Electrical Monitor

Hydropower in India: Unlocking the logjam

EM news bureauThursday, March 03, 2016, 15:51 Hrs  [IST]

India is blessed with a large number of river basins that crisscross the country from mighty Himalayas to Southern Peninsula. The abundant availability of free flowing water makes India an ideal choice for hydroelectric projects. With exploitable hydropower potential pegged at nearly 1,50,000 mw, India is currently ranked fifth across the world in terms of usable potential.  Assuming a 60 per cent plant load factor, that gives power generation of 90,000 mw.

Some of the basins that hold sizeable potential include Brahmaputra Basin (66,000 mw), Indus Basin (33,000 mw) and Ganga Basin (21,000 mw). Hydroelectric power generation is also environment friendly since it non-polluting and essentially involves converting kinetic energy of flowing or falling water into electric energy. While electricity is evacuated and transmitted to consumers, the water flows back into the river.

Sustainable resource: Given that India is actively working on a strategy to cut down emission of harmful gases, the policy framework must focus on green capacity additions via hydropower development. Hydro power’s role in addressing energy security with minimal discharge in environment is based on three elements of sustainability, availability and affordability. Hydro power plants, for instance, provide clean power with no greenhouse gas emission while construction of dams contributes to flood control. Hydro power plants have a long economic life of over 40 years. Importantly, hydropower plants allow for quick increase or cut down in power production, thereby giving these units the flexibility to address demand fluctuation. This aspect of quick start/stop of hydropower is also important in managing grid operations when contribution of electricity from non-conventional renewable sources like solar or wind becomes significant.

Impediments: With such inherent advantages and huge potential, hydroelectric power generation in India needs to be reinvigorated in a meaningful manner. According to the latest data on power generation, the installed capacity of hydropower is around 46,000 mw including small hydro projects.  This is less than 17 per cent of India’s total installed capacity of 2,76,000 mw. However, this is just 31 per cent of the exploitable hydro-power potential of 1,50,000 mw.  As far as the region wise split is concerned, most of the potential has been harnessed in southern and western regions while over 90 per cent of the total potential in the north eastern region is yet to be tapped, primarily in parts of the Brahmaputra river basin.

The bountiful resources notwithstanding, a number of issues including environmental concerns, absence of strong policy initiatives, delays in clearances and approvals, problems in land acquisition have pulled down share of hydropower in India’s overall energy matrix. Given that India is thickly populated, large hydroelectricity projects along with construction of mega dams has led to displacement of population in the past. That has only aided the sentiment against hydroelectricity projects.

Further, development of hydropower projects has largely remained under the ambit of state governments because water as well as land are state-specific subjects.  This has resulted in the absence of coordinated policy with each state coming up with its own set of rules and regulations. The issue is compounded in the case of inter-state water disputes that adversely impacts development of integrated river basin for hydropower projects.

Removing the bottlenecks: Given the vast potential that hydropower holds in the country, it is imperative that bottlenecks be removed and the negative public perception around such projects addressed with transparent and well-laid down policies, leaving no scope for ambiguity or interpretation. Land acquisition and displacement of project area people remain the biggest challenges and a model for fair and quick compensation needs to be put in place to ensure that there is no public outcry. In the past, some of the big dam projects have seen massive delays and resultant cost overruns because of local public perception protests. There is also need for a comprehensive forest policy so that environment clearances are not delayed. There are other challenges as well that need to be addressed so that hydropower can emerge as an attractive investment proposition for power generation companies. At times, hydropower projects are located in remote areas and such projects need an elaborate transmission network for evacuation of power. Another area of concern for potential developers is that of financing. Hydropower projects are capital intensive and given the uncertainties around such projects, the cost of capital is typically higher. While costs of running a hydropower project are much lower than a thermal plant, most projects take anywhere between 6-8 years to complete. They also require higher costs in the initial phase due to environmental and social impact, and complexities in engineering and construction of the structure. Given the longer time cycle to execute a hydropower unit, such projects need long term debt of 20-25 years but the scope to raise long tenure debt is currently limited in the Indian market. Further, the current mechanism does not allow effective harnessing of true potential of hydropower potential in India. A differential tariff regime whereby consumers pay higher tariff for peak hour usage is likely to attract more investors and help development of more hydroelectric power projects in India. Given that hydropower is clean and works out to be cheaper in the long run due to limited operating costs and longer life cycle, both central and state governments with hydro resources should work in tandem to address the concerns of both the public and investors. Well-defined norms, set processes with no scope for deviation and efficient coordination between various government agencies will help in removing uncertainties, usher in a fair degree of predictability and stability for developers, and allow setting up of hydro projects in a time bound manner. Nature has endowed India with ample water resources and their effective and efficient utilisation can bring power to millions of homes.