POWERGRID is working towards achieving its mission of " Establishment and Operation of Regional and National Power Grids to facilitate transfer of power within and across the regions with reliability, security and economy, on sound commercial principles ".

The exploitable energy resources in our country are unevenly distributed, like Coal resources are abundant in Bihar/Jharkhand, Orissa, West Bengal and Hydro Resources are mainly concentrated in Northern and North-Eastern Regions. As a result, some regions do not have adequate natural resources for setting power plants to meet their future requirements whereas others have abundant natural resources. Demand for power continues to grow unabated. This calls for optimal utilization of generating resources for sustainable development. Thus, formation of National Power Grid is an effective tool to achieve this as various countries have adopted the model of interconnecting power grid not only at national level but also at international level.

Further, acquiring Right of Way (ROW) for constructing transmission lines is getting increasingly difficult, especially in eco-sensitive areas like North-Eastern Region, Chicken neck area, hilly areas in Jammu & Kashmir and Himachal Pradesh. At the same time, these areas are also endowed with major hydro potential of the country. This necessitates creation of “Transmission Super Highways”, so that in future, constraints in ROW do not cause bottleneck in harnessing generating resources. Inter-connection of these highways from different part of the country would ultimately lead to formation of a high capacity " National Power Grid ".

Thus, developments in power sector emphasize the need for accelerated implementation of National Power Grid on priority to enable scheduled/unscheduled exchange of power as well as for providing open access to encourage competition in power market. Formation of such a National Power Grid has been envisaged in a phased manner.

Presently, as on June 30, 2011, National Grid with inter-regional power transfer capacity of about 23,800 MW has already been established and this capacity is planned to be enhanced to about 28,000 MW by 2012.