Over the past year and a half, a total of 1,795 MW hydro power capacity has been commissioned. Of this, 1,659 MW was commissioned in 2016-17 and the rest in 2017-18 (till July 2017).
The Ministry of Power is in the process of finalising a new hydro power policy that could lead to its recognition as a renewable source of energy. The proposed policy seeks to blur the difference between large and small hydro power plants. Given the dire condition of the hydro power sector with nearly all under construction projects delayed and/or stalled, the policy is aimed at reviving the projects and expedite their construction. To this end, the government has also proposed a Rs 160 billion hydro power development fund that will help restart stalled projects.
The cross-border electricity trade guidelines aim at promoting economic growth among all South Asian Association for Regional Corporation (SAARC) countries. The guidelines were issued by the Ministry of Power in consultation with the Ministry of External Affairs in December 2016. Electricity shall be traded at Indian power exchanges under term ahead and intra-day/contingency contracts, the quantum of which shall be prescribed regularly.
Key reasons for delays include time taken for approvals and clearances, slow pace of work at the site, sites often being inundated by floods, agitation against the project by the affected population, financial issues as well as poor geology.
Considering the cost overruns of delayed and stalled projects, investments required for concurred projects as well for those under survey and investigation stage, a total investment of Rs 1,737 billion will be required for the realisation of the total hydro power capacity. The magnitude of this investment is likely to increase with further delay in the execution of these projects.
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 hydro power, making its development essential for the Indian power system. Hydro power plants have the ability to be quickly ramped-up, especially in the case of pumped storage hydro power plants. Unfortunately, India has only nine of these plants developed so far.
The financing sentiment in the hydro power 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.
Key Topics Covered:
Section I: Market Overview and Outlook
Section II: Plant Performance Analysis
Section III: Upcoming Project Analysis
Section IV: Developer Profiles
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