs 92,463 crore of accumulated losses and Uttar Pradesh's with about Rs 1,00,858 crore. Maharashtra's owed about Rs 90,659 crore, among the largest debts in the country.

Maharashtra shows both the problem and one possible answer. It auctions more of its new lines than any other state, but its discom, MSEDCL, ranked 49th of 54 in the power ministry's latest rating, weighed down by more than Rs 75,000 crore of unpaid farm power bills.

In April, the state cabinet approved a fix. Farm supply will move into a separate company, the state will take on about Rs 32,679 crore of the discom's debt through guaranteed bonds, and what remains will be listed on the stock market.

Fixes like that matter because, for a developer, a 35-year fee is only as good as the discom paying it. A buyer that pays late raises the cost of borrowing for every line, lenders build that into the bids, and the extra cost returns to consumers through tariffs. On a rough calculation, if worry about late payment adds one percentage point to the cost of financing these lines, the yearly charge on Rs 1,36,378 crore of transmission rises by about Rs 1,250 crore, or roughly 9%.

If a discom does not pay at all, the line's owner takes the first hit. Late-payment rules brought in during 2022 now push discoms to pay power and transmission companies on time, and old unpaid bills fell from about Rs 1.39 lakh crore to Rs 3,330 crore by March 2026. But clearing old bills has not removed the losses behind them, so the risk has not gone away.

The Centre's support makes the discoms' bill smaller. It does not make them better payers.

Fix The Payer, Not Just The Pipe

PM-DHARA improves on the earlier phases in one important aspect. By paying recurring transmission charges rather than construction costs, it lets the Centre bring back private ownership without distorting auctions.

But it treats the grid as a building problem when it is also a payment problem. The Centre controls the Rs 54,082 crore, and MNRE's detailed guidelines, still to be written, will decide how that money is paid, to whom and for how long.

Those guidelines could pay the support only on auctioned projects, which keeps the risk of overruns with builders rather than consumers. They could also pay it directly to line owners, and only for states whose discoms are up to date on their transmission bills.

This matters to anyone who pays an electricity bill. In May, I wrote that every link in India's power chain has learnt to pass its costs down to the consumer. PM-DHARA adds another link, because the fees for the new lines will flow through the discoms into consumer tariffs for 35 years.

If those discoms cannot pay on time, the lines cost more to build and finance, and households end up paying for the wires and for the delays.

And if the lines arrive late, clean power that cannot reach the grid goes to waste, and the demand it would have met is supplied mostly by coal-fired plants. Lines built on time by builders who carry their own risk, and paid for by buyers who can pay, are the cheapest way to avoid that.

Two Rescues Later

None of this is new ground for the Centre. It has tried to rescue the discoms twice in a decade, and both attempts came with conditions attached.

Under UDAY, in 2015, states took over most of their discoms' debt in return for promises to cut losses. A 2024 audit of Rajasthan by the Comptroller and Auditor General (CAG), the government's auditor, found that the turnaround there never happened. Discom debt fell from about Rs 80,530 crore in 2015 to Rs 48,260 crore in 2020, then rose again as the companies borrowed afresh.

The Revamped Distribution Sector Scheme of 2021, worth about Rs 3.04 lakh crore, went further and released money only to discoms that met set conditions. Things have improved since. Discoms made their first combined profit, of about Rs 2,701 crore, in FY25, as my May column noted. But one good year does little against Rs 6.47 lakh crore of past losses.

So, tying PM-DHARA's money to discom health will not fix the payer on its own. What it can do is stop central money from making the problem bigger by making sure each new line is openly bid and paid for by a discom that is at least keeping up with its current bills. After two rescues, that is a modest aim, and one the Centre can still write into the rules before the first state bids.