Monday, March 10, 2014

Hydro projects essential for the health of the grid

Hydro power generation constitutes only 16 percent of the total installed power capacity in India and the current hydro-thermal mix stands at 20:80 which is a far cry from the ideal ratio of 40:60. Of the 1, 45,320 mw of hydro potential, India produces only25 per cent at 39,893.4 mw. Around 76,439.5 mw hydro capacity is underway, of which 20 per cent is under construction.Higher capital cost and longer gestation periods have been a deterrent in attracting investments in hydro sector when compared to the thermal sector. The cost of a hydro power station is typically Rs 6 to 7 crore per megawatt compared to Rs 4 to 5 crore per megawatt for a thermal power station.Most hydro projects take four to five years to complete while thermal power stations can be completed in three to four years.

Plan Period
Installed capacity at the end of Plan (mw)
Hydro Power Installed Capacity
Total Installed Capacity including other R.E.S.
Hydro Power Share as % of Total Installed Capacity (in %)
8th Plan (1992-97)
21,644.8
85,019.31
25.46
9th Plan (1997-02)
26,261.23
1,03,410.04
25.4
10th Plan (2002-07)
34,653.77
1,32,329.21
26.19
11th Plan (2007-12)
38,990.4
1,99,627.03
19.53
2012-13
39,491.4
2,23,343.6
17.68
2013-14* (Apr-Nov13)
39,893.4
2,46,077
16.3


Hydro power development is essential to maintain grid stability in a country like India where power generation is predominately thermal. Hydro power stations, unlike thermal stations, have versatile operating characteristics such as instantaneous starting, stopping, and operating at various loads etc. which aid in maintaining power stability. The inability of thermal power stations to back down in off peak periods can result in dangerously high frequencies resulting in a grid collapse as well damage to plant equipment. Inadequate hydro power stations reduce the operating plant load factor (PLF) of thermal power plants thereby affecting the efficiency of the power station and reducing its plant life.

Realising the need for hydro power development, in 2003, the government of India embarked on an ambitious programme to increase hydro power capacity in the country. The initiative was to install 50,000 mw of hydro power generation capability in the country. The Central Electricity Authority (CEA) was responsible for preparation of pre-feasibility report for the scheme and accordingly Preliminary Feasibility Reports (PFR) of 162 new hydro-electric schemes totalling over 50,000 mw were prepared. However, we have managed to add only about 13,000 mw in the past decade. The slow pace of capacity additions is further corroborated by the fact that even though around 37,081 mw of hydro-electric schemes were concurred by CEA since 2002-03, 68 percent of these projects are yet to start construction. For the past few years the government has been trying to fast-track hydro projects but too little avail.

Hydro Power Development Scenario in India (till November 2013)


The slow pace of growth in the hydro sector can be attributed to both manmade and natural factors. A large number of projects have failed to take off on account of environment and forest clearances and agitation against development of the plant by people affected by the project.

Factors plaguing development of hydro power
·         Difficult/in-accessible potential sites
·         Land acquisition problems
·         Environment &forest clearances
·         Resettlement &rehabilitation problems
·         Law &order problem
·         Paucity of funds
·         Longer gestation period
·         Geological surprises
·         Inter-state aspects
·         Consensus on apportionment of project cost among various beneficiaries
·         Excessive burden on account of net present value
·         Natural calamities

Inter-ministerial meetings have been held in the past one year on various clearance and policy related issues to improve the investment climate for the sector. The ministry of environment and forest (MoEF) is particularly looking into streamlining the process with regards to environment clearance (EC) and forest clearance (FC) which are normally examined by the EAC (Expert Appraisal Committee) and FAC (Forest Advisory Committee), respectively, to avoid duplication of efforts by the two committees as well as multiple scrutinies. Further, EC and FC are two different processes wherein applications for EC are directly dealt by MoEF while FC applications are initially processed through various levels in the state government. MoEF is expected to modify the earlier en-bloc timeline-based forest clearance to a milestone-based timeline both at the Centre and state level.

On the policy front, the government is likely to exempt hydro projects from competitive bidding upto March 31, 2022.The graded reduction in permissible merchant sale of hydro power is to be limited to delays arising from the developers’ side and not on account of force-majeure like floods, cloud bursts etc.  Both these amendments to be made in the tariff policy, proposed by the Cabinet, are likely to attract investments in the hydro sector. The government is also looking to make purchase of hydro power by electricity distribution companies mandatory and for those states that are unable to meet the proposed obligation would be expected to purchase tradable certificates. All these initiatives would not only attract investments but also contribute to the viability of hydro electric schemes particularly in the north-eastern region.

The pros and cons of developing hydro electric power stations are almost equally numbered and cannot be ignored. Large hydro power stations require huge investments, have long gestation periods, displace people, submerge land areas and in some cases face severe opposition from lobbyists. Despite the cons, the power sector, fraught with issues of acute coal and gas shortage and peaking shortages as high as 12,159mw during 2012-13, mandates tapping of hydro resources to maintain the right balance in our power management systems. However, environmental concerns should go hand in hand with development. This calls for standards, protocols and safeguards to be put in place for sustainable development of our power sector.

                                       
                    Infraline Energy Power Research Team

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