Budget 2024: Hydropower May Unlock Potential Of Sustainable Energy In India
It is consistently demonstrated that hydropower plants across the spectrum: storage, run-of-river, and pumped storage provide immense benefits. The most prominent ones are assured clean energy with in-built base and peak load supply, quick ramp-ups and ramp-downs, black start, and operating reserve capability. In addition, pumped storage plants (PSPs) provide grid stability by acting as green and rechargeable batteries to accommodate intermittent renewables such as solar and wind. Considering the inherent variability of solar and wind power and the country’s need to go green, the grid-balancing act will have to be increasingly taken over from coal by hydropower, making its development essential for the Indian power system.
There are challenges, however. With cost overruns of delayed and stalled projects and investments required for concurred projects as well for those under the survey and investigation stage, a total investment of about Rs 1,737 billion will be required for the realisation of the total hydropower capacity. The magnitude of this investment is likely to increase with further delays in the execution of these projects. Naturally, the financing sentiment in the hydropower sector has been quite damp in the past two years with no major financial closure being reported. Stressed projects and assets have led to mergers and acquisitions in the sector as companies are looking to sell assets to reduce the burden of debt.
The sector faces several challenges:
Financial: Hydropower projects are capital-intensive and require high upfront costs. In addition, the risks involved in hydropower projects lead to difficulties in the arrangement of finances/ financial closure. Financing is obtained on high premiums. In addition, many states charge a royalty on hydropower developers in the form of 12 per cent free power from the project, which adds to the financial burden of the developer.
Multiple clearance windows: During the planning stage, statutory clearances such as forest, environment, and concurrence/ techno-economic clearance. Other clearances, such as defence and tribal, are dependent on a case-to-case basis. All these clearances are accorded by multiple departments, which makes the process time-consuming.
Social: During hydropower development, social protests are common, especially in storage schemes that resettlement and rehabilitation (R&R) of the local population. There is always uncertainty over the public acceptance of the project’s socio-environmental impacts and remuneration settlement between the project-affected families and the developer.
Water sharing disputes: Water, being a state subject, becomes the cause of dispute between state governments on the utilization of river water. In many cases, international disputes have also occurred, with China and Pakistan affecting hydropower development.
Environmental Impact Assessment issues: The Environmental Impact Assessment (EIA) is a crucial element in hydropower development. In some cases, due to harsh terrain and weather conditions in the project region, developers may compromise on the quality of EIA. Additionally, the lack of skilled and experienced manpower for EIA studies is also a cause of concern. Further, mismanagement or lack of transparency from the developer side during public hearings, an increase in the number of projects-affected families/ higher compensation demands lead to conflict and even litigations.
Geological surprises: During planning, there is uncertainty in scope finalisation, as geological surprises are common during actual construction, especially in the Himalayas. The geological challenges can lead to changes in the location of civil structures dams and powerhouses, and affect the estimated construction material quantity.
Remote and underdeveloped project location: Generally, hydropower projects are built in remote locations that lack basic infrastructure, roads and communication networks. It leads to two challenges; firstly, the developer has to build the required facilities. Secondly, the project workforce, including senior management and labour, is sometimes reluctant to move to such locations.
Power evacuation issues: The developed power needs to be transmitted over long distances. There have been cases where the project has not been commissioned due to delays in the development of the power evacuation infrastructure, especially in the northeastern regions where the issue of the Chicken Neck corridor is prevalent. Sometimes, the transmission network cost occupies the leading share of the project’s total cost.
Lack of skilled contractors: India lacks the number of skilled contractors/ workforce necessary to revive the hydropower sector. The technical and managerial competence is lacking in conducting detailed social and environmental impact assessments and timely construction.
While the advent of Kundan Green Energy is comparatively recent – 2017 – we have earned our credentials consistent with time-sensitive rehabilitation of small hydropower projects which had been in suspension for years. These are complemented by greenfield projects completed in record time. From the perspective of our understanding and experience, policymakers should consider the following submissions.
Suggestions to Further Promote Hydropower:
· The states should completely defer the 12 per cent free power charged to the hydropower developers as royalty. At least, the free power should be deferred till the loan repayment period.
· To plan for holistic hydropower development, it is necessary to carry out integrated river basin-wise studies. It will lead to effective utilization of river water’s potential and improved management of a river’s ecosystem.
· Since water is a state subject in India, and electricity is on the concurrent list, there is a need for central and state government’s cooperation to actively work towards hydropower promotion. The states’ water-sharing agreements should include a hydropower development agenda.
· A nodal agency/institution dedicated to hydropower development should be established. The agency should be responsible for all the required clearances.
· Pumped storage hydropower plants be incentivized to maintain grid stability through the ancillary services and by acting as a water battery to support grid integration of intermittent renewables such as solar and wind. Such incentives will also promote private-sector investment.
· The government and private hydropower developers should collaborate with academic/ research institutions to develop indigenous hydropower-generating equipment (electrical, mechanical, electronic).
· Central and state governments should come forward in creating public awareness programs to highlight the importance of hydropower projects. It will address the negative perception of hydropower projects among the public and minimize the social barriers.
In conclusion, I would underline the fact that new hydropower projects need to be planned and implemented, prioritising the minimisation of the negative social and environmental impacts without compromising their ability to generate electricity and provide ancillary and water services. This can be achieved by ensuring that adequate measures that protect communities, water flows, water quality and local species are embedded throughout the development and operation of hydropower projects. Like any other infrastructure project, the environmental impacts of hydropower projects cannot be completely avoided. However, impacts can be minimised or offset. This must be done and alternative measures taken to offset environmental and social impacts however minimal.
