Large hydropower in India is now officially a renewable energy source, as the Indian Government approves measures to promote the hydropower sector in the country.
Previously, only projects under 25MW were declared renewable, but now all hydropower comes under this description. The Union Cabinet, chaired by Prime Minister Narendra Modi, also declared large hydropower projects as part of non-solar Renewable Purchase Obligation. This will cover all projects commissioned from now on (small hydro is already covered).
Tariff rationalization measures were also introduced which includes providing flexibility to developers to determine tariff by back loading of tariff after increasing project life to 40 years, increasing debt repayment period to 18 years and introducing an escalating tariff of 2%.
Further measures to promote hydropower approved by the cabinet include: budgetary support for funding flood moderation component of hydropower projects on case to case basis; and budgetary support for funding the cost of enabling infrastructure i.e. roads and bridges on case to case basis as per actual, limited to Rs. 1.5 crore per MW for upto 200MW projects and Rs. 1.0 crore per MW for above 200MW projects.
India is endowed with large hydropower potential of which only about 45,400MW has been utilized so far. Only about 10,000 MW of hydropower has been added in the last 10 years. The hydropower sector is currently going through a challenging phase and the share of hydropower in the total capacity has declined from 50.36% in the 1960s to around 13% in 2018-19.
As most of the hydropower potential of the country is located in the higher reaches of Himalayas and North- East Region, the government said that increasing hydro development would result in overall socio-economic development of the region by providing direct employment in the power sector. It will also provide indirect employment/ entrepreneurial opportunities in the field of transportation, tourism and other small-scale businesses. Another benefit would be of having a stable grid considering 160 GW capacity addition by 2022 from infirm sources of power like solar and wind.