REL plans to foray into hydro power

NEW DELHI: With gas supplies proving to be a problem, Reliance Energy (REL) has decided to move into hydro power in a concerted way. The company proposes to invest over Rs 10,000 crore in the hydel sector and has set a target of generating 4,000MW from the sector.

At present, REL produces 940.6MW from five projects. This together with projects that are in the pipeline account for 16,000MW, but much of this is in gas-based capacities, including the 5,600MW Dadri project.

“Fuel is the biggest constraint in the power sector today, this is part of the reason for the foray into hydro power,” said a company official. Another factor seems to have influenced this course of action for Reliance Energy: “Our experience with distribution in centres like Delhi and Mumbai showed us that there is a huge peak demand, and such demand can’t be met by buying power from base load plants. Hydro seemed to be the ideal source for peaking power,” the official said.

REL’s concerted foray into hydro power is fortuitous, as it comes at a time when state governments like those of Uttaranchal, Himachal Pradesh and Arunachal Pradesh are aggressively seeking out private participation in the hydro power sector.

The states have surplus power but are cash strapped. These states have accordingly moved into a competitive bidding game to capitalise on their hydro potential by luring private sector companies.

This includes payment of an up front cash premiums as part of the tender process. This is not possible for public sector companies like NHPC.

In Uttaranchal, Reliance Energy has bagged the 280MW Urthing Sobla hydel project after paying a premium of nearly Rs 6.5 crore. In Arunachal Pradesh, Reliance Energy has bagged its biggest hydro projects — 1,700MW.

The middle Sewang project which was earlier to be developed by NHPC was awarded to Reliance Energy in February this year. In Himachal Pradesh, the company is bidding for four projects totalling 1,000MW capacity.

Interestingly, Reliance has managed to avoid the environmental and rehabilitation issues that have become par for the course for hydro projects. This the company has managed by focusing on run of the river projects.