According to reports, the government, which plans to make it mandatory for electricity distribution companies to buy hydropower, is also considering launching tradable certificates for the states that do not have potential to meet the proposed obligation. It will shortly kick off the consultation process to amend Electricity Act to promote investments and hydropower. Hydro energy certificates will enable northern and northeastern states to attract more investments besides ensuring viability for the projects.
“India can tap higher hydropower potential by making it mandatory for distribution companies to promote the same on the lines of solar and wind power. For the states that have geographical limitations to put up hydro power projects, we are considering to create a tradable instrument like renewable energy certificates (REC), which one can buy to meet the hydropower purchase obligation,” said a power ministry official.
The ministry has already circulated a concept note among the stakeholders. Based on their feedback, it will propose the quantum of hydropower distribution companies need to procure. It will also establish the value of hydropower certificates.Central Electricity Regulatory Commission introduced REC mechanism to ease the purchase of renewable energy for obligated entities that are not well endowed with renewable energy sources. One REC represents a megawatt-hour of energy generated from renewable sources.
Launched in 2010-11, solar and non-solar renewable energy certificates are traded on Indian Energy Exchange and Power Exchange of India. As against the potential of 1,45,320 mw of potential, only about 40,000 mw of hydropower projects have been commissioned in India so far. The ministry wants to make it obligatory to procure a target proportion of state’s total long term tied up capacity from large hydropower projects bigger than 25 mw.
“Share of hydro power has come down to 17% from as high as 46% during 1960s in country’s electricity basket. We want India to add 30,000 mw of hydropower generation capacity in 13th and 62,000 mw in 14th Five Year Plan to arrest the fall in its share, which has come down to 17%,” said a power ministry official. He said that the move will enable hydropower projects to find assured market and achieve financial closure.
In 1998, India announced the hydropower development policy for effective utilisation of water resources. In May 2003, government launched 50,000 mw hydro initiative in which preparation of pre feasibility reports of 162 projects taken up by Central Electricity Authority through various agencies.
However, number of large hydropower schemes has failed to take off on account of delayed environment permissions and opposition from the project affected people.