Future blurred for hydro?

Lack of a robust government policies and new investments, and the existing issues have led India’s hydropower sector go through a rough patch. The hydropower sector, right now, is awaiting revival.

Though hydropower is one of the major revenue-generating sectors in India, it has witnessed a growth fall in the past couple of years with no new investments, a weak hydro policy, and more focus on the other renewable energy sectors.

At present, India’s hydropower sector is ailing, with only 795 MW capacity added in the last year. Around 40 hydro assets are yet to see any relief and could well move to NCLT for recovery by lenders.

Less investments and weak policies
There are clearly no new investments witnessed in the sector and the focus is primarily on renewable energy, especially solar. The industry had submitted a memorandum to the Ministry of Power in 2017 seeking the implementation of the proposed hydro policy. However, it remains only on paper and yet to see any initiation by the government.

The hydro sector is primarily witnessing the refurbishment of existing projects mainly in the states of Uttaranchal, Tamil Nadu, Kerala and Karnataka. Himachal, being a hydro rich state, remains dormant while Arunachal Pradesh, with the biggest hydro potential, has not shown any promising movements. Until recently, the Government of Arunachal Pradesh had decided to cancel over 100 licenses of IPPs, because they had not started any development works for their respective projects in the last five years. This was a positive step, because then, there were some movements in the development of these projects.

The Cross Border Electricity Trade (CBET) Policy could also play an important role in the region’s energy security needs. While India needs to take a more pragmatic view on the same, hydropower development in Nepal and Bhutan could see a thumbs-up with an amended CBET.

The future
Hydro is here to stay. With rapid renewable energ9y capacity addition in the grid, hydro power will play the best inertia balancing role for grid stability in the near future. Storage hydro projects (pumped storage plants) are expected to take the seat for future development in the sector.

Hydropower’s clean, green and sustainable traits have clearly gone unnoticed by policy makers especially at a time when the world is shunning thermal plants due to environmental issues.

However, the sector could be revived if the government comes up with a feasible policies and incentives, encouraging more investments.
Authored article by:
Neelav Samrat De,
General Manager – Market Management
ANDRITZ Hydro Pvt Ltd