Himachal Pradesh has significant hydropower potential, but delays in obtaining clearances, and environmental and land acquisition issues have been discouraging developers from investing in the state. The state is thus focusing on critical policy interventions in order to revive investments in the hydro, solar and biomass segments. At the 3rd Global RE-Invest, Ram Subhag Singh, additional chief secretary (multi-purpose projects and power, non-conventional energy sources, industries) to the Government of Himachal Pradesh, discussed the steps being taken to address the various challenges facing the hydropower segment in the state. Excerpts…
India is on target to achieve its goals set under the Paris Agreement. In fact, as a country, we are progressing much faster towards these goals than many of our counterparts. Himachal Pradesh is playing its part in this energy transition and is one of the leading states in the country harnessing the vast hydropower potential. The state has five major river basins – Sutlej, Ravi, Beas, Chenab and Yamuna. Roughly 23,000 MW of potential hydropower capacity can be deployed in the state in these vast river basins. Of this, only 11,000 MW of hydropower capacity has been harnessed, which leaves scope for the development of another 11,000 MW of capacity in the state.
Efforts to revive the hydropower segment
We are in the midst of formulating a policy paper or a white paper on how to set up another 11,000 MW of hydropower capacity in the state over the next 10 years. We plan to present this to the central government. We foresee capacity additions of 1,700-1,800 MW in the segment in the next three to four years, of which roughly 600 MW will be installed by NHPC Limited as part of its upcoming Parbati hydroelectric project. Another 100-150 MW will be set up by Statkraft as part of its Tidong hydropower project.
Other projects in the pipeline include Bajoli Holi by GMR and Sorang by Himachal Pradesh Power Corporation Limited, along with small-hydro projects with capacities of less than 5 MW. These are expected to come up in the next three to four years. It is going to be a gigantic task to deploy the remaining 8,000 MW of potential hydropower capacity by 2030 and we want to plan ahead for this.
One of the major challenges that investors face in the hydropower segment is related to clearances. Obtaining clearances from the forest department, for instance, takes a long time. Further, feasibility report approvals get delayed and environmental and land acquisition issues crop up. We have shared a proposal with the chief minister, as per which we will identify 10-20 hydropower projects in the upcoming budget of 2021-22, and acquire all the required clearances for these projects beforehand from the government’s end. Thus, these projects will be bid out on a plug-and-play model, with all the clearances already in place, and the private players have to just win a bid and start implementing the project without getting caught up in long approval procedures. I am quite optimistic that we will be successful in this endeavour, which will help in further opening up the hydropower space in the state for private project developers.
There are many hydropower projects in the state that have been stranded for the past many years. A few of these projects were allocated to various government companies. If we feel that there is no significant progress in the development of these projects, then we plan to take them back, get clearances for them ourselves and allocate them through competitive bidding to new developers. This policy initiative is expected to be launched at the earliest in the state.
“There are a lot of opportunities for private investment in Himachal Pradesh.”
There has been serious effort from the government, particularly in the past three years, to ensure that the stranded hydropower projects are cleared. A worrisome capacity of hydropower projects is currently stuck due to various issues being faced by project developers. Further, investment in the hydropower space is not picking up. There are a couple of reasons for this decline in investments. It is not due to the lack of effort from project developers, but due to the time taken for approvals and clearances to come through and the demands that are put up from the various quarters in the areas where these projects are coming up. We are working to make sure that such issues are resolved in a timely manner.
The state government has come out with certain new relaxations and policy guidelines for the hydropower segment. If a developer misses the zero date when the construction was supposed to begin or if a developer has missed the scheduled commercial operation date, a supplementary implementation agreement will be signed. The timelines will be extended suitably so that financial closures for these projects can take place without a hitch. A separate cell has been created within the State Directorate of Energy to take up these issues so that the state government can hand-hold developers and help them get their clearances on a priority basis. As per our estimates, 212 hydropower projects can benefit from this policy, provided they come forward.
Transmission infrastructure upgrade
We are also making efforts to resolve the risks associated with power evacuation. There have been instances in the recent past when project developers have faced delays due to the unavailability of power evacuation and transmission infrastructure. We have received sanction from the World Bank for a transmission project, giving us sufficient funds to improve the transmission infrastructure in the state. It is our intent to take care of all issues at the earliest so that no developer faces any challenge in setting up hydropower projects in any of the river basins within a period of one to two years. We know that there are certain issues being faced in Chamba in the Ravi basin as well as some minor challenges in Kullu district in the Beas basin, but with the help of the World Bank funds, all these evacuation issues will be resolved. Further, the state electricity board (SEB) of Himachal Pradesh is also gearing up to reduce its transmission and distribution losses and make the state more consumer and investor friendly. Thus, we plan to create a conducive environment for attracting investments in the hydropower segment.
Being a hilly state, we have certain constraints in solar power development, and we are not as well placed as states like Rajasthan and Madhya Pradesh. However, we do have ample opportunities for interested players in the solar power space. In fact, a mega solar park is being planned by SJVN Limited in the Spiti region. We have appealed to the central government for speedy construction of the required power evacuation and transmission infrastructure, which will also help carry power from the Jhangi-Thopan project, which is another large hydropower asset coming up in the state within the next two years. In addition, we are promoting the deployment of solar pumps under the Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan scheme as well as ground-mounted solar projects, which will feed power into agricultural feeders. Thus, there are a lot of opportunities for private investment in the state.
Some concerns remain regarding the signing of power purchase agreements for solar power projects. The state electricity board (SEB) has a solar renewable purchase obligation, which will soon be met. Moreover, solar power is slightly expensive in the state when compared to hydropower. Thus, the SEB may not procure any more solar power. Developers setting up solar projects in the state can then sell this power through large open access projects. However, going forward, we expect solar power offtake by the state discom to increase as the prices go down further on account of technology advancements.
“There has been serious effort from the government, particularly in the past three years, to ensure that the stranded hydropower projects are cleared.”
Himachal Pradesh also has a vast biomass potential, owing to its large forest cover, which ensures an unlimited supply of pine needles with a high calorific value. Similarly, lantana plant wood can be converted into briquettes, which can then be used to generate power. According to our state policy, cement plants and other large industries are obliged to buy a certain percentage of this biomass power, which will ensure power offtake for parties interested in setting up these projects.
Moreover, we have approached the central government regarding the development of power manufacturing hubs in the state, whereby we would ensure land, power and other amenities at competitive rates to the interested parties. About 250-400 acres of land has already been identified for this hub near the industrial town of Baddi. Thus, there are many exciting opportunities for investors to set up renewable power projects as well as manufacturing facilities in the state.