HYDROELECTRIC PROJECTS DEVELOPMENT:
CHALLENGES AND RESPONSE –*
RV SHAHI, SECRETARY
MINISTRY OF POWER, GOVT. OF INDIA
Enhancing the level of energy consumption, particularly in less
developed and developing countries, is a global challenge. 20% of
world population living in industrialised countries consume 60% of
energy and remaining 80% of population have to manage within 40%
of total energy.
This has obviously resulted in wide disparities
between the standard of living and quality of life of high energy
consuming countries on the one hand and those who do not have the
opportunities of adequate access to energy on the other.
It is
precisely for this reason that development of different sources of
energy and increase in its consumption has become a priority agenda
of all the developing countries.
2.
Various countries have adopted their own strategies to provide energy
to their people. In the context of electric power, as an important form
of energy, the thermal and hydroelectric power on a global basis, have
occupied the largest proportion. Within the thermal group, coal based
power stations occupy dominant position. However, this varies from
country to country. The Gas based combined cycle power stations in
number of countries occupy a significant proportion.
Similarly,
nuclear power stations have also increased and have been adding
large amount of capacity to the thermal group. During last 30 years,
Hydroelectric power generation has, as a matter of fact, reduced from
21% in 1973 to less than 17% in 2000. During the same period, coal
based generation marginally increased from 38% to 39%, gas
increased substantially from 12% to 17.4% and nuclear witnessed a
very steep rise from 3.3% to 16.9%. Obviously concerted efforts are
required to develop Hydroelectric capacities
*PAPER FOR VALEDICTORY SESSION IN INTERNATIONAL CONFERENCE ON LARGE DAMS (ICOLD) AT
MONTREAL, 17-20, JUNE, 2003
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3.
Low Exploitation of Hydro Potential
Inspite of hydroelectric power requiring a clean energy generation
process, exploitation of Hydroelectric potential in various countries
has been rather on a lower side. While the countries like Canada &
Norway have exploited their hydro potentials to the extent of 48% and
58% respectively, Brazil has developed it to the extent of 31%, China
and India both only to the extent of 18%.
(MW)
4.
COUNTRY
POTENTIAL
INSTALLED
PERCENTAGE
Norway
47,000
27,360
58
Canada
160,000
65,378
48
Brazil
170,000
52,427
31
China
310,000
56,000
18
India
150,000
27,000
18
Power Shortage in India
In India, though over 100,000 MW of capacity has been added in last
50 years, there is a huge gap between the demand and supply of
power.
While in the last few years it has marginally reduced, the
peaking shortage continues to be over 12% to 13% and the average
energy shortage at about 8.8%. Indian power system has an installed
capacity of 108,207 MW in May 2003, with hydroelectric accounting
for 25%.
Installed Capacity in MW (05/2003)
Sector
Hydro
Thermal
Wind
Nuclear
Total
State
23,085
40,141
65
0
63,291
Private
876
9,419
1805
0
12,100
Central
3049
27,047
0
2720
32,816
Total
27,010
76,607
1,870
2720
1,08,207
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5.
Declining proportion of Hydro Capacity
In the last 30 years, the proportion of hydroelectric capacity in the
Indian power system has considerably reduced. It has dropped from
about 46% in 1970 to 40% in 1980, 29% in 1990 and now 25% in
2003. In spite of the Hydroelectric potential, which is now estimated
to be of the order of 150,000 MW, the exploitation has been of the
order of 27,000 MW. Some of the important reasons for decline in the
Hydroelectric proportion in the total capacity over the last 30 years
are as follows:
a)
Indian power supply industry has always experienced the situation of
shortages both in energy and peaking requirements. To tide over the
shortage in shortest possible time, more dependence was placed on
sources of power generation with shorter gestation period. Obviously
this short-term approach rather than a long-term perspective led to
this problem.
b)
With abundant coal reserves in the country, large capacity additions
through coal based pithead power stations during the eighties and
nineties increased the thermal proportion.
c)
Emergence of gas based combined cycle power stations based on
indigenous natural
gas with gestation period of 2-2 ½ years also
received priority in response to the anxiety to create capacity addition
in shortest possible time.
d)
Nuclear power stations have also emerged as reliable modes of
thermal generation.
e)
In spite of best efforts at the stage of planning and formulating
projects in the hydro segment, a number of large projects got into long
gestation period of construction on account of various reasons,
namely environmental issues, rehabilitation & resettlement (R&R)
problems, gap between investigations and field realities, etc. We do
have a number of successful stories on the hydroelectric projects but
we also have large projects which have taken several years to get
completed.
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6.
Thrust on Hydro Power
In the recent years, the Govt. of India has committed quantum jump,
in the financial allocation and also by way of other supports so that
Hydroelectric projects not only get right priorities but also contribute
in an increased way to the future capacity addition programmes of the
country. Accordingly, in the 10th Five-Year Plan (year 2002-2007), the
target for hydroelectric capacity has been placed 14,393 MW, which is
more than the total installed capacity (13,666 MW) created in the last
20 years. The thrust on hydroelectric development is based on the
following considerations:
a)
Hydroelectric involves a clean process of power generation.
Once the
projects are constructed, there is no pollution ramification unlike
many other power generation technologies and processes.
b)
Since it does not suffer from the limitation of inflation on account of
fuel consumption, in the long run, it is the most cost-effective option
for power supply. In Indian context, where more than 45% of Indian
population has yet to have access to electricity at an affordable price,
this is an important consideration.
c)
Indian power supply system has a peculiar limitation of huge variation
between peak and off peak requirements. Management of peak load in
an
effective
manner
could
be
conveniently
handled
through
availability of hydroelectric support. The system at present does suffer
from large frequency variations. Better hydro support could address
this problem better.
d)
Locations of Hydroelectric projects in India are also in areas which
need substantial support for their economic development.
areas are North-east, Uttaranchal, Himachal Pradesh
Kashmir where more than 80% of potential exists.
These
& Jammu &
Developing
projects in these areas will spur economic activities and will lead to
overall economic development.
e)
In an integrated Hydroelectric project – there are many such projects –
the schemes involve not only supply of electricity but also provision of
drinking water and irrigation. These are important issues in many
parts of India. Hydroelectric projects, in many cases, do have the
ability to mitigate these problems.
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f)
Flood control is also an issue and quite often a challenge. Integrated
hydroelectric projects could adequately address this concern.
7.
Govt. of India Initiative on Hydro Power Development:
The main features of the Government of India policy on hydro power
development are as follows:

Additional budgetary financial support for ongoing and new
hydro projects under Central Public Sector Undertakings.

Basin-wise development of hydro potential – comprehensive
Ranking studies for 399 schemes.

Advance action for capacity addition – 10 year ahead of
execution

Emphasis on quality of survey & investigations

Resolution of inter-state issues on sharing of water and power.

Renovation, Modernization & Uprating of existing hydro stations

Promoting small and mini hydel projects – 25 MW and below
now fall into category of “non conventional” qualifying for
benefits.

Simplified procedures for clearances by Central Electricity
Authority; Electricity Act 2003 further liberalises this.

Rationalization of hydro tariff by allowing premium on sale rate
during peak period

Realistic
estimates
of
completion
cost
considering
new
development on geological front during execution.

Promoting hydel projects in joint venture

Selection of developer through MOU/Bidding route

Govt.
support
for
land
acquisition,
resettlement
and
rehabilitation, catchment area development, etc.

Some of the measures announced by; Govt. of India have
already been introduced which include simplified procedures for
transfer
of
techno-economic
clearances,
streamlining
of
clearance process and introduction of three-stage clearance
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approach
for
development
of
hydro
projects
in
Central
Sector/Joint Ventures, etc.

The Central Electricity Regulatory Commission has approved
5% hydro development surcharge on annual fixed charges for
central hydro power generation.

8.
50,000 MW Hydroelectric Initiative
Apart from over 14,000 MW capacity addition which has been planned
to be operational during the period 2002-2007, a
50,000 MW
Hydroelectric Initiative has been launched by the Prime Minister of
India in May, 2003. This initiative has started with the preparation of
feasibility report and detailed project report. 162 hydroelectric
schemes have been identified with an aggregate installed capacity of
50,560 MW.
They are located in sixteen States of the country. Of
these, 106 schemes aggregating to about 39,000 MW are located in
only four States namely Arunachal Pradesh, Uttaranchal, Himachal
Pradesh and Jammu & Kashmir. These projects under this Initiative
are proposed to be taken up for execution during 11th & 12th Plans
i.e. between 2007-2017.
Report
to
Detailed
All the preparatory works from Feasibility
Project
Report
and
also
in
many
cases
infrastructural development should have been done before that.
9.
Major challenges and responses:
Development of Hydroelectric projects has thrown up a number
of important challenges, the world over and particularly in
Indian context. Over a period of time, experiences have been
acquired and India is responding to these challenges in the
following manner.
a)
Impact on Environment: Hydroelectric projects do create
environmental issues emanating from sub-mergence of large
areas also involving forest.
The Govt. of India has a
comprehensive legislation on environmental issues and based
on this legislation, there are well laid down principles and
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guidelines.
Environment Impact Assessment studies when
properly carried out throw up the tasks to be undertaken by the
project development agencies. Over a period of time, both the
processes of a) studies and preparation of the plans to mitigate
environmental impact and b) procedure of clearances from the
authorities, have been streamlined. Process of improvement on
these areas continues to see as to how best the adverse
environmental impacts are mitigated and also the procedure
does not lead to delays. It needs to be ensured that if the forest
area is affected, sufficient amount of forest is created. Ministry
of Environment & Forest is working on a plan to create Forest
Bank which would entail creation of huge afforestation with
funding from project development agencies in advance so that
this issue could be adequately responded.
The mechanism of
compensatory afforestation through the Forest Bank will enable
quicker clearances of projects.
b)
Rehabilitation & Resettlement (R&R) of Project Affected People
(PAP) is another major issue affecting the smooth execution of
Hydroelectric projects particularly where in submergence areas,
the number of project affected people are large. Experience of
last several years has brought about sufficient amount of
understanding on the subject. The expectations of people, local
authorities
and
project
development
agencies
are
being
synthesised so that there is greater degree of acceptability of the
system of R&R. Govt. of India is contemplating a national policy
on R&R for Project Affected People. In the meantime, Ministry
of Power of Govt. of India and its public sector undertakings are
coordinating their efforts with the State Govts. so that R&R
issues are adequately addressed and project implementation is
smooth.
In cases, where large projects are involved, specific
monitoring mechanism has been put in place at senior most
level in the Govt. so that proper implementation of R&R plans
by project agencies is done in letter and spirit.
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With the above experiences now, it appears that in future, the
concerned project development agencies would evolve proper
plans and programmes well in advance so that the mitigatory
measures are adequate and project implementation is smooth.
c)
Another issue of concern is in relation to safety of dams. Here
again, experiences from some of the very large projects of the
country have led to considerable amount of knowledge base and
it is expected that in future projects, studies and findings on
dam safety could provide much higher degree of confidence.
Some of the Indian institutions have equipped themselves both
with hardware and software to properly address these concerns.
Where required, project development agencies do depend on
expertise available anywhere in the world for in depth studies
and guidance.
d)
In view of complexity in development of Hydroelectric projects,
particularly
large
submergence,
ones,
ramification
emanating
of
from
dam
submergence,
height,
dam
safety,
drinking water schemes, irrigation, infrastructure etc., the
process of clearances obviously gets linked with multiple
agencies and authorities. Short cuts could create problems.
Inordinate
delays
unaffordable tariff.
struck.
could
entail
huge
cost
and
therefore
Harmonious balance has, therefore, to be
Here again, experience of last many decades has
brought about a reasonable consensus on how to address this
situation.
The process of improvement on this front also
continues. Procedures have been streamlined, and they would
continue to be streamlined, to see that project development
process, prior to commencement of main plant construction, by
way of permission and clearances is made faster. Ministry of
Environment
and
Forest,
Ministry
of
Power
authorities continue to search for better solutions.
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and
other
e)
Reliability of detailed project report needs to be enhanced.
There are a number of examples in Indian Hydro project
development context of large variations from estimated costs
primarily on account of differences between the outcomes of
investigations and ground realities. Both in respect of hydrology
and geology, the quality of studies, investigations, analysis and
findings need substantial improvement. The silver line is that
there are recent examples of project development where
variations are within limits. Experience gained here again must
lead to qualitatively better DPR’s and estimates and project
could be completed without cost over runs, at least
with
avoidance of such cost increases which are on account of
variation
in
estimates
germane
to
inadequacies
in
investigations.
f)
Construction time is another area of concern, which needs to be
compressed. Large projects have taken inordinately long time.
There are two major aspects which could make a difference –
one is relating to construction management techniques starting
from planning to monitoring and another relates to construction
technology.
Here again, there are recent examples of making
substantial improvement on both the fronts. Some of the
projects which have been sanctioned in the recent months are
being targetted to be completed within 4-5 years.
Based on the benchmarks which have been established, the
techniques and technologies would be further improved. Choice
of technology will have to be given serious consideration. For
the next few years, project development agencies are being
advised to target 4 years for completion of small projects, 4 ½
years for medium size projects and 5 years for large projects.
These schedules are significant improvement over the past
performance.
After these results are achieved, the
would be further improved.
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norms
g)
Communication with press, media and people at large to reduce
the communication gaps on merits of hydro-projects and on
mitigatory measures is another area of challenge which is being
addressed.
This also needs to be taken up appropriately at
global level.
11.
Opportunities in Indian hydroelectric sector
About 14,000 MW of additional capacity in the period 2002-2007 and
50,000 MW of additional capacity during the period 2002-2017 throw
open enormous opportunities for national and international agencies.
The opportunities fall in the following categories.
a)
Preparation of DPR for the 162 schemes with over 50,000
MW capacity
12.
b)
EPC contracts for development of many of these projects
c)
Package wise contracts in a large number of projects.
d)
Investment as equity holder and project developer
e)
J.V. with Indian Companies for developing projects
f)
Providing finance - opportunities for the funding agencies.
Viability of Investments
The main reason for somewhat lukewarm response for investments in
Indian power sector in last ten years has been the poor financial
health and creditworthiness of the sector
With the reform and restructuring of Indian power sector, post
Electricity Act 2003, which has been notified on June 10, 2003,
during the next 3-5 years Indian power sector, even on distribution
segment, could present itself to be stronger both technically and
commercially. Implementation of the recently launched Accelerated
Power Development & Reform Programme (APDRP) of the Government
of India is expected to lead to financial viability of distribution
business.
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Based on these, investments in the sector, and more particularly in
hydroelectric projects, which could provide comparatively inexpensive
power in the long run, would be fully viable. The electricity market
where competitive environment is being created, with multiple options
of production and sale of power and where power trading is emerging
as a distinct activity, power sector offers enormous opportunities.
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