Tweaking of funding norms for hydropower projects in works

New Delhi: India is looking to tweak the funding modalities for hydropower projects in the country, aiming to harness the unutilised potential in the north-eastern and Himalayan states as part of its clean energy shift.

A senior government official told ET that NITI Aayog member VK Saraswat-led advisory group is firming up an action plan for river basin development and hydropower projects in these states.

"The focus would be on keeping the long-term generation tariffs of hydropower projects at par with average national power purchase tariff," the official said.


According to the official, one of the reasons for the high tariff of hydropower is loading of the cost of flood moderation and enabling infrastructure in project cost.

"In this backdrop, an action plan is being firmed up to enhance the budgetary support for enabling infrastructure and tweaking the tariff rationalisation measures to bring down the tariff, thereby reducing the burden on the consumer," he said.

The government can also look at providing longer-term soft loans for such projects to even out tariffs over time while making it mandatory for power retailers to include a share of hydropower in their purchases, the official added.

While the national power purchase cost is ₹3.75 per kWh, for hydropower it goes up to ₹8.55 per kWh, making it unviable for consumers.

As per the Central Electricity Authority, India has an installed hydropower capacity of 46,850 MW, which is 11.4% of the total installed capacity. However, it is estimated that India has the hydropower potential of 145,320 MW.

Besides being environment friendly, hydropower has the ability for quick ramping, black start, reactive absorption etc, which makes it ideal for peaking power, spinning reserve and grid balancing and stability.

Further, hydropower also provides water security, irrigation and flood moderation benefits, apart from socioeconomic development of the entire region by providing employment opportunities and boosting tourism etc.