Energy Ministers discuss hydro power revival at the bi-annual state power ministers’ conference

Recently at a Pan-India biannual energy ministers meet in Simla, the water scarcity of Simla and woes of power sector were discussed. The host state Simla suggested immediate and long-term reforms in the hydro power sector. Himachal Pradesh’s Chief Minister Jai Ram Thakur requested the government to give hydropower similar status as solar power.

“For years, the people of Himachal have given their land and labor for the growth of hydro power in the state. They have not been duly compensated till yet even after giving up their river catchment areas and natural resources. The pain of displacement from their ancestral land still exists. We urge the Central agencies to expedite the compensation,” – Jai Ram Thakur, Chief Minister of Himachal Pradesh.

He further suggested that “hydro sector needs ‘Hydro Purchase Obligation” for assured take-off of power, medium term sale of hydro power, giving renewable status to hydro is the need of the hour and we urge the Centre to look into these demand.”

In other developments, the draft amendments in the National Tariff Policy 2018 also has a clause suggesting exclusion of Hydro Power and “waste heat gases as a byproduct of industrial process” from RPO calculation. The draft NTP proposes to change the basis of calculation of RPO. It states that consumption from hydropower and from “waste heat gases as a byproduct of industrial process” shall be deducted to calculate RPO.

Further the Union Minister RK Singh suggested of a new hydro policy in the pipeline and said that “All advanced countries are exhausting their hydro capacity. In the past few years, hydro projects have been stalled because of that (protests) and geological challenges. The hydro power (delay in commissioning of projects) then becomes costly.”

The new policy is supposed to have points like:

  • To bring down the capital cost of hydro power projects
  • To discontinue mandatory sale of free power for 10-12 years so that the developers can recover the cost
  • To provide soft loans no longer than 30 years

All these points are in turn supposed to reduce the cost of hydropower projects.

Shimla hosted close to 18 state power ministers, 29 senior officials from 26 states at the conference. Currently, Shimla is facing a major water scarcity and the tourism is also affected due to this. Hydropower and tourism are two major revenue generation activities in the state.

Govt mulling to introduce hydro tradable certificates

As per an article in Economic Times (refer), government is using an accelerated approach towards promotion of India’s hydro power assets. A recent progress on this pertains to introduction of tradable hydro certificates (on the lines of RECs). Demand for these tradable hydro certificates will be generated from a separate hydro power purchase obligation, a concept note on which has already been circulated among various stakeholders. A relevant amendment to Electricity Act,on the issue, is also likely to be tabled.

In India, hydro power has huge installed capacity in northern and north-eastern states. This unequal distribution can be fixed by making states procure a certain fixed quantum of hydro power.

India has 144320 MW of potential out of which only 40,000 MW has been commissioned.

Other relevant news on hydro power can be read here.

Financial assistance for small hydro power projects

According to a recent  release (Release no.101304) in press information bureau of India, the Hon’ble minister for new and renewable energy has produced in a written note to Lok Sabha, that financial assistance will be provided to states from GoI to develop more small hydro power projects. MNRE is providing central financial assistance (CFA) to small hydro power projects in both private and public sectors. Through the assistance MNRE also expects states to identify more potential sites.

Vital information pertaining to previous funds was also provided.

MNRE quotes that the total funds released under SHP Programme during 2010-11, 2011-12 and 2012-13 were Rs. 151.99 crores, Rs.154.45 crores and Rs.158.92 crores respectively. 6474 potential SHP sites with an aggregate capacity of 19,749 MW have been identified in the country. So far, 985 small hydro power projects with an aggregate capacity of 3754 MW have been setup and 265 projects aggregating to 945 MW are under implementation in various States.

For other similar updates on small hydro power – click here

“Hydro Purchase Obligation” may be a reality

The power minister in a statement has given signs that hydro purchase obligation may be a reality as the minister said that the provision is being considered. The idea broke out first when the hydro sub-group had recommended the Power Ministry to declare hydro power (even that with capacity above 25 MW) as renewable, which the ministry had initially refuted. For previous blogpost on similar issue click here.

As per the latest article covered by the media (Business Standard), the ministry is considering of bringing in the concept of Hydro Power Obligation (HPO) aimed at providing a boost to hydro power generation segment.

Hydro Power – not renewable yet

Owing to sluggish capacity addition of hydro power projects in the country, the hydro sub group recently had recommended power ministry to declare all hydro power projects as renewable, which the later refuted.

Currently only those projects, having an installed capacity of less than 25 MW, are considered as renewable. As per the re-assessment studies carried out by central electricity authority (CEA), country’s hydro power potential is estimated at 148701 MW out of which only 34664 MW has been developed so far. Forty five (45) hydro projects having installed capacity of 10897 MW (25 MW & above) have been targeted for hydro power capacity addition during the 12thPlan, out of which 534 MW has already been commissioned till date. This slow growth of hydro power is attributed to the fact that hydro power projects have high capital costs, longer gestation periods and higher risk in implementation. Along with this inflated excise duties on steel, cement and service tax on construction services further adds to project developer’s woes.

A favourable consideration to the hydro sub group’s recommendation by the power ministry would have exacerbated the present situation of the REC market. Obligated entities would then have easily met their obligations by simply purchasing hydro power and eventually shying away from purchasing RECs from the market. This would have reduced demand of RECs further. The power ministry also refuted the rationale behind the demand for making it mandatory to buy certain percentage from hydro as RPO owing to weak implementation of RPO/REC framework.

For relevant media articles, visit the following links –

Go to top