SMALL HYDRO PROGRAMME IN INDIA

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1 SMALL HYDRO PROGRAMME IN INDIA Bhuwanesh Kumar Bhatt Ministry of New and Renewable Energy Hydropower represents use of water resources towards inflation free energy due to absence of fuel cost with mature technology characterized by highest prime moving efficiency and spectacular operational flexibility. Out of the total power generation installed capacity in India of 2,53,389 MW, hydro power contributes about 16.3% i.e. 40,798 MW. The total hydroelectric power potential in the country is assessed at about 1,50,000 MW. The share of hydro power in our country, in the total installed capacity of power generation, is continuously decreasing. It has come down from 46% in 1960 to 16.33% in In India, hydro projects up to 25 MW station installed capacity are classified as Small Hydro. The estimated potential of small hydro power (SHP) is about 20,000 MW. Small hydro power projects are normally run-of-river and no dam needs to be constructed. These projects do not encounter the issues associated with large scale hydro projects of deforestation, resettlement and rehabilitation. The projects have potential to meet power requirements of remote and isolated areas. These projects have the potential to turn around economic activities in local areas, villages and remote areas. These factors make small hydro as one of the most attractive and reliable renewable source with grid quality power generation. With the advancement of technology, it is now possible to set up economically viable low head small hydro projects on existing canals and fall structures, dam outlets and small streams spread through the country. New technologies of hydro kinetic turbines are opening avenues to setup small size power projects using flowing velocities of flowing water in rivers and canals. Small hydel projects normally do not encounter the problems associated with large hydel projects of deforestation and resettlement. The projects have potential to meet power requirements of remote and isolated areas. These factors make small hydel as one of the most attractive renewable source of grid quality power generation. Small hydro being mostly run of river types is environmentally friendly as it has zero emissions while generating electricity. There is no storage of water and no dam is constructed in these projects and hence there are no displacements of habitation. The projects can address power requirement of local areas and avoid long transmission losses. Small hydro projects can also be helpful in mobilizing resources and save life in case of emergency in remote areas. From an energy security perspective, Hydro is the most secure of all sources, since it is dependent on locally available resource and quite predictable water cycle. It can be an excellent source of power generation to meet peak demands if small storage of one or two days is introduced. In the situation of energy shortages and non-availability of power in remote areas, small hydro can provide long term effective solution. The small hydro sector has two distinct components. One, SHP projects in MW size capacity range, which are grid connected and normally developed by the State Government 59

2 ICHPSD-2015 or by a private developer. These projects are instrumental in increasing installed capacity of power generation in the State and eventually overall capacity addition in the country. Apart from this benefit, where the project is being developed there is a series of socio-economic activity in the project area which helps in overall development. Since the power project is a permanent asset in remote area, it provides sustainable economic activity and employment opportunity. The other component of SHP programme is of decentralized power and energy generation through micro hydro and watermills. These applications have the potential of developing local entrepreneurs and meeting energy requirements of a village / community. Small / micro hydro projects and watermills have the potential to provide sustainable economic growth to village community along with livelihood and agro/ cottage/ small industrial activities. Hydro projects up to 25 MW station capacity have been categorized as Small Hydro Power (SHP) projects. Further, these are classified as: Class Station Capacity in kw Micro Hydro Up to 100 Mini Hydro 101 to 2000 Small Hydro 2001 to Ministry of New and Renewable Energy (MNRE) has been allocated the business of micro/ mini/ small hydropower plants up to 3 MW station capacity during 1989 and in September 1999 the mandate of the small hydropower plants up to 25 MW station capacity has been transferred from Ministry of Power to MNRE. The estimated potential for power generation in the country from small / mini hydel projects is 15,380 MW from 5718 identified sites. Out of this potential about 50% lies in the States of Himachal Pradesh, Uttarakhand, Jammu & Kashmir and Arunachal Pradesh. In the plain region Maharashtra, Chattisgarh, Karnataka and Kerala have sizeable potential. Focused attention is given towards these States through close interaction, monitoring of projects and reviewing policy environment to attract private sector investments. The Ministry has been providing Central Financial Assistance to State Governments and private sector to set up small / mini hydro projects. The Ministry is also organizing technical support towards survey and investigation, preparation of DPRs, project monitoring and training through Alternate Hydro Energy Center (AHEC), IIT, Roorkee. The MNRE has taken a series of steps to promote development of SHP in a planned manner and improve reliability & quality of the projects. By giving various physical and financial incentives, investments have been attracted in commercial SHP projects apart from subsidizing State Governments to set up small hydro projects. The Ministry is giving special emphasis to promote use of new and efficient designs of water mills for mechanical as well as electricity generation and setting up of micro hydel projects up to 100 KW for remote village electrification. These projects are taken up with the involvement of local organizations such as the Water Mills Associations, cooperative societies, registered NGOs, village energy cooperatives, and State Nodal Agencies. 60

3 In the year 2000, the total installed capacity of small hydro projects was 1275 MW. There has been an increase of about 150% in the installed capacity during A continuous and steady growth was seen in the SHP sector. During the 9th Plan, a total capacity of 269 MW was added. This capacity addition had increased to 536 MW during the 10 th Plan and 1419 MW during the 11th Plan. The average capacity addition of 55 MW per year during the 9th Plan had increased to 284 MW per year during the 11th Plan. However, this has declined to about 170 MW in the year So far, 1001 small hydropower projects aggregating to 3,832 MW have been set up in the country, of which 320 projects of 1662 MW are from private developers. Electricity and electricity generated from hydro projects is concurrent subject of Central and State Governments. 23 States/UTs have announced their policies for private sector to set up SHP projects. CERC issue guidelines for determining tariff of power generated from SHP projects and SERCs, in their respective States, have accordingly announced tariff and other conditions. The sharp increase in installed capacity of SHP projects during 10 th and 11 th Plan can be attributed to participation of private sector. The SHP programme in India is now by and large private investment driven. Generally, SHP projects are economically viable and private sector has been showing interest to set up SHP projects. The viability of these projects is normally directly proportional to capacity of the project. Most of the States with reasonably high SHP potential have been interested in allotting the projects to the private sector for implementation and operation. Since SHP projects had reasonably good economic viability, a number of financial institutions and banks were financing these projects. The experience of past 15 years shows that a faster growth in the SHP sector is possible only with active participation of private sector. Seeing current trends in States, a major part of capacity addition and exploitation of SHP potential in future can only come from private sector projects. It is strongly felt that there is a need to systematically address issues responsible for slow down of SHP sector. The Cost of constructing small hydro projects are continuously increasing and the tariffs offered by the States are not sufficient to justify fresh investments in the sector. The present cost per megawatt of small hydro projects is now touching about Rs crore to Rs crore per megawatt. A number of small hydro developers were dependent on sale of Renewable Energy Certificates (RECs) generated from SHP projects in to the open market. However, non-compliance of RPOs by the distributing companies has truncated the REC market. So far, 1019 small hydropower projects aggregating to 3,990 MW have been set up in various parts of the country and 233 projects of about MW are in various stages of implementation. State wise details are given below: State Wise Numbers and Aggregate Capacity of SHP Projects (upto 25 MW) 61

4 ICHPSD-2015 Potential, Installed & Under Implementation (as on ) S. No. State Potential Projects Installed Projects under Implementation Nos. Total Capacity Nos. Capacity Nos. Capacity 1 Andhra Pradesh Arunachal Pradesh Assam Bihar Chattisgarh Goa Gujarat Haryana Himachal Pradesh J&K Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand West Bengal A&N Islands Total

5 At present, a capacity addition of about 300 MW per year is being achieved from SHP projects of which about 70% is coming through private sector. In order to accelerate the pace of small hydro development, both public and private sector participation for commercial projects and decentralized micro hydel for remote village electrification are being encouraged. It is targeted to add about 2000 MW capacity from SHP projects during the 12th Plan ( ). Against a target of capacity addition from SHP projects of 550 MW during the 10th Plan period, projects with an aggregate capacity of about 537 MW were installed. The total installed capacity of small hydro projects was 1975 MW (up to 25 MW), at the end of 10th Plan. The 11 th Plan target for small / mini hydro is 1400 MW. The target for first three years of the 11 th Plan was 750 MW, against which MW have been achieved. Year wise target and achievements for the 11 th Plan are as follows: Period Physical Financial Target Achievement Target (RE) (Rs Crore) Achievement (Rs Crore) th Plan

6 ICHPSD-2015 The present growth of capacity addition from SHP is about 250 MW per year. The aim is to double the current growth rate and take it to a capacity addition of 500 MW per year A target of adding 1400 MW from small hydro has been fixed for the 12 th Plan. Targets and achievements during first 3 years of the 12 th Plan are as follows: Period Physical Financial Target Achievement Target (RE) (Rs Crore) Achievement (Rs Crore) (actual) * * * - 185* - *proposed The present growth of capacity addition from SHP is about 250 MW per year. The aim is to double the current growth rate and take it to a capacity addition of 500 MW per year. SHP incentive schemes The MNRE has been providing financial support / subsidy for following activities to develop the SHP sector: Research & Development, and Human resource Development, strengthening of technical institution/capacity building, setting up turbine laboratory Resource Assessment, Detailed Survey & Investigation, DPR preparation and perspective plan for States Capital Subsidy to State Sector Projects Subsidy for Commercial Projects Renovation & Modernization of old SHP projects (State Sector) Water Mills / Micro hydel projects The details of financial support / subsidy provided by MNRE for SHP projects are: (i). Financial support for resource assessment for identification of new potential SHP sites and preparation of DPR: Under the Scheme, the financial support is provided to the State Govt. dept./agencies/local Bodies in the Government sector for the overall estimation of potential of SHP projects in a State, identification of new potential SHP sites and for the preparation of Plan for systematic SHP development including environment impact assessment etc., in the State. Financial support also provided for specialized studies for remote / border areas to prepare plans for setting up Micro Hydel Projects (MHPs) in such areas and strengthening of data base for potential SHP sites. These studies will be supported on case to case basis. The financial support of ` 6.00 lakhs for each project upto 1.00 MW capacity and `

7 lakhs for each project with more than 1.00 MW & upto 25 MW capacity is available under the scheme. (ii). Support to new SHP projects in State sector: The financial support provided for setting up new SHP projects taken up in the Government /State / Public Sector by the Government departments/agencies/sebs/local bodies, etc. which are declared as State nodal dept./agency by the State Govt. & made responsible for SHP development in the State/UT or the owner of the proposed SHP project. The quantum of financial support available is given below: Category Above 100 KW and Above 1 MW 25 MW up to 1000 KW Special category and NE States Rs. 75,000 per kw. Rs. 7.5 Crores / MW limited to 20 crore per project. Other States Rs. 35,000 per kw. Rs. 3.5 Crores / MW limited to 20 crore per project. (iii). Support to new SHP project in private / co-operative / joint sector: The Ministry of New and Renewable Energy (MNRE) is encouraging setting up of Small Hydro Power (SHP) projects in the private sector, joint sector, co-operative sector, etc. The Ministry provides financial support for the new SHP projects up to 25 MW capacity. The quantum of financial support will be independent of the term loan and will be limited to the amount indicated below: Areas N E Region, J & K, H.P. & Uttarakhand (Special Category States) Other States (iv). Upto 25 MW Rs 1.5 crore/ MW limited to `5.00 crore per project Rs 1.0 crore/ MW limited to`5.00 crore per j Scheme to support Renovation & Modernization of old SHP projects in public sector: The financial support provided for renovation and modernization of existing Small Hydro Power projects upto 25 MW station capacity (set up in the Government sector) and which were commissioned for a minimum period of seven years prior to the date of submission of the proposal to the Ministry. The quantum of support available for this purpose is given below: Areas Upto 1000 KW Above 1 MW & upto 25 MW All States & UTs ` 10,000 per KW Rs 1.00 crore/mw limited to`10.00 crores per project 65

8 ICHPSD-2015 Small hydro power projects have reached commercial stage. The projects are normally economically viable and private sector has started showing interest in investing in the SHP project. The viability of these projects improves with increase in size of the project. Since , the thrust of this Ministry s SHP programme has been deployment of SHP projects through private sector investments. Now a large part of capacity addition is being achieved through private investment. State Nodal Agencies provide assistance for obtaining necessary clearances, in allotment of land and potential sites. As per the Electricity Act, 2003, the State Electricity Regulatory Commissions (SERCs) have been empowered to decide on various components of the policy such as tariff, wheeling, banking and third party sale for grid interactive renewable energy based power projects, in their respective State. The Policy for Small Hydro Power (SHP) and private sector participation therein, is governed by the Electricity Act 2003, the National Electricity Policy 2005 and Tariff Policy 2006 announced by the Government of India. Power is a concurrent subject. 23 State Governments have so far announced policy for private sector participation for the development of SHP projects. The State Electricity Regulatory Commissions (SERCs) have been deciding tariff in their respective States. These States are: Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chattisgargh, Gujarat, Haryana, Himachal Pradesh, J&K, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand and West Bengal CERC has issued guidelines to determine tariff for all renewable energy technologies including small hydro projects. Constraints in setting up SHP projects The growth in the SHP sector is relatively slow. The main reason for the slow progress can be attributed to the difficult locations where SHP projects are normally set up, short working season in hilly areas and involvement of private and forest land in setting up of SHP projects. The risks due to natural calamities in setting up SHP projects are high and sometimes the developers face resistance from local residents. This apart, time taken in allotment of sites and obtaining statutory clearances in the States, adds up to the overall time in construction of SHP projects. The SHP projects are governed by the State policies and the potential sites are allotted by the State Governments to private developers. The Main constraints in setting up SHP projects are: Time consuming process for allotment of sites by the States and statutory clearances including land acquisition, forest clearance, irrigation clearance etc. Relatively longer gestation period in completing the projects due to difficult terrain and limited working season. Inadequate evacuation facilities for power generated from SHP projects. 66

9 Increase in project cost due to inflation in the prices of steel and cement. Support to Micro hydel projects and Water mills The Micro Hydel Projects and water mills have the potential to meet the power requirements of remote areas in a decentralized manner. The Ministry has been implementing a scheme to support up-gradation of water mills and micro hydel projects up to 100KW capacity, which are mainly located in remote and rural areas including international border areas. Such projects are benefiting to the local people in such areas by providing illumination / electrification, micro-entrepreneur development and socio economic development. Ministry has sanctioned financial support for up-gradation/ installation of watermills (Mechanical and Electrical) and about 2,200 watermills has already up-graded/ installed in the state of Himachal Pradesh, Karnataka, Kerala, Jammu & Kashmir, Nagaland, Tamilnadu and Uttarakhand. Beside this more than 200 micro hydel projects (up to 100 KW) also installed in the remote areas. The available Central Financial Assistance is given below: S. No. Category of Watermill Amount of CFA i. Mechanical output only Rs 50,000/- per Watermill ii. Electrical output (up to 5 kw) or Both Rs 1,50,000/- per Watermill mechanical and electrical output (up to 5 kw) iii. Micro Hydel Projects up to 100 kw Capacity Rs 1,25,000/- per kw Specialized studies / survey to prepare plans for setting up water mills / micro hydel projects and strengthening of data base for potential sites and develop them in clusters will be supported on case to case basis. The survey studies should be carried out preferably district wise and simultaneously for both watermills and micro hydel projects. North Eastern and other Border States would be encouraged to take up such studies on priority. Further the Ministry will also provide full financial support for the project proposed with new technology for turbine (ultra low head, kinetic etc), generator (permanent magnet and controls (including automation) are also be eligible for the support, however, the same will be considered on merit basis on the recommendation by the technical committee formed by MNRE. The Ministry would also give financial support for training / capacity building under the programmes. Technical Institution (Alternate Hydro Energy Centre, IIT Roorkee) Alternate Hydro Energy Centre (AHEC) at Indian Institute of Technology, Roorkee was established in the year 1982 with initial sponsorship of Ministry of New and Renewable Energy. AHEC has been providing professional support in the field of Small Hydropower Development covering planning, Detailed Project Reports, Detailed Engineering Designs and Construction drawings, Technical Specifications of Turn Key execution/equipment Supply, Renovation and Modernization of SHP Stations, and Techno-Economic Appraisal. Technical support to over 25 different state and central government organizations for SHP development has been 67

10 ICHPSD-2015 provided. IPPs and financial institutions are utilizing its expertise support for their SHP development. Data Bank for small hydro projects is the unique facility created at AHEC. AHEC has developed two new designs of water mills for grains grinding and for mechanical/electricity generation purpose for the hilly region of the country. AHEC has been imparting training to the field engineers and technologists through short-term training courses. AHEC offers a four semester Master of Technology (M.Tech) programme in "Alternate Hydro Energy Systems". A real time digital simulator for small hydropower plants has been established with the support from the Ministry for providing efficient initial and advanced training to operators and engineering staff of different types of small hydroelectric plants. Standards, manuals and guidelines for various aspects of small hydropower development are being prepared by AHEC through consultative process with the sponsorship of MNRE. A project to set up a small hydro hydraulic turbine R&D laboratory at AHEC with an objective of creating international level facilities for testing, design and R&D in the area of hydraulic turbines, hydro mechanical equipment, control and instrumentation of small hydroelectric power plants have been sanctioned. Monitoring and Interaction with States: During last year and this year, the Ministry stepped up substantially its efforts towards close monitoring of the projects, interaction with potential States and private developers. A series of meetings and visits were held at the level of the Minister and Secretary, MNRE with the potential States to monitor the ongoing projects and take up new potential sites. The Ministry has been requesting the States to take steps for faster allocation of sites, giving clearances and creating evacuation facilities. Small hydro projects are difficult to construct as they are normally located in remote and hilly areas. The gestation period is relatively long and the projects take 4 to 5 years in completion. Water being State subject, the projects are allotted by the States and all clearances are given by them. In some cases, allotment / purchase of land; forest clearance etc. takes 2 to 3 years. The Ministry has a very limited catalytic role in the exploitation of this potential by way of guiding the States, providing some subsidy to the projects to improve their economic viability and create technical support services The Ministry is also taking up with the respective Power Departments to identify new potential sites and draw up an evacuation plan linked to progress of small hydro projects. 68

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