How Hydro fared in 2017?

HYDROPOWER

How Hydro fared in 2017

NeelavSamrat De, General Manager – Market Management, ANDRITZ Hydro Pvt. Ltd.

Between 2012 and 2017, India’s hydropower capacity addition target was 10,897 MW while only 5,479 MW was achieved in the 5-year plan, showing only a 50% target achieved. While India made an unfair Cross Border Electricity Trade (CBET) policy for power purchase from Nepal and Bhutan, hydropower projects planned for finalisation in 2018 may take a hit as the CBET has riders which have not gone well with our neighbouring countries. However, with Indian PM Mr Modi’s recent trip to Nepal, we are given to understand that India will relax the conditions in the CBET, so that Nepal and probably even Bhutan, could benefit through it.

The year 2017 was an average year for the country’s hydro sector. The focus was primarily on stressed assets and how these projects could be revived. The government earmarked Rs. 16,000 Crores to bailout these projects, totalling 40 in number. The proposal has also been sent to the Cabinet Committee for approval. This is yet to be cleared and approved.

There were steps taken by industry to push the government for reforms through the proposed amended Hydro Policy. This calls for inclusion of all hydropower projects under renewable energy. However, there are talks in the power corridors to include only projects of less than 100 MW to renewables.Even if this passed through as law, we could see a major chunk of hydro projects taking off. This proposal has also remained on tables without any concrete steps ahead.

With GST coming into force, we saw a change in the taxation regime in the sector. For most capital goods and services, we now have a flat 18% GST with exceptions for a few items which comes in as ancillaries or bought outs.

One major movement witnessed in 2017, was mainly attributable to the current geo-political in the region. The Indus-Water Treaty in existence between India and Pakistan came in as a counter move to China’s One Belt One Road with Pakistan. Various large and mega sized hydro projects which were in planning stage, were expedited by the Government of India. We saw the approvals of various hydro projects like Sawalkote (1850 MW), Pakal Dul (1000 MW), Kwar (528 MW) and Kiru (624 MW). Barring Kwar, most of the projects on the Chenab river and flowing in to Pakistan, have been tendered for civil, hydro-mechanical and electro-mechanical works.

On the smaller scaled renewables, small hydro projects (SHPs) did not gather steam and we are yet to notice considerable movement in this niche market. India’s renewables target of 175 GW which includes solar, wind and bio-gas is allocated a target capacity addition of only 5 GW from SHP. In the last two and half years, as per MNRE estimates, only 0.59 GW was added to the grid from SHP sources. During 2016-17, small hydro power contributed 106 MW to the power generation capacity.

Another important aspect in terms of visible changes expected is the development of pumped storage schemes (PSPs). This storage scheme is particularly being discussed for its grid stabilising factors mainly due to the large scale capacity addition expected from energy sources such as solar and wind. Even though there is no clear mandate from the government in terms of PSP development, their requirement will become inevitable once the conventional versus renewable ratio reaches upwards of 75:25.

Multi-lateral funding agencies like the IFC, EIB, ADB, JICA and others have built and expanded their funding exposure portfolios for India’s energy and infrastructure sectors. EIB has allocated a Euro 800 million to develop small sized green projects while Asia Infrastructure Development Bank has earmarked an amount of Euro 1.20 billion for development of energy and development projects. The green corridor initiative between Germany and India has Euro 1 billion allocated for the development of infrastructure and Pump Storage Schemes. JICA is in the final stages of signing a loan agreement for a particular PSP project in the country while they are scouting for further exposure in the domain.

While Uttarakhand and Arunachal Pradesh are states of vast hydro potential, various factors including R&R, land, clearances and fresh funding continue to create stumbling blocks. Litigations in Uttarakhand in the aftermath of flash floods years ago, still keep the 24 projects in dilemma.

Another interesting development we witnessed until a year ago was the focus on the rehabilitation and modernisation of existing old hydro projects in Uttarakhand and Southern states of Kerala, Tamil Nadu and Karnataka. PFC and REC have been the major funding agencies for these rehab projects mainly owned by state utilities. Easily available funds for the highly indebted SEBs have made it possible to revamp these ailing projects whose Plant Load Factors (PLF) had been in the range of 20-30%.

The government’s initiative on river linking is also bring out more opportunities for hydro projects. A huge scaled study is currently being conducted to enhance water-way transportation, lift irrigation schemes and hydro projects.

Between 2012 and 2017, India’s hydropower capacity addition target was 10,897 MW while only 5,479 MW was achieved in the 5-year plan, showing only a 50% target achieved. While India made an unfair Cross Border Electricity Trade (CBET) policy for power purchase from Nepal and Bhutan, hydropower projects planned for finalisation in 2018 may take a hit as the CBET has riders which have not gone well with our neighbouring countries. However, with Indian PM Mr Modi’s recent trip to Nepal, we are given to understand that India will relax the conditions in the CBET, so that Nepal and probably even Bhutan, could benefit through it.

While looking at the past, we can now only hope that India’s hydropower sector can move ahead, maybe because the worst is over. Time will tell.

| Article published on 26/06/2018 by Rashmi Nargundkar

 
 
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