GS Paper - 3 (Energy)

Around 18 GW hydro capacity additions are required to meet the hydro purchase obligation (HPO) norms by 2030 in the country, according to rating agency Icra. To further the growth of hydro energy segment, the Centre has outlined policy measures over the last two-year period to promote the investments in the segment through notification of HPO norms, long term trajectory for HPOs as well as tariff rationalization measures.

What

  1. Based on the notified hydro purchase obligation norms & trajectory available till 2030, incremental hydro power capacity requirement is estimated to remain significant i.e. at about 18 GW, which corresponds to about 39 per cent increase over the existing installed hydro power capacity in the country.
  2. The HPO norms have been subsequently notified by SERCs (state electricity regulatory commission) in few states only, in line with policy targets as of now.
  3. The hydro energy segment faces many other challenges like elongated construction schedule, significant resettlement, rehabilitation and land acquisition issues, delays in clearances and geological/ topological risks which have led to significant time and cost over-run for hydro projects.
  4. This is also reflected from the fact that average project cost for the commissioned hydro project capacity by CPSUs (Central public sector undertakings) during FY 2017-2021 remained at about Rs 13-14 crore /MW.
  5. The hydro capacity addition in India has remained sluggish historically, with the significant execution challenges as also seen in the incremental capacity addition of about 22 GW between 2000 and 2021, representing a CAGR (compounded annual growth rate) of mere 3 per cent in the hydro segment.