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Renew | November 2016

The SHP value chain benefits local economies

Mahesh Paranjpe | Chief - Hydro, Tata Power

Which technologies are feasible to the Indian scenario?
The most common technology used for hydro is run-of-the-river power plants that is used mostly for small hydro projects with capacity less than 25 MW. For large hydro the most common technology used is the pumped storage technology that uses reservoirs to store water, and generate power with the differential height. Small hydro projects (SHPs) work best in the Indian scenario as it does not have the associated issues.

A great share of the small hydro power value chain benefits local economies. It has the lowest generation prices of all off-grid technologies and cab be adapted to various geographical and infrastructural circumstances.

Kindly explain the technicalities involved for SHPs .
About 50 per cent of SHP potential lies in the Himalayan states of Arunachal Pradesh, Uttarakhand, Jammu and Kashmir and Himachal Pradesh and significant potential has been identified in the regions of Maharashtra, Chhattisgarh and Karnataka. SHPs can play a crucial role in improving the overall energy scenario of the country and in particular for remote and inaccessible areas. As they have proven to be economically workable and private companies are showing lot of interest in investing in these projects. The estimated potential for power generation in the country from small hydro plants is about 20,000 MW.

How does India compare in hydro power globally?
India ranks fifth in hydro power capacity in the world. But, this power source currently accounts for only 12 per cent of the total generation in the country as compared to thermal power´s contribution of over 70 per cent. India has pro-actively working towards boosting up the sector, by formulating a new policy to push the stalled hydro projects and extend the benefits for other sources like wind and solar beyond 25 MW capacity. This will help in reviving the sector and make India a prominent player in the international market as well.

Despite peaking in 1970s the segment nosedived. How can there be a turnaround?
For a turnaround, it is imperative that the power purchase planning in a country cannot be based on the current power tariffs alone and it is important that the future scenario also needs to be considered by discoms. In view of the same, all stakeholders need to consider an appropriate mix of hydro in portfolio of purchase of bulk power by a discom for better security. Also, at present, the government is stressing on enforcement of Renewable Purchase Obligation (RPO) with a view to encourage renewable sources that are restricted to SHPs of less than 25 MW. In view of the distinct advantages of a hydro plant and also that it has the merits over renewable source like wind and solar, it is necessary that in line with RPO, the concept of Hydro Purchase Obligation be implemented. The present policy of GoI allows for hydro power plant´s tariff to be determined by the Regulatory Commission under Section 62 of the Electricity Act. At the same time several investors had shown interest in setting up merchant hydro plants and have been awarded contract through competitive bidding basis. It is therefore necessary that power from these projects are sold on regulated basis i.e. the tariff should also be determined by the Regulatory Commission under Section 62 of the Electricity Act. Besides, infrastructure should be built in time and satisfactorily monitored by the state and central authorities for timely completion of the hydro projects.

How do you view the future of hydro power in India?
According to CEA - the power ministry´s planning wing - a total of 75 projects have been approved since 2002-03 with a total installed capacity of 39,562 MW across India. Of these, nearly 42 projects with a total installed capacity of 26,638 MW are yet to be taken up by the developers for construction even after getting an appraisal from the commission. These projects are held up due to difficulties in securing environment and forest clearance. Also, due to an increase in time and cost overruns, many private players have exited their projects and public sector companies are clinging on to the hope of securing approvals. However, it is heartening to note that the government is committed to remove roadblocks in the path of the wind and hydro power sectors to fuel growth after focusing on solar energy for the past two years. This will help in attracting more investments and will provide boost to the sector.

What are the specifics of Tata Power´s partnership with SN Power in India and Nepal?
Tata Power and SN Power entered into an MoU in 2008. In 2009, Tata Power and SN Power signed an exclusive partnership agreement to develop joint hydro projects in India and Nepal. We, along with our Norwegian partner SN Power, are scouting for hydroelectric projects in both the countries. We already have two hydro projects, including the 880 MW project, coming at Tamakoshi in Nepal and we continue to explore various opportunities to create shareholder value. In the year 2011, Tata Power and SN Power Norway bagged the ´Dugar Hydro Electric Project´ in Chenab Valley in Himachal Pradesh, India. This run of the river project will primarily feed the northern grid. It is the last project in cascade in Himachal Pradesh on the river Chandrabhaga (Chenab) and envisages a dam height of 93 meters with an underground cavern type powerhouse at its base. The partners aim to have a total of 4,000 MW by 2020. Tata Power and SN Power are pursuing potential project opportunities based on the vast reserves of renewable energy in the Himalayas. Each joint project will be developed through a SPV structure. For SPVs in Nepal, SN Power will hold 50 per cent of the total issued and paid up capital of the SPV + one equity share. For SPVs in India, Tata Power will hold 50 percent of the total issued and paid up capital of the SPV + one equity share. Both companies will have equal say in all matters across all SPVs.

What are the major challenges affecting hydro?
As India continues to expand its generation capacity across energy sources, there are several challenges to set up hydro projects in the country. Some that a private developer faces in setting up a hydroelectric plant are long gestation period of construction on account of various reasons, namely environmental issues, rehabilitation and resettlement (R&R) problems, gap between investigations and field realities, etc. We do have a number of successful stories on the hydroelectric projects but we also have large projects which have taken several years to get completed. Moreover, due to the capital intensive nature of hydro power projects there is a challenge finding a balance between bankability and affordability. It is advisable to engage in detail with stakeholder communities in advance of setting up a project towards successful R&R. It might also be advisable for the government to look into the R&R directly and inform the developers of what is required of them in advance of the bid for the project. This might help in reducing delays while ensure successful R&R.

What learnings from your JVs in Bhutan and Georgia can be adopted in India?
While the Indian market is a focus for business for Tata Power, it also dawned on us that due to fuel shortages, land-availability and delays in various clearances, the pace of opportunities in India may move to fruition slowly. Tata Power has four investment verticals which compete against each other for investment. The four verticals are India, South East Asia, Middle east, Turkey and Africa. Whichever vertical brings the proposal where the risks are mitigated and rewards are shown, gets the investment. Going by the past five years´ experience, Tata Power hasn´t taken any decision of investment in India. Other than renewables, all decisions have gone to the other three geographical verticals. For the simple reason that the opportunities there fructified and got converted. We found that the rewards were more and risks were mitigated. The only investment that has really gone well in India is renewables. The company, thus, started making investments into projects in select international geographies to strengthen and diversify its portfolio and for greater impetus for growth, and is setting up 2,600 MW of capacity abroad. The company has endeavoured to lead the reform process for sustainable power and is committed to safeguarding the environment for future generations. We are constantly scouting for newer clean and green energy projects which are in line with our core business value of sustainable growth, and will further enhance and increase our clean energy footprint.

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