According to reports, Karnataka has accorded sanction to 21 renewable energy projects for a combined generation capacity of 114 Mw of power. The state government recently issued an order for these projects. However, the projects are subject to clearances from the departments of water resources, forest, ecology, and pollution control board among others.
Out of 114 Mw capacity sanctioned, 15 Mw is from wind energy and 2 Mw from the biomass, while the rest would come from the mini hydel power projects. Clean Wind Energy Private Ltd has proposed to set up a windmill in Tarikere taluk of Chikmagalur district. White Sales has proposed to set up the 2 Mw biomass gassifier based power plant in Dharwad.
Presently, Karnataka draws about 1,000 Mw of power from the renewable energy sector, of which 700 Mw power comes from the wind energy sector. Based on the recommendations of the Karnataka Renewable Energy Development Limited (KREDL), the energy department has sanctioned these projects. The department has approved the setting up of 19 mini hydro-electric stations at various places in the state. Some of the major power producers include Kare Power Resources Private Ltd, Chand Power Projects Pvt Ltd, Venika Green Power Pvt Ltd, MVK Infrastructure Pvt Ltd and Nimishamba Power Pvt Ltd.
So far, in the mini hydel power sector, the state government has allotted 700 Mw capacity projects to independent power producers. Of this, about 10 per cent is under implementation and the balance projects are still to secure clearances from various departments, S Chandrasekhar, managing director, Bhoruka Power Corporation Ltd said.
“The rate of implementation of mini hydel power projects takes a long time if the projects are located in the forest areas due to delay in approval from the ministry of environment and forests. Other projects in the non-forest areas take anywhere 3 to 4 years for implementation,” he said.
Presently, Bhoruka Power Corporation operates mini hydel projects with a combined generation capacity of 110 Mw. The company is in the process of adding two more projects of 18 Mw across Kumaradhara River in Dakshina Kannada district and a 15 Mw project in Gulbarga district.
He said the company plans to raise its renewable energy capacity to about 150 Mw in the next two years. It is also studying wind mapping for about 100 Mw of wind power projects in Chikmagalur district and would be commissioning 40 Mw project by end of this year.
It is exactly for the reasons mentioned above by S Chandrasekhar, managing director, Bhoruka Power Corporation Ltd that mini hydel projects though very attractive to private equity players becasue of technology is mature and the costs very attractive have often turned out otherwise unless the due diligence goes beyond the usual into specifics of project, location, R&R issues and permits.
The demand for such good quality projects and the fascination of many of the investors towards a mini hydro project has led to either investing at very high valuations of generating assets or in developers with one existing project with a huge project pipeline with projects that often just sanctioned.
What investors have failed to understand is how similar the clearance and permitting issues are in small hydro much like larger projects and more like regular thermal power projects including environment and pollution.
Incidentally, Bhoruka Power Corporation has raised has raised about $18 million from Darby Asia Mezzanine Fund II of Darby Overseas Investments Ltd, the private equity arm of Franklin Templeton Investments and is probably one of the more succesful mini hydro developers in India and has done a commendable job on installed and generating capacity in India so far.
Even in this sanction by Karantaka government, the entire environment and pollution clearances have been left to the developer. Developers that Panchabuta spoke to tell us that this typically takes anywhere from 18-30 months depending on how efficient the developers are in securing permits. Also, almost all permits that developers need to obtain are almost the same irrespective of size of project, and hence often the R&R costs and time are rather pain staking.