Meeting energy demands with hydro power

Analysis on challenges and opportunities for hydro power sector

India has a huge potential for hydro power development. The total hydro power potential is assessed at 150,000 MW at 60 per cent PLF (Plant Load Factor). The potential for small hydro is estimated at around 15000 MW.

A hydro power development is constrained by many factors which slow down the whole process. Submergence of huge tract of land, in the case of multi- purpose projects, and consequent resettlement issues; general protests from the local population against hydro projects; ecological issues such as forest submergence, wild life disturbances; conflict on sharing of river water among states; transboundary water issues (for example between India and Pakistan) over construction of hydro projects; hydrological issues; opposition on ideological grounds, etc are some of the major irritants for hydropower development, believes Dr. S K Sarkar, Distinguished Fellow & Director – Water Resources Division, TERI.

He says, “Water is a very emotive subject, and consensus among political executives over sharing of water connected with hydropower development is essential. There are also many court cases inhibiting smooth conduct of whole process of hydro power production.” For instance, the Kishenganga/Neelum river hydropower project is a clear example where in spite of good intention of the Indian government the progress is extremely show, as there are constant objections by Pakistan being a party to the Indus Water Treaty 1960. The hydropower sector in North East also witness lack of interest from some developers due to various reasons. Sometimes public involvements are less. For example, in lower Subanshri hydro power project, and Dibang multi-purpose project in the North East, such issues were noticed.

Hydro projects are very site specific and come with a lot of surprises. The developer must be experienced technically but when the government went ahead and gave out licenses to private developers without prior hydro experience, a lot of issues came up, believes Neelav Samrat De, Asst. General Manager (Marketing & BD), Andritz India Pvt. Ltd. He points out, “Primary reasons why the sector has been facing hurdles is mainly attributed to project delays and cost over runs; delay in according clearances by the government; land acquisition; rehabilitation and resettlement issues; no infusion of new funding in the sector; complexity of projects with regard to civil constructions at site; most developers are debt ridden and unable to cope with project cost escalations due to delays.”

He adds, “While little has been done to revive existing projects under construction by the government, we do not see any concrete steps being taken by the government even in 2017. India has an untapped hydro potential of 83,000 MW with maximum projects being in Arunachal Pradesh.”

Explaining upon how hydro power in India is facing major hurdles in spite of it huge potential in India, Dr. Rajib K Mishra, Director -BD & Marketing, PTC India Ltd says, “Hydro power projects have larger gestation period, (6-10 years) depending upon whether it is with or without reservoir. Substantial cost of capital for hydro projects (almost 70 per cent) is attributed from civil work and construction. It is prone to displacement and rehabilitation including geological surprises. Therefore it is much complex compared to renewable or thermal generation. Although these are complex issues for hydro, there are several advantages too. Higher tariff due to cost and time overrun has further complicated the viability of hydro projects in India and across the world.”

Steps to revive the stalled hydro plants
The central government and many state governments have formulated hydro power policies to help develop this sector. Under the hydropower development policy of the central government, Project Affected People (PAP) has been made long term beneficiary stakeholders in hydro projects by way of 1 per cent free power with the matching 1 per cent support from state government for local area development thus ensuring a stream of benefits. “Further, 12 per cent free electricity in the state is provided where the project is located. It also provides a differential policy for peaking power to facilitate greater participation of hydro projects,” informs Sarkar.

In the case of hydropower development affecting the water sharing of other countries, bilateral solution between the upper and lower riparian countries and India is often resorted. In the case of resettlement issues, local stakeholders are brought on board and consensus building approach is often adopted. In resolving hydrological issues, assistance of expert bodies such as Central Water Commission is taken into account. For sharing of water, the provision of the River Boards Act 1956 and the Inter State Disputes Tribunal Act 1956 is resorted. For environmental clearances etc, the Ministry of Environment and Forests attempts to resolve such issues quickly. For example, in the case of Inter-linking of rivers such as Ken-Betua, the Ministry took an active interest in obtaining the wildlife clearance, and Forest clearance. “In many hydropower projects, multipurpose objectives are also noticed and multiple authorities are involved. These authorities have to be brought under a common platform: the Tehri dam project in Uttarakhand (2006) caters to one third of drinking water needs in Delhi, showing involvement of multi-pleauthorises. The central and state governments will have to play a vital role by working together,” Sarkar says.

Sharing on what steps have been taken by the government to revive the stalled hydro plants Dr Mishra says, “Government is seriously considering several measures to make hydro power more attractive. To increase the hydro mix government is contemplating Hydro Power Obligation (HPO) mandatory for all the state utilities in line with RPO obligation for renewable. It is also being deliberated whether tariff for initial few years can be restructured and reduced so that the high cost of hydro projects and long term benefits can be achieved through backward loading. Comprehensive hydro power development policy is also envisaged in a time bound basis.”

On the other hand Neelav says, “We have been hearing about the hydro policy for some time now. However it is yet to be implemented. Also the HPO was a step that was being though in terms of mandating the SEBs to purchase a minimum amount of hydro power from the developers. This step also has not taken shape.”

The Viability Gap Funding was a shot in the arm to push projects stuck due to cost over runs. This stimulus has also not shown any promising results as most IPPs want to sell their projects to government utilities. “With the lack of will, we do not see any steps that could push large hydro projects towards completion. Except for hearing that projects up to 25 MW could be included under renewable, there is nothing new that has happened to the sector in the last 2 to 3 years,” he adds.

Removing the distinction between small project of up to 25 MW and large hydro project can help India projecting that its installed renewable energy capacity would be 225 GW by 2022. But only ambitious figures without walking the talk mean nothing.

“At the moment, we hear that the government will soon come up with a proactive hydro power policy to push stalled projects and explore possibility of extending benefits for renewable sources like wind and solar to hydro projects beyond 25 MW. We need to wait and see when this is materialised,” says Neelav.

How hydro power will meet the peeking power demands?
Hydro power is believed to meet the peeking power demands but the sector is facing many challenges resulting in to stalled growth of the sector. To improve hydro power generation in the country the government is taking several steps. Even after overcoming these challenges will hydro power be able to meet the peeking power demands.
Hydro power needs to be taken seriously believes Neelav. He says, “Hydro power plants have a quicker response time for a shut down and a start-up as compared to thermal plants. While the government has given a recent step to stop building new thermal plants due to coal shortage and environmental concerns, the only other large capacity clean energy source is hydro. Renewable capacity addition is on a large scale is not a good solution for grid stability as these are dependable on energy sources (wind, solar). So the only solution is hydro power which works on base load and also peaking load basis while also considering the environmental issues. This is evident when we see the hydro capacity utilisation in developed countries mainly in Europe and Latin America. The only thing needed as of now is the will to start taking hydro power more seriously.”

Hydro power by its attributes can be ramped up or down very fast to meet the peaking needs and to complement the renewable resources which are available only during fixed time of day. Therefore a hydro plant with storage facility is the natural resource which can work as the peaking power and to meet the fluctuating load, believes Dr Mishra. However he points out, “It’s certainly not good news that hydro power which used to account for 1/3 of the generation in country few years back has come down to almost 14 per cent in the year 2016-17. All out efforts should be made to make this percentage higher to cope up with the increasing fluctuating demand of utilities.”

As per Dr Sarkar, it is not possible to meet the peaking requirement by thermal power or by renewable energy. For renewable, the power supply is intermittent and thus very difficult to use as peaking power. The peaking power is achieved either by hydropower or power produced through gas or by using diesel gensets. The diesel gensets are not environment friendly.

He adds, “Hydroelectric dams can generate less during off peak power and quickly respond to peak demands. Natural gas or pumped storage are often used where there is no enough hydroelectricity to respond to daily and weekly variation in generation and consumption. Pumped storage hydroelectricity is the largest capacity form of grid energy storage. During period of high electrical demand, the stored water is released through turbines to produce electric power. Hydropower is a clear power. Hydropower is generally cheaper in the long run than natural gas based plants, which are constantly at risk from fuel price increases in the global market.”