Issues in Reviving Hydropower Sector

Why in news?

The recently notified National Energy Policy proposes to bail out stranded large hydropower projects and to increase their life from current 35 years to 60 years.

What is the current situation?

• As of May 2017, India’s total generation capacity stood at 330GW, of which 44GW is from hydropower.
• Despite having significant hydro potential of 148GW, only 44MW (30%) of the total potential is harnessed.
• The share of hydropower in the overall energy mix has been falling since 1962-63 when it stood at 51% (13% today).

Why the low capacity addition?

• The major reasons lie in clearances delays, local issues, land acquisition, rehabilitation and resettlement and contractual disputes.
• Only close to 7% hydro capacity belongs to the private sector today.
• So, the government plan to bring private investments into the sector has not been successful either.
• Numerous projects has been stranded for decades leading to increase in various costs in the original project.
• This poses a threat to the financial/business viability of projects.

What did the parliamentary committee say?

• The parliamentary committee on energy and sub-committees (2016) was formed to advise the policy interventions in the energy sector.
• It has recommended three measures to revive hydro power.
  • Declaring all hydro projects as renewable energy sources and introducing Hydro Power Obligation (HPO);
  • Reinstating mega power benefit for hydro projects (discontinued after 2012); and
  • Providing better financing options (long-term loans, etc.,)
• Several countries including the UK and Brazil consider hydro as renewables.

What are the issues with the recommendations?

• Though hydropower is clean energy, it comes with a cost to the environment, wildlife, and relief and rehabilitation (R&R).
• The major problems lie in land use, emission of greenhouse gases such as methane, sitting in geological sensitive areas.
• But, the larger problem faced in India is sub-optimal impact assessments and clearances by the MoEF.
• So, bringing hydro into renewables should be supported with proper regulation, rather than allowing developers a free hand in exploiting resources.
• It is imperative that declaring hydro renewable does not undermine the ecological issue and R&R issues.
• In terms of buying hydropower, HPO will obligate the electricity companies to buy.
• However, with HPO the issues will be on compliance.
• So, there has to be strict enforcement, or HPO might become new REC (Renewable Energy Certificates), which was a huge failure.
• Also, the benefit of all the proposed changes seems to apply to the projects that achieve commercial operation within five years of the notification.
• So, the problem may continue to persist for many delayed future projects.

Source: Business Line