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Renew | November 2016

Stumped Flow

Once at the forefront of power generation in India, today hydro power has fallen far behind. We take a look at what ails the sector and the possible solutions to restore its former glory.

Hydro power - used synonymously to refer hydroelectricity - is energy derived from falling or fast running water. A green source of energy, it is viewed by institutions like the World Bank as a means for economic development without adding substantial amounts of carbon to the atmosphere.

In 2015 hydro power generated 16.6 per cent of the world´s total electricity and 70 per cent of all renewable electricity, and was expected to increase about 3.1 per cent each year for the next 25 years.

Taking into account impact on society and environment, hydro power has positive and negative aspects. Here, a number of tools have been created as countermeasures, e.g. the Environmental and Social Impact Assessment (ESIA) - which is a mandatory requirement, the Hydro power Sustainability Assessment Protocol - which provides a rapid sustainability health check, etc.

On the positive side, the cost of hydroelectricity is relatively low, making it competitive, for example. the average cost of electricity from a hydro station larger than 10 MW is 3-5 US cents per kWh. Also, once constructed, the project produces no direct waste, and has a considerably lower output level of greenhouse gases than fossil fuel powered energy plants.

Technology Options
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. Normally used to cover the base load, this technology is advantageous as these plants can be set up with minimal investment and does not need large stretch of land for reservoirs, so no relocation/resettlement of habitants are required.

The major disadvantage associated with this is that these plants are seasonal and thus generate more power during monsoon, when the river flow is high; and much lower during the drier summer or winter months, when the rivers are dry or frozen. Another issue is availability of potential sites, as these projects need a steep drop in the river and such locations are limited.

For large hydro the most commonly applied technology is pumped storage, wherein reservoirs are used to store water and generate power with the differential height between the upper and lower reservoirs. During off-peak periods, water is pumped from the lower to the upper reservoir. There, it is once again available for electricity generation at peak load times.

The advantages of this technology is that it is simple and robust, and can easily be scaled to storing large quantities of energy rather cheaply. The pumped storage turbines respond very quickly to demand changes and provide grid operators with a very flexible facility. Moreover, they are efficient - even reaching around 80 per cent for the storage and generation cycle.

Commenting on the viability of small hydro projects (SHP), Mahesh Paranjpe, Chief - Hydro, Tata Power states, SHP works best in the Indian scenario as it does not have many of the associated issues. A great share of the small hydro power value chain benefits local economies. It also has the lowest electricity generation prices of all off-grid technologies, and comes with adaptability to various geographical and infrastructural circumstances.´

However, to date, much of India´s SHP potential remains untapped.The estimated potential for power generation in the country from this technology is about 20,000 MW. Of this, about 50 per cent of the small hydro 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 states.

´SHPs can play a crucial role in improving the overall energy scenario of India and in particular for remote and inaccessible areas. These have proved out to be economically workable and private companies are showing lot of interest in investing in SHP projects,´ Paranjpe adds.

Challenges for India
At the end of March 2016, India´s installed hydro capacity stood at 42,783 MW, nearly 14 per cent of the country´s energy mix. This has come down from a 44 per cent share in 1960´s. India ranks fifth in global hydro power capacity, but it 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. So, is hydro power dying a slow death in India despite its huge potential?

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.

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 the 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.

According to experts, delays in getting environmental and forest clearances is another major reason that hurts the growth of projects. This is followed by difficulties in execution of the projects due to tough terrain conditions; while illegal construction at floodplain and difficulties in rehabilitation of locals only add to the problem.

As per a recent report by PwC, projects have been affected due to delays and non-clearance on environment and forest aspects; while availability of land required for compensatory afforestation also poses a threat to implementation.

Some thus feel that the sector´s progress thus seems to have been affected due to lack of adequate focus from the government. While successive governments have given impetus to solar and wind energy development in India, hydro power has somehow lost out. Despite India´s renewed focus on clean energy sources and reduction in overall carbon foot print, hydro power has taken a back seat when it comes to tapping non-thermal energy sources.

Adds Paranjpe, ´At present, the government is stressing on enforcement of RPO that are at present 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 Way Forward
Almost 17 per cent of India´s installed capacity is hydro power. As India continues to expand its generation capacity across energy sources, there are several challenges to set up hydro projects in the country. Some of the typical challenges that a private developer faces are long gestation period of construction on account of environmental issues, rehabilitation & resettlement (R&R) problems, gap between investigations and field realities.

´We do have a number of successful stories but also have large projects which have taken several years to be completed. Moreover, due to the capital intensive nature of hydro power projects it is a challenge finding a balance between bankability and affordability,´ points out Paranjpe.

Here he says that 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 at R&R directly and then inform developers about the requirements in advance.

This might help reduce delays while ensuring successful R&R.
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 Centre for timely completion of projects. Observes Paranjpe, ´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.´


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