Will new categorisation of hydropower plants lead to sector's revival?

The Union Cabinet recently brought all hydro power projects of more than 25 MW capacity under renewable category which caused a jump in their share of energy production in the country

By Kundan Pandey
Published: Thursday 20 June 2019
The hydropower sector is in a slump. Jaiprakash Power Ventures Ltd sold its 1,080 MW Karcham Wangtoo project in Himachal Pradesh to JSW Energy in 2015 for a loss (Photo courtesy: SANDRP)
The hydropower sector is in a slump. Jaiprakash Power Ventures Ltd sold its 1,080 MW Karcham Wangtoo project in Himachal Pradesh to JSW Energy in 2015 for a loss (Photo courtesy: SANDRP) The hydropower sector is in a slump. Jaiprakash Power Ventures Ltd sold its 1,080 MW Karcham Wangtoo project in Himachal Pradesh to JSW Energy in 2015 for a loss (Photo courtesy: SANDRP)

How does one quickly increase the share of renewable energy in a country’s total energy mix? Going by the government of India, it requires a simple file order. On March 6, the renewables sector accounted for 20.6 per cent of India’s total energy production, but the next day, the share jumped to over 33 per cent. This became possible because on March 7 the Union Cabinet brought all hydro projects of more than 25 MW capacity under the renewables category.

So far, only hydropower projects of under 25 MW capacity were considered in the renewable category. This would help revive the ailing hydropower sector, states the Cabinet decision.

For a good one-and-a-half decade after Independence, hydropower was India’s main source of energy. In 1962-63, it contributed 51 per cent of the country’s total energy mix, shows data on the power ministry’s website.

In 2018-19, the figure stands at 13.1 per cent. Ashok Khurana, director-general of the Association of Power Producers, a grouping of 27 big power sector units, says that small and large hydropower projects should be at least 35 to 40 per cent of India’s energy mix for optimal load management.

The reason behind the fall of hydropower are two-fold. One, hydropower plants are complex and time-taking to build and, hence, costlier than conventional and other renewable projects. While the construction cost of solar power plants is Rs 6-6.5 crore per MW, coal-based plants cost Rs 8 crore and hydropower projects cost around Rs 10 crore.

Two, since the plants are expensive to build, the electricity they produce is costlier. A report of the Central Electricity Regulatory Commission says that in 2017, discoms paid Rs 1.11 to Rs 8.55 per kWh for purchasing hydropower from Union government-owned generation companies, while the cost of power from coal-based plants was between Rs 1.92 and Rs 5.69 per kWh.

“The Cabinet’s decision will help revive the sector because discoms and other big users will be forced to buy hydropower,” says Khurana, referring to Hydro-power Purchase Obligations (HPOS)—a tool to make discoms and power plants buy hydropower—mentioned in the decision.

HPOs have been conceptualised along the lines of Renewable Purchase Obligations (RPOs), which were introduced in 2008 in the form of Renewable Energy Certificates (RECs). All discoms and power plants are obligated to buy a certain amount of renewable power every year (the percentage varies annually) and if they do not buy it, they have to purchase equivalent RECs. HPOs have been announced as a seperate entity within non-solar RPOs.

However, RPOs as a tool have not succeeded, which raises doubt about the prospects of HPOs too. Twenty-seven states and Union Territories in India have achieved less than 60 per cent of their RPOs in the past nine years, told power minister R K Singh to the Lok Sabha in January this year.

“RPOs have not succeeded because governments are just not serious about renewables,” explains Ashwin Gambhir of Prayas, a Pune-based non-profit. Moreover, HPOs are unlikely to come into implementation anytime soon because they are applicable only to hydropower projects commissioned after March 8, 2019, and none of India’s under-construction hydropower plants are close to completion.

As per a report of the 43rd Standing Committee on Energy, released in January 2019, of the 78 planned hydropower projects in the country, only 37 (aggregating 12,178 MW) are under construction. Thirty-five of these 37 projects have exceeded their proposed construction time, while construction of 41 projects (aggregating 26,780 MW) is yet to start as environment clearances are pending.

THIS IS NOT the first time the government has tried to revive the hydropower sector. In the 1990s, it opened up the sector to private players to bring in additional resources. Subsequently, many state governments allotted a large number of hydro projects to private companies.

However, in spite of a number of policy measures and initiatives, private companies produced just seven per cent of the country’s hydropower, while their share in India’s thermal power was almost 40 per cent. In an effort to boost the sector, the government announced a bailout package of Rs 16,000 crore in 2016. “It was never implemented,” says Khurana.

“Since large hydropower plants are not turning out to be profitable, private players are ditching the sector. Even functional plants are sitting idle as there are no buyers for hydropower," says Soumya Dutta, national convenor of Beyond Copenhagen, a coalition of over 50 organisations working for climate justice and sustainable development.

For example, Jaiprakash Power Ventures Ltd, a subsidiary of the Jaypee Group, sold its 300 MW Baspa-II and 1,080 MW Karcham Wangtoo projects of Himachal Pradesh to JSW Energy in 2015 for a loss of Rs 500 crore, Dutta says. Both the units are functional.

LARGE HYDROPOWER PROJECTS have been controversial due to their impact on local ecology and population, which invariably gets displaced. There is substantial data to corroborate this. About 0.8 million people, most of them tribal, have faced displacement in India due to hydropower projects, as per a paper released by the erstwhile Planning Commission in 1997.

In its report released in April 2014, a Supreme Court-appointed expert panel blamed the hydel power projects in Uttarakhand for the Kedarnath flood disaster of 2013.

A research by Oxford University using global samples from the past 70 years says that hydropower dams have an average cost overrun of 96 per cent. The study, published in 2016, also says that freshwater ecosystems suffer more from dam building than marine or land-based ecosystems, and have lost, on an average, 76 per cent of their population since 1970.

Another study published in BioScience in 2016 says that hydroelectric dams contribute more to global warming than previously estimated. Rotting vegetation in the water causes dams to emit a billion tonnes of greenhouse gases every year. This is 1.3 per cent of total annual anthropogenic global emissions. So is bringing large hydropower plants under the renewable category a good idea?

“India is trying to show its seriousness about being a renewables-friendly country. However, the decision could have one possible negative impact if the country fails to meet its renewables target set under its Nationally Determined Contribution (NDC),” says Priyavrat Bhati, advisor-energy, CSE.

NDC is a concept used under the United Nations Framework Convention on Climate Change (UNFCCC) and denotes efforts by each country to reduce national emissions. The Paris Agreement requires all UNFCCC Parties to achieve their NDC. As per its NDC, India has to reduce the emissions intensity of its GDP by 33 to 35 per cent by 2030 from the 2005 levels.

To achieve this, it has to ensure a 40 per cent share of renewables in the electricity generation mix and create additional carbon sinks of 2.5 to 3 billion tonnes of CO2 equivalent. The Indian government has set a target of 175 GW of renewable by 2022 to meet its NDC. “The fear is that if the country fails to achieve this target, it will show hydropower projects as green energy source,” Bhati says.

Dutta too says that India has set its renewable energy target under NDC cleverly. Instead of using the term “renewable energy sources”, it has mentioned non-fossil fuel energy source, which can include even nuclear energy. If needed, it is easy for us to categorise our big hydropower projects as green to meet our NDC.

The Standing Committee report says segregation of hydro projects is just based on capacity and that all hydel projects are renewable in nature. The segregation came into play only because the different categories were allocated to different ministries, it states. Initially, India had a Ministry of Energy, from which the Ministry of Non-renewable Energy was culled out in 2006.

The committee even claims that at just 4-10 gram CO2/kWh, hydropower is best in terms of GHG emissions. It is even less than 38 gram CO2/kWh GHG emitted from solar power. The report also says that many countries, like the US, China and Canada consider all hydro plants as renewable.

Still, the government will do well to remember that the International Energy Agency considers only hydro-power projects less than 50 MW as renewable.

(This story was first published in Down To Earth's print edition dated June 16-30, 2019)

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