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Press Release | December 2013

Promoting Hydro Power

Promoting Hydro Power: A Counter Strategy Against Rising Fossil Fuel Prices organise by IPPAI
Date: 12-13 December 2013
Venue: The Taj Mahal Hotel, 1 Mansingh Road, New Delhi

The Independent Power Producers Association of India (IPPAI) had organised a two day workshop on "Promoting Hydro Power: A Counter Strategy against rising Fossil Fuel Prices" on 12-13 December 2013 at the Taj Mahal Hotel, 1 Mansingh Road, New Delhi. The conference had received participations from esteemed regulators, policymakers, hydro project developers, investors, transmission & distribution utilities and power consumers, and discussed the way ahead.

Speaking at the occasion, Shri Harish Rawat, Hon'ble Minister of Water Resources, Government of India delivered the inaugural address. He said that setting up of multipurpose dams in the Brahmaputra would help reduce floods and provide for many benefits. Wherever appropriate sites are there, we should set up big hydro.

Major problems are faced wrt environment, security, land acquisition. Our government has set up a high powered committee. The committee will monitor the progress every month. I have instructed CWC to bring down the clearance time to 1/3rd of the existing time. We would like private developers to engage the best consultants so that the appropriate level of DPR can be prepared and few changes are required otherwise this process of clearance takes inordinately long.

Prime Minister took up the issue of sharing of waters. China agreed to share only hydro information. We have made a beginning; we would like to take it ahead. In Brahmaputra, nearly 85% of the water emanates from India. We are able to tap only 5% of it. We are also working on inter basin water transfer in India".

Shri BP Pandey, Additional Chief Secretary (Power), Government of Uttarakhand said I'd like to dispel all myths and speculation regarding hydro power dams and the floods in Uttarakhand. Hydro power projects have the most comprehensively done clearances.

Before the SC judgement came, we already had the HC judgement that required all clearances to be taken. Even for building a school we have to come to MoEF for clearance. We spend a lot of money on various forms of environment and other mitigation. People in Uttarakhand are supportive of hydro projects as they have a stake in it. SC judgement says that an expert panel has to be formed to review the projects. Unfortunately, the members on the board are environmentalists and we don't have any representation on it.

We should not raise issues in an ill informed way. We should not hold up development.

Shri Feng Yanan, India Representative, Sino Hydro Group said that as a Chinese company they could not work on hydro projects close to the border. He said they had constructed 40% of the work in the 3 gorges dam. He said that they were also involved in diverting the waters of the Brahmaputra more inland into China. Yanan said that the Chinese Banks could extend cheap loans for hydro projects in India. He invited Indian companies to work with them in joint ventures in India.

Shri Devendra Chaudhry, Additional Secretary, Ministry of Power, Govt. of India said, "Everybody wants to profit from or to use power but no one wants the power projectá to be built in their own backyard. He said that there is a secret behind the success of Jammu and Kashmir in the recent spate of hydro power projects planned and those being implemented: The Forest Conservation Act of India doesn't apply there. Therefore hydro power development gets expedited.

Referring to the irony of people holding up hydro power in the name of climate change, he said that 1000 gms of CO2 are generated per unit coal, 30 gms are generated for storage water dams and only 5 gms for Run of the River projects.

In Madurai, he said, no one would protest against the Madurai dam, nor in Punjab will anyone protest against Bhakra Dam, in both these projects people identify with the dam. The key to resolving the subansiri prject therefore is establishing local stakeholder relationships. With reference to compulsory afforestation, he said that money in hundreds of crores has been collected but no disbursements have been done. The problem is there is no land available to plant trees in. eg Arunachal is a state under nearly 98% forest cover, no land is left.

He said that the Hon'ble Power Minister of India Shri Jyotiraditya Scindia has accorded top priority to facilitate development of 41 GW in Arunachal at the earliest. The ministry of power was in discussions with the ministry of defence, the ministry of home affairs (47 projects were cleared by MHA, just the day before).

He said that when construction costs increased from Rs 15 to Rs 1500 no project developer objected. But they object when land compensation increases 4 times.

Further, he said that we need a new business model to ensure electricity from power projects reaches local people. Finally "Let's take this debate to the states!" , he said.

Shri Harry Dhaul, Director General, IPPAI spoke about the importance of Hydro power in India's energy portfolio. He stressed on why the hydro power would be the obvious choice in the Indian power sector,"

Climate friendly, firm power with almost zero variable cost

Advantages of hydro power over fossil fuelled power:

  1. Independent of volatile fossil fuel prices - imported and domestic
  2. Hydro power tariff becomes significantly lesser than coal based tariff over time
  3. Hydel plants have a much longer life as compared to coal fired plants
  4. There is no strain on transport infrastructure for regular movement of fuel (such as coal rakes which go fully loaded and return empty) Effective solution to meet peaking power shortages
  5. Saves outgo of precious foreign exchange
  6. Climate friendly power generation

He also Addressed on the Discoms' concernsá and made suggestions for deliberation," Removal of Uncertainties:

  1. Set up a holistic policy framework covering all statutory and technical clearances:
  2. Environment, Forest, Wildlife, Water etc involving MoP, MoEF, CEA, CWC and State Government Authorities
  3. Frame an environment policy which provides transparency and certainty. Ensure disbursement and utilisation of CAMPA.
  4. Expedite issues in land acquisition of forested land. Work out central/state guaranteed package for rehabilitation and resettlement. Deploy adequate manpower for the safety and security of energy assets and personnel. Further, there may be Government back stop guarantees to safe guard projects from delays arising due to law and order issues Providing options for utilities to purchase hydropower through the negotiated contract route under Section 62 of Electricity Act 2003."

Implementation of Hydro Purchase Obligations (HPOs)

  1. An HPO is an obligation to procure a target proportion of a state's total long term tied up capacity from large hydro projects (ie projects of capacity greater than 25 MW)
  2. Capacity based: To be based on MW on a long term basis
  3. Applicability: Can be fulfilled from both existing and new capacity
  4. HPO Target: State based HPO based on state's load profile (peak:base)
  5. For may formulate model regulation for implementation and enforcement which may then be adopted by SERCs
  6. HPOs to ensure
  7. Adequate Off-take of hydropower by all Discoms, not just a select few
  8. Greater bankability and de-risking of hydro power projects Provide financial support in the form of soft loans, viability gap funding, central subsidy for development of roads, rail, river ports, transmission lines to cover high initial tariffs from partial loading of infrastructure
  1. Basin-wise development of hydropower to ensure optimum utilisation of infrastructure assets
  2. Priority in scheduling/transmission for hydropower
  3. Finalise and implement the draft peaking power policy

Shri Ajoy Mehta, MD, MSEDCL said that he was against the concept of Hydro Purchase Obligations as a leading buyer-utility in the country. He asserted that no power should be purchased without the tendering route, unless private power producers agreed to accept CAG scrutiny of their accounts. He said that he was willing to consider an alternative model for hydro power so long as hydropower producers formulated an efficiency band within which they sold power. Not all the risk of geological surprises would be passed on the buying utility, he added.

  1. Mr. RD Singh, Director, National Institute of Hydrology (NIH), Roorkee spoke about the Uttarakhand tragedy. He said that some people are of the opinion that the Kedarnath disaster was caused due to construction of hydropower projects in Upper Ganga basin. However, the project nearest to Kedarnath is about 10 km downstream and is under construction. Obviously hydropower projects have no direct role in the catastrophic event at Kedar Nath.
  2. Tehri reservoir recorded the rise of 25 meters within 48 hours of rainfall on 16-17 June.
  3. Due to heavy rainfall in Uttarakhand the water inflow in Tehri dam from Bhagirathi and its tributaries reached about 7,000 cumecs, of which a mere 500 cumecs was released from Tehri Dam Reservoir and remaining 6,500 cumecs of water stored in the reservoir.
  4. On June 16, Alaknanada and Bhagirathi had a combined flow of around 13,000 cumecs at Haridwar out of which only 500 cumecs of Bhagirathi water was released from Tehri Dam Reservoir.

In case the whole of the water inflow of Bhagirathi would have been released from the Tehri Reservoir it could have caused an additional rise in the water level. (Presentation extract attached)

Mr Singh also spoke on giving the importance of knowing the conditions of glaciers. He said "Research is being conducted by NIH to find methodology which will incorporate the climate change impact on hydro power projects".

Mr. Jayant Kawale, Former Jt. Secretary, Ministry of Power and Managing Director, Hydro & Renewables, Jindal Power talked about the lack of timely Environment clearances which were holding up hydro power development in the country.

He said that Policy of Ministry of Environment & Forests (MoEF) regarding Environmental Flows was quite arbitrary.

  1. Stipulations of Environmental Flow releases being adopted by MoEF are arbitrary not based on any scientific study.
  2. The policy for this, in the past few years has not been consistent. In the earlier stages the stipulation was restricted to 10% of the average lean flow. This was enhanced to 15% and subsequently to 20%.

More Environmental Flow (E - Flow, ie release of water from the dam) means less power generation. Now if more E-flow is fixed by MoEF than what was considered earlier, in many cases the hydro power projects become unviable.

The Hydro Project Developer is also a stakeholder. There is a Need to balance environment and development in a sustainable way, Kawale said. Waste of time of hydro project development is a waste to the national economy, Kawale added

Shri Kashindra Yadav, Chairman, Brahmaputra Board said, " Good master plan is necessary to build hydro dam

Development of project should not be thrust on beneficiary against their willingness" Mr Yadav said

"There is a Long gap between the preparation of DPR and actual start of work, and no change in the formulation of DRP" Mr. Yadav, Chairman, Brahmaputra Board added at the event here on Promoting Hydro Power organised by IPPAI

Speaking at the conference, Mr BG Verghese, Journalist and Columnist said ," Water is life and life is politics" Produce electricity, creates new jobs & opportunities

Mr Verghese said that without support from Bangladesh, we cannot develop Ganga, Regional cooperation is an important thing, he stressed. "We declare most of the ares as eco-sensitive areas. We cannot adopt "TOUCH ME NOT" policy" BG Verghese at IPPAI conference on Promoting Hydro Power áLet the basin countries come together to do study of Brahmaputra valley" BG Verghese added.

Shri Arunabha Ghosh, CEO, Council on Energy, Environment & Water said, "All major sectors need to grow simultaneously", Arunabha Ghosh

"On an average, 57.5 % targets were achieved since 4th five year plan" Mr Ghosh said

  1. Private sector expected to play an important role in new hydroelectric projects in the "hydropower states"
  2. Hydro Policy 2008, Mid-term Appraisal of 11th Five Year Plan identified environmental clearances, land acquisition and resettlement-rehabilitation as causes behind delay

It is important that "rapid" hydropower development does not come at the cost of socially and environmentally "responsible" hydropower development. Lack of Environmental clearances continues to remain key factor in restricting hydro power development.

"Actual monitoring is steadily going down, Limited or no efforts to gain public acceptance through public involvement and transparency"

Mr. Harry Dhaul, Director General, IPPAI summed up and said we want to protect the environment and at the same time we also want affordable cost of power.

The way ahead is to create (1) a National Environmental Policy and (2) re-make the National Hydro Policy to ensure development of hydro power to provide affordable power to consumers in the country.

About IPPAI:

IPPAI (Independent Power Producers Association of India) is a not-for-profit association that was setup initially with the idea of providing a neutral forum to facilitate private sector investments in the Indian Power Sector through the IPP model. The forum enabled discussion and debate on various issues faced by the private investors as the power industry moved from command to market economy. It presently functions as an independent body that provides a neutral platform for the discussion and examination of issues critical to the sustainable development of the power sector in India. For more information please visit (www.ippai.org)

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