Mint Primer: Why India needs a new hydropower policy

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A hydropower policy is in the works. This comes at a time when India has set ambitious energy transition goals with plans for 500 GW of installed non-fossil power capacity by 2030. Hydro projects are also strategically important. Mint explains the policy imperatives:

What is the current state of hydropower?

India currently has an installed capacity of 52 GW and another 18 GW is either under implementation or has been bid out. The government aims to take it to 78 GW by 2030. However, this fiscal, amid intermittent rains and the El Niño phenomenon, hydropower generation has been impacted. Union power minister R.K. Singh last week informed Parliament that there was a 14% fall in hydro generation in the first half of FY24 compared with the corresponding period of FY23 due to variable monsoon rain. Further, around 2 GW of hydro capacity is currently inoperative after floods in Sikkim.

Didn’t India have a hydropower policy?

Yes. The government did come up with a hydropower policy in March 2008 which talked about transparent selection procedure for awarding projects to private developers and allowing the project developer to recover the costs incurred in obtaining the hydropower project site. It allowed a special incentive for the developer by way of merchant sale of up 40% of the saleable energy. However, the segment has not grown as expected largely because of issues in land acquisition, and environmental clearance, among other reasons. The new policy would replace the existing one and possibly, plug the gaps.

Why then do we need a new policy?

India needs to get states and developers to take up new hydro projects. The parliamentary panel on energy has also suggested that for optimum utilization of hydro potential, India needs an enabling policy and take it up on mission mode. The panel observed that cooperation between the central and state governments is a pre-requisite.

What is expected in the new policy?

It may provide incentives for project developers and budgetary support for building infrastructure related to hydro projects, such as roads, bridges, and transmission lines. Currently, the developer not only has to develop enabling infrastructure, including roads and bridges for the construction of power projects, but also has to bear the expenditure that leads to an increase in project costs and therefore power tariff. The policy is expected bring about tariff rationalization. It may also incentivize pump hydro projects.

What’s their strategic importance?

Hydro projects can play a strategic role in border states as they help India protect its lower riparian rights with respect to China which is building large dams on the upper reaches of the Brahmaputra. State-run NHPC has submitted a pre-feasibility report for the 11 GW Upper Siang Multi-purpose Storage project involving an expenditure of 1.13 trillion. This, along with other hydro projects on the Brahmaputra, known as Siang in Arunachal Pradesh, is part of India’s attempt to counter Chinese water diversion.

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