Future of Hydro Power in India- Private Sector Performance

1. FUTURE OF HYDRO - PRIVATE SECTOR PERFORMANCE
RAHUL VARSHNEY

2. Hydro Power- Private Sector Performance
 Hydro Power contributes to16.36% of total
electricity generation in India.
 Around 90000 MW capacity is still untapped
and is yet to be developed
 Private sector participation is growing in Hydro
Power segment.
 Hydro is a major source of peaking power,
ancillary services and black start.
 Most flexible and sustainable source of
generation
 Cost of generation of BBMB plants after 40
years of operation is only 20 paisa/kwh
2
40661
Hydro Capacity under operation
27482
2694
10485
100%
68%
7%
26%
120%
100%
80%
60%
40%
20%
0%
50000
40000
30000
20000
10000
0
ALL India State Private Central
Hydro Capacity under Construction
14410
2242
4837
7331
100%
16%
34%
51%
120%
100%
80%
60%
40%
20%
0%
20000
15000
10000
5000
0
ALL India State Private Central

3. No development from Private sector
 Around 41000 MW Hydro Projects
have been allotted to various Private
developers
 Not much development is taking
place in Arunachal Pradesh, remote
locations of Himachal and
Uttarakhand
3
Private Sector Allotted Hydro Projects, yet
to be taken for construction
3600
1100
1800
1100
33000
Himachal Pradesh Uttarakhand
Sikkim Meghalaya
Arunachal Pradesh
Top 3 players make up ~90% of the installed private capacity
1,700
447 278
2,000
1,000
0
Jaypee Tata Power Bhilwara &
Statkraft

4. Challenges for the private sector
 CHALLENGES
- Bad Infrastructure / Road conditions
- Delay in Award of Clearances (environment &
forest) , Land Acquisition
- Delay in Financing / getting Financial Closure or
additional funding due to cost & time overrun.
- High free power component and cost plus tariff
- Financial upheaval and changes in company
strategy. No M&A policy or clarity
 REWARD
- Cost plus tariff giving 15.5% ROE subject to an
available buyer
- Benefits to the Electrical system -spinning
reserve & frequency response, voltage support,
black start capability
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5. Bad Infrastructure
 CHALLENGES
- Bad Infrastructure / Road conditions affecting
schedule of Project
 WAY FORWARD
- Access to the projects should be part of state
government initiative.
- Common Infrastructure – funding, development
and utilisation
- Defining the share of Government and Project
Developers in infrastructure costs
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6. Approval and Clearances
 CHALLENGES
- Approval and clearance
 WAY FORWARD
- Defining of standard clearances with
required papers and procedures
- Land acquisition under the New Act
- Evolution of Single window; avoid
multiplicity of examination
- Fixing timelines for statutory and non-statutory
clearances
- Dispute Resolution
- More than 30% of the projects get stuck
due to Environment clearances
- Land diversion / Forest Clearance takes at
least 2-3 years and is considered into
critical path of Project Activity.
- Environment clearance of Uttarakhand
HEPs stalled by Supreme court from
Aug’13 onwards.
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7. Change in ownership
 CHALLENGE
- Change of ownership and control
- Change of ownership in the Implementation
Agreements of most of the Hydro states are
restrictive or ambiguous.
- Loss of expenditure and intellectual property.
 WAY FORWARD
- Remove restrictions on change of ownership
- If required pre-define the technical and Financial
credentials of incumbent.
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8. Enabling Environment
 The Risk Reward should be reviewed. Much higher Risk
 State should take Project Management role and be enabler to clear bottlenecks
 Evolving of single window clearance; avoid multiplicity of examinations of
similar issues at different levels
 Viability of free power requirement
 Clear M&A policy enabling certain developers to exit and unlocking value.
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9. THANKS