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Business EconomyPosted at: May 30 2016 6:35PM


Assocham calls for expeditious harnessing of hydel projects to meet peak power deficits

New Delhi, May 30 (UNI) Stating that India’s peak power deficit could rise from 2.6 per cent in FY16 to 5.6 per cent in FY22 as demand starts to overtake supply, a new study has underlined the urgency for expeditiously harnessing country’s hydropower resources.
“Availability of reliable, affordable and sustainable electricity is an essential requirement for propelling the India growth story and all potential sources of energy will need to be tapped to meet the envisaged demand and ensure its energy security,” says Assocham-PwC joint study.
Considering an energy elasticity of 0.8, India will need 7 per cent annual growth in electricity supply to sustain annual gross domestic product (GDP) growth of around 8-9 per cent, it said.
In order to achieve the target of 1,800 kilowatt-hour (kWh) per capita consumption and electricity access for 300 million people by 2034, India will require an additional power supply capacity of 450 GW, as such hydropower, with an abundant 148 GW, can substantially contribute towards meeting India’s energy needs, says the study titled ‘Hydropower @Crossroads”.
Considering that coal-based generation accounts for about 70 per cent of total installed capacity and over 80 per cent of total units generating in India, the study cautioned that such higher dependency on thermal generation sources pose a serious threat to energy security in terms of fuel availability, long-run economic viability and environmental sustainability.
In this context, the report says, “Hydropower can play a crucial role in India’s sustainable development and energy security given that it meets the criteria of sustainability, availability, reliability and affordability,”
It states that share of hydropower in India’s energy mix has decreased by almost 30 per cent in past 40 years owing to various issues like water sharing disputes, environmental concerns, rehabilitation and resettlement (R&R), land acquisition, delays in procuring clearance and approvals, inadequate technical and financial capability of developers.
Considering that hydropower projects are capital-intensive and are faced with various risks and uncertainties, optimum risk allocation mechanisms between developers, government and project affected people need to be in place, suggests the study.
Moreover, new financing avenues need to be developed along with sufficient funding support from the government in order to attract investment in the sector, it adds.
It also calls for extending adequate fiscal incentives in terms of tax holiday, Value Added Tax (VAT) exemption, and exemption of custom duty to help reduce hydropower project cost and secure a cheaper source of finance, it says.
Viability gap funding (VGF) can also be a viable proposal to make hydropower projects price competitive, it further says.
“Government may create a special hydropower development fund or can use the clean energy fund to provide loans to hydro projects at a lower rate of interest,” it suggested.
UNI NM SW SB 1834
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