Role of hydro in the renewable sector

• Only 30% of the  of the total hydropower potential of 149 GW in India has been developed
• Hydropower projects with a cumulative capacity of over 13,000 MW are  currently stranded in India
• The role of private sector critical  for promoting accelerated hydropower development

New Delhi, 28 June 2017: India has the fifth largest hydropower reserve in the world, with untapped potential of over 100GW thereby providing the private sector tremendous scope to help accelerate development of the sector. However till date, only 3.2 GW of hydro capacity, which constitutes only 7% of the total hydropower installed capacity today, has been commissioned by private players.

Factors such as complex clearance and approval procedures, land acquisition issues, insufficient market depth and scope, limited availability of long term financing, existing models for sharing of hydro benefits etc. have contributed to the slow pace of hydropower development in the past, said ‘Accelerating Hydropower Development in India for Sustainable Energy Security’, a report by PwC and ASSOCHAM. 

The report also states that though private participation in the hydropower sector has gained momentum in the recent past, it still faces many impediments across various stages of a project development lifecycle. Several hydropower projects, across the Central, State and Private sectors, with a cumulative capacity of over 13,000 MW are witnessing significant time and cost overruns.

Speaking on the potential of Hydropower as a clean and green energy source, Yogesh Daruka, Partner -Energy and Utilities, PwC India said, “Hydropower is ideally suited to support the variability and intermittency of solar and wind generation, through provision of peaking support and ancillary services. Accelerated hydropower development will play a critical role in supporting the Government of India’s renewable energy capacity target of 175 GW by 2022. Moreover, for India to meet its INDC commitments under COP 21, an additional 20 GW of hydropower capacity needs to be developed by 2030.

The recent GOI proposed initiatives for the hydropower sector like interest subsidy, hydropower purchase obligations, classification of hydropower as renewables (irrespective of its capacity) are likely to accelerate growth for the sector and reduce the impediments faced by hydropower developers, including safeguard concerns. This will help revive many of the hydro projects in the country which are currently stranded,” he added.

To help achieve these ambitious targets for the hydropower sector, the PwC – ASSOCHAM report mentions some specific strategies and key interventions:

• A robust governance framework with the key enablers being inter-governmental coordination, integrated planning and a supportive institutional structure
• Market development for the  hydropower sector which includes extending the scope of the existing ancillary market, introducing hydropower purchase obligation(HPO), higher peak tariffs, bundling of hydro with cheaper sources of power
• Investments in the hydropower sector to be facilitated by streamlining of clearance processes, provisioning of fiscal incentives and with the use of innovative financial products to help  obtain cheaper and long term financing
• The government should  further strengthen the existing benefit sharing mechanisms to make locals/affected people as partners in hydropower development
• Leveraging the technical expertise of select global players and embracing technological advancements in the sector

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