Capacity Addition Track of LHP in India – Examining the Key Policy and Regulatory Barriers to Hydro Power Development in India

Capacity Addition Track of LHP in India – The Cumulative Examination

Hydro power in India has significant potential of above 140 GW and power generation from Large Hydro Projects (LHP) in India has gained a momentum over the past five years, marking a growth of over 13%. But, despite of this magnanimous potential , till date only 30% of India’s total economically feasible hydro power potential has been harnessed.

Presently, India holds a total hydro power (LHP) installed capacity of ~ 45 GW as on June 2017. Of this total installed capacity, the hydro power capacity pulled up by state generation companies (GENCOs) stands to be ~30 GW as on June 2017, which means a share of more than 65%. The central GENCOs & the private fellows cumulatively holds  nearly 36% of the total share. It can be observed from Exhibit 1 that India witnessed an addition of ~ 5.2 GW in the large hydro power capacity from 2012-2017. Of this total capacity added during the course of last five years, maximum addition of close to 2GW was made from 2016 to 2017 . Year wise addition in the installed capacity of hydro power can be seen from Exhibit 2.

The arising need for generating electricity via clean fuel, has opened good avenues for hydro power to grow remarkably in India. However, to reach that growth levels, development of large hydro power needs to be channelized through an efficient governance framework by adopting a suitable policy framework coupled with uniform & transparent processed.

The existing processes, structures and institutional frameworks must be re-aligned to the development goals & hydro power capacity addition targets. While , adequately recognizing the role of private sector in enabling to achieve those targets.

Exhibit 2: Year Wise Historic Trends in the Addition of Hydro Power Installed Capacity (GW) - Examining the Degree of Variance, Status as on 2017.

Year-Wise-Historic-Trends-in-Addition-of-Hydro-Power-in-India_enincon

Acknowledging the need of the hour, the Government of India has undertaken a number of initiatives in the recent past, supported by various policy-level changes to promote hydropower development and facilitate investment in the sector. As a part of these initiatives, the government has increased financial allocation, along with other non-financial support, and is also in the process of establishing a dedicated hydropower development fund to improve the investment attractiveness of the sector. Some key policy-level changes introduced by the government to facilitate hydropower development in the past are mentioned as follows:

Table 1: Key Policy-Level Changes Introduced by Government to Facilitate Hydropower Developent in the Past in India

Policy Key Features
Hydropower Development Policy, 1998 Eastablished a power development fund by levy of cess on electricity consumed Transferred the subject of hydropower development up to 25 MW from the Ministry of Power to the Ministry of New & Renewable Energy
50,000 MW - Initative Preparation of a preliminary feasibility report and detailed project report of hydroelectric schemes in 16 states
National Electicity Policy, 2005 Addressed the issue of long-term financing of hydel projects and providing guidelines for a centre-state participation in development of hydel projects Emphasised large-scale development of feasible hydropower potential

*The views expressed in this article are solely those of enincon perspectives and do not necessarily represent those of Enincon LLP.

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