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Renew | May 2016

Hydropower | Too slow to be steady

Amidst a rejuvenated interest in harnessing clean energy, hydropower, ironically one of the oldest renewable sources known to man, is seeing deceleration in growth.
Recent times have seen a welcome focus on harnessing renewable energy sources for power generation, worldwide. India too, has taken the challenge of curbing its carbon emissions head on, setting a humongous target of generating 175 GW through renewable sources by 2022. However, there can be several hurdles on the way, despite constant and well-meaning efforts. The challenge here is to create an optimal mix of energy from various renewable sources, instead of pinning all hopes on one or two, so as to ensure sustainability.

Unfortunately, the recent trend in India shows that there is a considerable thrust behind solar and wind energy, while hydro, one of the oldest and most versatile renewable source known to man, has been relegated to the back benches. What was once a major source of power generation in the country is now seeing a steep deceleration in growth. As of March 31, 2016, India´s installed hydroelectric capacity is 42,783 MW, a mere 14.35 per cent of the country´s energy mix. To think that hydropower used to command around 44 per cent of the energy mix in the 1970s is baffling, to say the least.

What´s even more perplexing is the fact that India ranks fifth in the world, in terms of usable hydropower potential! With a total potential of about 148 GW, hydropower is crucial to addressing India´s energy or peak shortages and limiting the carbon intensity of the power sector. Hydro plants are highly responsive when it comes to demand fluctuations, which makes them the ideal source to cope with demand peaks and stabilise system frequency. They can also provide the balancing capacity required for large-scale grid integration of various renewable energy sources, including solar and wind, which otherwise exhibit a high degree of generation variability. The scope is huge, only it is not being aptly tapped. Yes, the sector has seen some renewed interest; however, the progress has been lethargic.

The reasons for this slow progress are manifold. Large hydroelectric (hydel) projects invite widespread criticism due to their social and environmental impacts - dam and reservoir construction requires resettlement of a large number of people, while also affecting the underwater ecosystem. Environmental concerns are even more severe in case of storage-based hydropower projects, which involve large-scale submergence. Even small hydropower project (SHP) development - which is relatively inexpensive and has little social and ecological impacts - is fraught with challenges like non-availability of clear-cut policies and single-window clearance frameworks for developers.

Kenji Urai, Managing Director, Toshiba India Pvt Ltd says, ´In India, most of the Hydro projects are awaiting clearances and facing land acquisition problems. Arranging finance is also a main concern. Both Public Sector and Private Sector players are finding it difficult to manage regional issues.´

Besides, there is little coordination among central and state governments and other stakeholders, which only makes the entire process more chaotic. Industry experts are of the view that India´s hydropower exploitation has slowed down principally due to a large mismatch in the appreciation of benefits and risks of hydro development by key stakeholders. As Dr RP Saini, Head, Alternate Hydro Energy Centre, IIT Roorkee rightly points out, ´Non-availability of standardised processes and efficient inter-agency governmental coordination has increased unpredictability to create a better climate for potential investors and efficient information sharing between partners.´

Private players typically underestimated the technical and managerial challenges involved in developing hydropower projects. Consequently, many projects have run into time and cost overruns, with questions even being raised about the viability of some projects. In addition, the concessions that the state governments have lent are not adequate for hydropower exploitation in difficult-to-access areas; while projects have been allocated, the state governments have failed to provide supporting logistics and evacuation infrastructure in such sites.

Apart from the fact that hydropower is highly eco-friendly and does not emit any greenhouse gases, there are several other merits that make it an attractive energy source. For instance, hydropower does not require any fuel like most other sources of energy. Operating labour cost is also usually low, as plants are automated and have few personnel on site during normal operation.

In addition, hydro plants have a long lifespan of between 50 and 100 years, making them extremely profitable.

While Solar and Wind energy resources are rigid in terms of capacities, hydro electricity can be produced in almost any size from few Watts to 10,000 MW. In addition, hydropower plants have little unpredictability looming over them, in contrast with Solar and Wind sources, which are highly dependent on climatic changes. The load factor for Solar and Wind energy ranges from 15-40 per cent, which is quite low compared to fossil fuel energy, whereas hydropower plants have a load factor of 40-60 per cent.

Government Initiatives
Given the obvious advantages of hydropower over other sources, renewable or otherwise, it would be wrong to say that the Government hasn´t done much to boost the sector. In the 12th Five-Year Plan, the government set a target of 10,897-MW hydropower capacity addition. However, only 34 per cent of the total planned capacity has been tapped till now.

Over the years, the government has taken several initiatives to bring hydropower development to the fore, namely the New Hydro Policy 2008, which facilitates transparent bidding, extension of cost plus tariff regime, earmarking one per cent free power from every hydropower project for local area development, etc. Moreover, 100 per cent Foreign Direct Investment (FDI) is permitted in the hydro sector, under the automatic route for generation, transmission, distribution and trading. The hydropower sector has been open to private participation for over two decades, since 1992, to be precise!

Yet, hydro projects haven´t been able to gather the desired momentum, with as many as 21 projects facing time and cost overruns, for the various reasons cited earlier. Besides, water in India is a state specific subject and policies vary from state to state, which brings in further complications. Several projects with common river systems have been stalled due to disputes on water-sharing. The Sutlej-Beas water sharing dispute between Punjab and Haryana and the Mullaperiyar dam conflict between Kerala and Tamil Nadu are two such typical cases.

Private Participation
The impediments and risks associated with hydropower generation in India have led to lukewarm response from private players, with the private sector contributing to only 11.5 per cent of the total capacity addition between 1991 and 2012. Some of the challenges faced by the private players are long gestation period due to environmental issues, resettlement and rehabilitation (R&R) problems, capital-intensive nature of large hydel projects, gap between investigations and field realities, etc.

India´s public sector does not have the required monetary and managerial capabilities to single-handedly exploit the 148 GW hydro potential and hence, private participation is crucial. It can be boosted by framing investor-friendly policies that can mitigate major issues like capital-intensity and R&R problems. For instance, the government can directly look into R&R and update developers of the exact requirements before bidding for the project. Policies that can substantially reduce capital expenses will also be welcome. Urai says, ´Earlier there was ´Mega Power´ Policy where you could have benefits of duty exemption for large sized hydro power plant. Such policy should be retained till appropriate technology for a certain base level capacity of hydropower projects is available in India under ´Make in India´ concept.´ Introducing a Hydro Power Purchase Obligation, akin to Solar Purchase Obligation, can also do wonders for the sector.

Other recommendations include streamlining of all clearances and acquisition procedures, adequate transmission infrastructure for evacuation of power generated from the projects, appropriate policy and regulatory mechanisms for ensuring project attractiveness, proper benefit sharing mechanism with project affected people (PAPs) and adequate incentives to improve the projects´ bankability.

Technical Front
Technology plays a crucial role in hydropower development, not only in increasing the generation capacity and operational efficiency, but also in improving the environmental compatibility of the plant. Yogesh Daruka, Director, Energy, Utilities & Mining, PricewaterhouseCoopers says, ´Some of the key technological developments in hydropower sector are around increasing the efficiency of turbines, adding hydropower capabilities at low-head sites and enhancing the capacity factors.´

According to Dr Saini, there are three different areas where technological advancement is required, viz civil works, hydro mechanical equipment, and electrical equipment, transmission and distribution.

Civil works involve high-risk activities such as tunnelling and blasting and this is where the scope for technological advancement arises - in minimising the risks. As to hydro mechanical equipment, Dr Saini says that there is hardly any scope for improvement since turbines already have a conversion efficiency of around 95 per cent. ´However, there is scope to develop fish friendly turbines for large hydro,´ he says. In SHPs, ultra-low head and hydrokinetic turbines suitable for river and canal streams should be developed as Indian rivers and canals hold a lot of untapped potential. Regarding electrical equipment, the scope lies in developing cost-effective and efficient generators like permanent magnet generators (PMG) and variable speed generators. There is a rather dire need to develop efficient power evacuation in order to facilitate seamless generation.

Road ahead
Agreed that the hydropower industry is fraught with several roadblocks and hurdles, but these can be mitigated with suitable empathetic measures such as streamlining clearance processes and land acquisition modalities, favourable tax treatments, sound inter-state agreements for water sharing to avoid disputes, developing enabling infrastructure, transparent methods of allocation of hydro sites to developers etc. In addition, government should create clear cut policy framework along with the State governments for the development of already identified projects. Daruka emphasises on the need to focus on integrated river basin development. ´Hydropower development in India has generally been oriented toward individual projects. This approach has limitations for sustainable development of an entire river basin,´ he says. He further states the importance of bringing PAPs to the forefront of development. ´The overarching principle for socially and environmentally responsible hydropower development needs to be that the project affected population be the first beneficiary of the project. A well enunciated benefit-sharing framework by the government to share monetary and non-monetary returns with stakeholders is required,´ he says.

Dr Saini feels that increasing SHP capacity can go a long way, while also adding that setting up hydro projects should be declared as a priority under the National Mission envisaged by the Government of India.

Considering the largely untapped hydropower potential of India, it is only sensible that the motley issues be dealt with, promptly and effectively to unlock its benefits. Given its obvious advantages over other energy sources, there is no doubt that harnessing hydropower will spell wonders for India´s pitiable power scenario at the customer-end. However, to stride in the right direction, the emphasis has to be redirected towards the sector with firm, effective and timely measures.

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