“Hydro seems to have been left out”

Views of NHPC Limited’s K.M. Singh

Notwithstanding the challenges faced in the implementation of hydroelectric projects (HEPs), NHPC Limited has been at the forefront of hydro capacity additions. The company aims to double its installed hydro capacity by 2022, from more than 6,600 MW at present, besides diversifying into the thermal and solar power segments. At a recent Renewable Watch conference, K.M. Singh, chairman and managing director, NHPC Limited, spoke about the company’s capacity addition plans and his outlook for the hydropower segment. Excerpts…

 

Overall hydropower development

The country’s power basket in the early 1960s mainly comprised thermal and hydropower, with the latter accounting for around 40 per cent of the total installed capacity. With growing focus on thermal power development, especially in the later part of the century, the share of hydro in the power basket has declined significantly.  Against an optimal hydro-thermal mix of 40:60, the share of hydro is currently around 14 per cent, with the remaining being thermal and other sources of generation. The country’s current installed hydropower capacity is 43,133 MW as against the 123,534 MW desired under the optimal energy mix scenario.

There is abundant hydropower potential in the country. State-wise, Arunachal Pradesh has the highest hydropower potential of 50 GW; however, of this, hardly 1 per cent has been developed. The second largest state with regard to hydropower potential is Himachal Pradesh with a potential of 18 GW, with 50 per cent of the potential still untapped. Uttarakhand also has a potential of 18 GW, with only 21 per cent of the capacity developed.

Current capacity and performance so far

Currently, NHPC owns 21 HEPs and one wind power project, aggregating 6,667 MW of installed capacity. Further, three projects aggregating 3,130 MW and a 1,000 MW project in a joint venture (JV) with the Jammu & Kashmir government are under construction. In addition, nine projects aggregating 6,995 MW of hydropower capacity are under clearance, four renewable energy projects totalling 188 MW and a thermal power plant (TPP) of 1,320 MW capacity are at various stages of clearances. The company also has three HEPs under survey and investigation. Therefore, around 20,480 MW of capacity is being handled at present. Most of these projects are located in areas with high hydropower potential such as Jammu & Kashmir, Himachal Pradesh and the Northeast.

In the past few years, NHPC has witnessed significant achievements such as the setting up of the world’s longest inclined pressure shaft of 1,546 metres at the Parbati II HEP; the country’s first concrete faced rock fill dam at the Dhauliganga HEP; introduction of jet grouting technology at the Teesta V HEP; commissioning of a number of projects ahead of schedule including the Chamera II, the Indira Sagar, the Omkareshwar and the Kurichu HEPs; and recording the highest monthly progress of 816 metres by tunnel boring machines at the Kishanganga HEP.

Capacity addition targets

By the end of the Thirteenth Plan period (2017-22), we aim to achieve 11,616 MW of installed hydropower capacity, almost double our existing capacity. In the thermal power segment, 1,320 MW of capacity is aimed to be set up during the Thirteenth Plan. Although we do not have any capacity in the solar segment as of now, we are working towards setting up 330 MW of projects by the end of the plan. In wind, we already have 50 MW of capacity and are expecting to reach 122 MW by the end of the plan period.

During the Twelfth Plan period (2012-17), NHPC has added 1,372 MW of capacity and by this financial year, we will commission another 250 MW, including the first unit of 200 MW of the Parbati II hydro project. With this, the total capacity addition by NHPC during the Twelfth Plan period will be 1,622 MW.

Key projects in the pipeline

The hydropower projects planned to be commissioned in the Thirteenth Plan period will include the 2,000 MW Subansiri Lower HEP, the 600 MW Parbati II HEP, the 330 MW Kishanganga HEP as well as the 195 MW Kotli Bhel 1A HEP. Further, in a JV with the Jammu & Kashmir government, the company plans to set up the 1,000 MW Pakaldul HEP and the 624 MW Kiru HEP in the state.

The governments of Arunachal Pradesh and Assam are keen on commencing works on the Subansiri HEP. The project has been granted all clearances by the central government. However, a case pertaining to the project’s seismic stability filed by agitators is pending with the National Green Tribunal. Once cleared, the project will take around four years to be completed. Earlier, the Kishanganga HEP was planned to be commissioned by December 2016; however, due to law and order problems since July 2016, work at the site had been stalled. The Kotli Bhel HEP in Uttarakhand has also been stalled owing to the Supreme Court order banning the construction of HEPs in Uttarakhand following the 2013 floods. We are expecting to get the clearance for these plants very soon. Overall, during the Thirteenth Plan, we intend to add 4,749 MW of hydropower capacity. We are also working on a 72 MW wind energy project at Palakkad in Kerala. In the thermal segment, we are setting up the 1,320 MW Pirpainti TPP in Bihar. In the solar segment, the company is setting up 330 MW of projects in Tamil Nadu and Uttar Pradesh. Thus, these projects will contribute 1,722 MW of capacity.

In addition, we plan to start construction of 5,930 MW of hydro capacity across various projects during the Thirteenth Plan period. These are the 520 MW Teesta IV HEP in Sikkim; the 2,880 MW Dibang HEP, the 600 MW Tawang I HEP and the 800 MW Tawang II HEP in Arunachal Pradesh; the 800 MW Bursar HEP in Jammu & Kashmir; and the 210 MW Dhauliganga Intermediate and the 120 MW Gauriganga IIIA HEPs in Uttarakhand. Construction of another two projects – the 66 MW Loktak and the 540 MW Kwar – in a JV will also be initiated. Further, we are in discussions with the Druk Green Power Corporation of Bhutan to sign a JV agreement for the 770 MW Chamkharchhu I HEP in Bhutan.

For the Dibang HEP, the Ministry of Environment, Forest and Climate Change has imposed a condition to reduce the dam’s height by 10 metres. Therefore, we had to prepare a revised detailed project report (DPR). Within a month or two, we are likely to obtain the Central Electricity Authority’s (CEA) concurrence for the project; post that the Project Investment Board and Expert Appraisal Committee approvals will also be obtained. Apart from this, for the Loktak HEP, the DPR is ready and is under examination by the CEA, while all other clearances for the project are in place.

Issues and challenges

Some of the key challenges faced in setting up HEPs are delays in obtaining forest, wildlife and environmental clearances, holding public hearings for resolving issues, land acquisition, rehabilitation and resettlement (R&R), and law and order issues. Geological uncertainty is another major challenge. For instance, for our Parbati II HEP, which has a 23.5 km long tunnel, we are facing constraints in tunnelling a 4 km stretch. Besides, there is a dearth of competent contracting agencies and skilled manpower since the HEPs are located in remote and hilly areas.

Another issue that affects the execution of HEPs is financial constraints. HEPs entail high capital costs and long gestation periods. There is non-availability of long-tenor loans at low interest rates and lack of equity infusion in the segment. In addition, states have started levying water cess, electricity duty, etc., which puts an additional burden on developers. Besides, there is a lot of variation among the states with regard to the imposition of upfront charges. Amidst these uncertainties, it becomes difficult to predict the final completion cost of a project.

Sector revival

HEP development entails a multidisciplinary and multi-authority approach; therefore, active and effective involvement of the state governments is very important. State governments must extend cooperation in land acquisition and R&R. They should be responsible for maintaining law and order, and sharing the cost burden of basic infrastructure facilities. Besides, shifting water from the state list to the concurrent list through a constitutional amendment will encourage the development of hydropower projects.

In order to improve the financial viability of HEPs, it is necessary to provide long-term debt finance for 20-25 years to project developers. Early implementation of differential tariffs for peak and off-peak hours, and withdrawal of water cess to keep the hydro tariffs low are necessary to improve the commercial viability of hydropower. Besides, simplifying the procedure for obtaining clearances, land acquisition, R&R, etc. is needed to expedite the development of projects. An amendment to the Land Acquisition Act for compulsory acquisition of land immediately on the sanction of the project will improve the land acquisition scenario. Further, in order to overcome the technical hurdles faced during project implementation, it is necessary to prepare bankable DPRs.

Sector outlook

While there has been a growing focus on developing renewable energy sources like solar and wind, hydro seems to have been left out. This is probably due to the fact that wind and solar can be commissioned faster. However, due to the inherently intermittent nature of wind and solar energy, it is important to ensure that corresponding spinning reserves are maintained for grid stability, which is possible only with the development of hydropower. The formulation of a hydropower policy, which is under way, is necessary for the development of the segment. The policy is likely to be put up for cabinet approval soon.

Dams, and subsequently hydropower, have been much maligned by civil society. It is therefore necessary to spread awareness about the need to tap the hydropower potential of the country in a sustainable manner given its economic, social and environmental benefits.

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