Hydro & Small Hydro Outlook in India 217 Evaluating Business Case & Future Scenario of Large & Small Hydro Power Plants in India Report Summary enincon consulting llp, 217, New Delhi, India
Enincon s Key Findings India s generation mix since the advent of the portfolio has been dominated by coal based assets. But, the current government s initiatives has embarked concrete avenues for renewable energy capacities from solar and wind power. Given, all the intermittent challenges like huge Capex requirement, environmental considerations and skilled manpower etc, India s hydro sector looks to gain as well from the fillip observed in the country for clean energy generation. Additionally, the new hydro policy in picture shall open up a market of close to 12 GW in near term not only for the hydel power developers, but also for the EPC contractor, OEMS and other value chain players, which safely indicates a business case of approximately USD 4 Billion. Enincon s report Hydro & Small Hydro Outlook in India 217 acknowledges the triggers for business case of LHP and SHP in India demanding an in-depth research based prognosis to demystify opportunities around same. Some of the key findings of this report are given as- Examining Business Case of Hydro Power in India Fate Drivers Low Capacity Additions of Thermal Power Cost Competitiveness Push on Raising Green Energy Portfolio No Pull for Gas Based Generations Government Financial Backing Business Case Strength Impact in Near Term 5 1 5 1 5 1 5 1 5 1 Track Falling rate of capacity addition in coal based power generations can pull up the case for hydro LCOE of hydro power is the lowest when compared with all sources of power generation Achieving the aggressive 175 GW of RE power targets can build up a strong case Lack of domestic availability of natural gas and subsidies cuts off one aspect New hydro policy aims to provide ~ USD 3 Billion of financial assistance to support stalled projects Weak Decent Strong 5 1 Scale Business Case Impact enincon consulting llp, 217, New Delhi, India
Hydro Potential(GW) of N.R. States for Capacity Above 25 MW Percentage Potential Left Over to be Exploited 1 Hydro Power Planning Hydropower planning and development in India are generally project oriented and not based on any basin development plan. Nonsequential development of a hydropower project may make it unviable and inefficient & need to primary address of this roadblock is essential. A large number of hydropower projects with common river systems between adjoining states are held up due to a lack of interstate agreements and disputes on water sharing. Sutlej-Beas dispute between Punjab and Haryana and the Mullaperiyar Dam conflict between Kerala and Tamil Nadu are well reported examples of water-sharing disputes between states State Wise Track of Existing Potential and Yet to be Taken Under Construction Hydro Capacity (Above 25 MW) in Northern Region, Status as on June 217 2 15 1 5 37.2 % 6.9 71.1% 12.8 67.6% 9.1 5.8%.39 HP UK J&K PU UP RJ HR Source: enincon research, State Energy Departments, MoP Total Hydro Potential (Above 25 MW) Hydro Capacity Unexlpoited (Above 25 MW) Percentage Capacity Left Over to be Exploited Punjab, Rajasthan & Haryana have exploited 1% of the so far assessed hydro potential 8 6 4 2-2 enincon consulting llp, 217, New Delhi, India
Biomass Power- Andhra Pradesh & Madhya Pradesh Wind Power Kerala & Maharashtra Solar Madhya Pradesh & Rajasthan Economic Cost of Generation INR./kWh U-Shaped Trough in Solar Price 2 Robust Power Market Success to witnessing more Hydro Projects in India shall demand robust power market in the country. According to the new Tariff Policy, 216, competitive bidding for hydropower projects is exempted under a sunset clause till 222. The deferment is based on the recommendation of the power ministry s task force, which cited high construction risks and geological uncertainties inherent in these projects as some of the reasons that make it difficult for hydro projects to be cost competitive in the bidding process Economic Cost of Generation SHP Comparative Analysis of LCOE with Other Sources* 6 5 4 3 2 2.9 2.9 3 3.1 3.2 With Global Environmental Premium INR. 4.96/kWh 3.7 3.7 3.7 3.7 3.7 3.7 4.9 4.8 4.64.7 4.5 With Domestic Environmental Premium INR. 3.74/kWh 4 3.9 3.9 3.9 3.8 4.2 4.5 5 5 5 5 5.2 5.2 2.97 2.53 5.2 5.7 4.42 4.43 4.8 4.68 Coal Avoided Cost INR. 3.8/kWh Viability gap funding (VGF) can also be a viable proposal to make hydropower projects price competitive. For new projects, the government may consider floating tenders and allocating projects to developers with the lowest VGF proposal. 1 SHP All States in India Wind Power Tamil Nadu & Karnataka Wind Power Gujarat & Madhya Pradesh Source: enincon research & analysis, Companies, World Bank Wind Power Andhra Pradesh Biomass Rest of India Solar Power Rest of India enincon consulting llp, 217, New Delhi, India
3 Adequate Infrastructure Enabling adequate infrastructure shall determine the fate of HEP installations in India by 222. Most of the hydropower projects are located in remote areas which do not have adequate transmission infrastructure for power evacuation due to various reasons - such as site inaccessibility, absence of integrated generation and transmission plans, and lack of demand. ~12 percent Anticipated Contribution of NR states in Total Intra State Power Transmission Infra of India by 219 Intra State Transmission System proposed by RE Rich States - Proposed Connectivity System to STU network (Intra State) for Green Energy Corridors in India 8 4 5 25 Proposed Capacity Addition in (ckt. Km) Number of Sub Station 23 22 132 11 66 33 TN KR AP GJ MH RJ HP JK 7 35 4 2 Proposed Capacity addition for Tamil Nadu Tamil Nadu plans to add 446 ckt. km of transmission lines at 23 kv and 11 kv voltage levels. Consecutively 32 substations and 73 MVA of transformation capacity is to be added Proposed Capacity addition for Himachal Pradesh State plans to add 74 ckt. km of transmission lines at 132 kv and 33 kv voltage levels. Consecutively 6 substations and 55 MVA of transformation capacity is to be added Proposed Capacity Addition (ckt. Km) Number of Sub Station Source: PGCIL, enincon research enincon consulting llp, 217, New Delhi, India
4 Land Acquisition Streamlining the land acquisition process and other approvals coupled with financial incentives and new financing avenues are necessary for Hydro Projects in India. The state government, in consultation with the central government, may develop appropriate procedures to expedite various clearances, such as those for the environment, forest and land. R&R issues, local agitations, forest clearance, land acquisition, inadequate infrastructure has led hydro power share in India s electricity mix to decline by almost 3 percent in last 4 years Some Issues Need to be Addressed to Smoothen the Process of Hydropower (and other infrastructure) Development R&R provisions are not mandatory in the case of private purchase of land of less than 1 acres in rural areas and 5 acres in urban areas. These provisions enable the developer to buy land in multiple parcels of less than 1 acres and also allows for no R&R in case of acquisition of agricultural land Instead of addressing issues related to responsible development and benefit sharing, the SIA processes sometimes cause delays. However, the New Land Acquisition Bill has sought the exemption of SIA for critical infrastructure projects which may benefit the developer. However, this may on the other hand cause delays due to protests from NGOs, locals and other concerned organisations Public sector companies do not require any public consent for acquiring land. This deters private investors and may also lead to protests, causing delays for projects undertaken by the public sector The new bill tried to address this issue by allowing exemption for both public and private developers. However, the acquisition process needs to be strengthened to prevent misuse of land by private entities Source: enincon research enincon consulting llp, 217, New Delhi, India
Capacity in MW Capacity in MW Capacity in MW 5 Outlook of SHP in RE Mix The capacity of small hydro power in India is projected to hover between 5.3 to 6 GW by 222. Under the, Low Solar& Wind Scenario the small hydro power generation in India is projected to increase at a CAGR of 7 percent till 222. Anticipated Small Hydro Capacities (MW) in India Tracking Outlook till 222 Under Different Scenarios Scenario 1 High Solar & Wind Scenario 14 Solar Capacity (MW) SHP Share (MW) Wind Capacity (MW) SHP New Share (MW) Small Hydro Anticipated Capacity (MW) Under BAU YoY Projections till 222 7 65 6 55 5 45 4 Growth of 5 percent approximately 444 46 47 61 498 218 219 22 221 222 FY14 FY15 FY16 FY17 FY18 FY19 FY2 FY21 FY22 Scenario 2 Low Solar & Wind Scenario 12 Solar Capacity (MW) Wind Capacity (MW) SHP Share (MW) SHP New Share (MW) SHP Capacity (MW) CAGR 6 FY14 FY15 FY16 FY17 FY18 FY19 FY2 FY21 FY22 Source: enincon research & analysis enincon consulting llp, 217, New Delhi, India
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