Public Private Partnership (ppp) in Indian Hydro-Power Industry

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Public Private Partnership (PPP) in Indian Hydro-Power Industry

Submitted by: Group A

Shreyansh Ajmera (PGP08056)

Jithesh Gautham (PGP08023)

Public Private Partnership (PPP) in Indian Hydro-Power Industry

Abstract

India has experienced a sharp increase in its energy demand as a result of economic growth and rising per capita power consumption. The Indian government is focusing on hydropower as one of the renewable sources of energy due to the concern for climate change, the country’s commitment towards honoring the Paris Agreement and rapidly depleting coal and oil fields. However, hydropower development has not been commensurate to the demand due to lack of power infrastructure, lack of modern technology and a shortage of financial resources.

The successful completion of Public Private Partnership (PPP) projects in roads, airports, and various other sectors have given hope to the government to implement the same also in hydropower industry to fill the power supply gap, especially in remote and backward regions. The states rich in water have made PPP guidelines and policies to initiate projects which work towards filling this power supply gap.

This article will provide an analysis of the status of hydropower projects in India, the PPP policies and hydropower projects initiated through these policies and successful examples of PPP model hydropower projects around the globe that can provide immense opportunities in India.

Article

Introduction

Power is the main driver of the economic development of a nation and one of the major infrastructure requirements for the development of all its sectors - industrial, rural and agricultural. It facilitates the linkage of rural population with the technological world. India has faced a shortage of power since its independence, but now, the situation has become critical with a large number of power cuts occurring daily in the country. India needs massive additions in power to meet the demand of its rapidly growing economy. Considering the need for energy security and the commitment to ‘Low Carbon Growth Strategy’, the Indian government has made provisions in the Twelfth Five Year Plan (FYP) to ensure sustainable development in the power sector and has emphasized on the development of hydropower alongside nuclear and other renewable sources of energy. Hydropower is a sustainable source of power generation because unlike conventional sources; it is inexhaustible, free and relatively clean.

Power is obtained by harnessing the kinetic energy of water running through a turbine and converting it into electricity by coupling the turbine to an electric generator. Typically 85% to 95% of the potential energy in water is converted to electricity, compared to 15% to 20% for solar, 35% to 45% for wind, and 30% to 45% for coal [1]. Hydro power projects cause no pollution, whereas, thermal power projects contribute to over half of the world’s carbon emissions. 60% of India’s power comes from thermal power. In addition to power, hydropower projects can also be used for fishing, flood control, irrigation, and various other purposes.

The first Hydel Power Station implemented in India was Sidrapong one in Darjeeling, it was completed in 1897 and is in operation to this date.

Hydropower projects can be classified according to their generation capacity[2], as follows:

a) Pico: 5 kW & below

b) Micro: 100 kW & below

c) Mini: 2,000 kW & below

d) Small: 25,000 kW & below

e) Medium: 100,000 kW & below

f) Large: more than 100,000 kW

Today, the share of hydropower in the power generation in countries with large resource endowments is as high as 95% in Norway, 80% in Brazil and 68% in Venezuela. China has emerged as the world’s largest producer of hydroelectricity [3].

Some of the public sector companies engaged in the development of hydroelectric power in India are Satluj Jal Vidyut Nigam (SJVNL), National Hydroelectric Power Corporation (NHPC), Northeast Electric Power Company (NEEPC4O), Tehri Hydro Development Corporation.

Growth of Hydropower Industry in India’s Five Year Plans (FYP)

The share of hydropower in the total renewable energy production during the FYP periods can be seen from the table-1 below:

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Hydropower’s share in the total installed capacity during the first FYP was around 37 percent which gradually decreased to 19.51 percent during the eleventh FYP as can be seen from figure-1. The contribution of hydropower in total installed capacity was over 40 per cent from the second FYP to the fifth. After that period, its share has gone down during successive plan periods. There were many reasons that contributed towards the poor condition of hydropower projects in the country including public protests against land acquisition, rehabilitation and resettlement policies, lack of funds and natural calamities. India displayed a rapid expansion rate for investment in the renewable energy market in 2011, with a 62% increase to about $12 billion (INR 7,689,000,00,000). About 4.2 GW of renewable power capacity was added in 2012, including 0.7 GW of hydropower capacity. The latest FYP (twelfth) calls for doubling the current renewable capacity to a total of 53 GW by 2017 [4].

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Status of Indian Hydropower Industry

India is blessed with a vast amount of hydroelectric potential and ranks 5th in terms of exploitable hydro-potential globally [5]. During the eleventh FYP, the total installed capacity in hydropower was 5,544 MW against the target 15,627 MW. The state sector was able to achieve most of their targets whereas the central target lagged behind. The private sector's contribution was more than that of the central PSUs, which is not a very encouraging sign in solving the power crisis in India, as shown in the table-2 below.

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The target achievement is very poor except for the Tehri Hydro Development Corporation (THDC) which was able to achieve its target of 1150 MW. The SJVNL, NEPCO, and NTPC (Hydro) did not achieve even a single percent of their expected target capacities. The NHPC has been successful in completing about 21% only. The main reasons cited for these failures are geological surprises, natural calamities, environment and forest issues, and rehabilitation and resettlement issues [6].

India has many rivers that flow perennially throughout the year. Many hydropower plants have been established for the generation of power. However, they have not been utilized up to their full potential. The Brahmaputra basin has only one percent of its total installed capacity whereas China has built the world’s largest dam on it for electricity generation. Only 3 percent of the total installed capacity is currently in operation, and about 8 percent is under construction stage.