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Hydro Development -

The Challenges and Response

R.V. SHAHISECRETARY

MINISTRY OF POWERGOVERNMENT OF INDIA

ICOLD Conference Montreal (Canada)

June 20, 2003

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Share in generation - Global scenario

1973 2000

• Hydro share has reduced from 21% to 17.1%

• Nuclear share increase significant from 3.3% to 16.9%

Gas 12.1%

Oil 24.7%

Coal 38.2%

Others **0.7%

Nuclear3.3% Hydro

21.0%Gas

17.4%Oil 7.9%

Coal 39.1%

Others **1.6%

Nuclear16.9%

Hydro17.1%

** Other includes geothermal, solar, wind, combustible renewables & waste

6,121 TWh 15,379 TWh

3

4700

0

1600

00

1700

00

1500

00

2736

0 6567

8

5242

7

5600

0

2701

0

3100

00Norway Canada Brazil China India

Potential (MW)

Installed capacity (MW)

Hydro Potential - Global Scenario

Only 18% of hydro potential utilised in India

% Potential utilized

58%

41%

31%18%

18%

4

7.3

11.5

7.8 8.8

12.213.0

18.020.5

1992-93 1996-97 2000-01 2002-03

Power Shortages (%) Peak Shortages (%)

Power Supply position in India

5

Hydro development : Rationale

25%29%40%46%

60%71% 75%

54%

'70 '80 '90 2003

Hydro Thermal + Others

Fuel Mix

Years

6

Thrust on hydro

Consistent shortages caused emphasis on short lead projects

• Increase in thermal proportion

- Abundant coal reserves / shorter project lead /

lesser R&R problems

• Still shorter lead of gas projects caused emphasis off the longer

lead hydro projects

• Nuclear also developed as reliable mode of thermal generation

Contd…...

7

Thrust on hydro

Despite best efforts during planning stage, the hydro

development constrained due to longer gestation construction

period

• environmental constraints

• rehabilitation & resettlement problems

• inadequate investigations :

- geological / hydrological surprises

Contd…...

Contd…...

8

Turnaround now in hydro development

• Government of India committed quantum jump in financial allocations

• Varied facilitating measures undertaken

# Added during last twenty years - 13,666 MW

To add during five years (2002-07) - 14,393 MW

Thrust on hydro Contd…...

Contd…...

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Hydro the preferred source

• Clean power - no pollution ramifications during operation

• Most cost effective option, free from inflation linked to fuel consumption

• Effective tool for load management - to counter large variations between peak and off peak requirements and frequency variations

• Supports and supplements socio economic development of the region

- hydro potential mostly in areas which need substantial support for economic development

• Integrated solution for power, drinking water and irrigation

Thrust on hydro Contd…...

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Initiatives on hydro development

Policy on hydro development by Government of India :

Ensuring higher capacity addition through :

• Enhanced Central Sector outlay

• Advance Action plan for next ten years

Exploitation of untapped hydroelectric potential

• Ranking Studies

• Basin wise Action Plan

• Preparation of feasibility studies and DPRs

- 50,000 MW hydro initiative

Contd...

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Promoting small and mini hydel projects

• 25 MW and below fall under ‘non conventional’ category - qualify for benefits

Tariff dispensation

• Rationalization of hydro tariff by allowing premium on sale rate during peak period

• CERC has approved 5% hydro development surcharge on annual fixed charges for Central hydro stations

Contd…...

Contd...

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Facilitating and expediting measures undertaken

• Three stage clearance procedure for Central Sector/ Joint ventures

• Simplified clearances further liberalized by Electricity Act, 2003

• Resolution of inter State issues on sharing of water and power

• Support for land acquisition, R&R, Catchment Area Treatment

• Emphasis on quality of Survey and Investigations

• Renovation, Modernization & Uprating of existing stations

Contd…...

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Hydro development - the process

Ranking Study

Potential assessed

(845 Schemes)

Ranking Study of unharnessed

399 schemes

Hydro Initiative(162 schemes) 50,000 MW

107,000 MW

150,000 MW

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50,000 MW Hydroelectric Initiative50,000 MW Hydroelectric Initiative

Initiative launched in May 2003

• Preparation of Preliminary

Feasibility Reports - Dec.’03 - Sep.’04

Contd...

Consultants identified to undertake Feasibility Studies

162 schemes identified with installed capacity of 50,560 MW located in sixteen States

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Implementation - 2007 - 2017

Clearances / sanctions - Sep.’04 - Jul. ‘06

50,000 MW Hydroelectric ……..50,000 MW Hydroelectric …….. Contd…...Contd…...

Detailed Project Reports - Jan.’04 - Jan.’06

for promising projects, depending on PFRs results

• DPR preparation also through reputed International Consultants

• Process of selection of Consultants for DPR of large projects through ICB

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Major Challenges and Response

Environment protection

Comprehensive legislation in place with well laid out principles

and guidelines

Environment Impact Assessment (EIA) studies carried out to

evaluate pre and post construction scenarios

Minimum use of forest area and close monitoring to ensure

efficient implementation of EMPs

• Plan to create Forest Banks for compensatory

afforestation

Contd...

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Rehabilitation and resettlement

Lessons learnt from past - greater synthesis now between project

developers, affected persons and authorities

A national R&R policy being contemplated

In parallel Ministry of Power has stepped up coordinated efforts

with local / state authorities

• Project specific monitoring mechanism put in place to

ensure implementation of R&R plans

Contd...

Contd…...

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Safety of Dams

Built up considerable knowledge base from global experience

A few Institutions in the country have also geared up - hardware/

software

Experts of repute from across the countries consulted for studies and guidance

Reliability of Investigations

Technological / procedural improvements in Survey & Investigations

• State of Art equipment / technology

• Consultation with Experts - a continuous processContd...

Contd…...

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Multiple agencies’ clearances

The players :

M/o • Power

• Environment & Forest

• Water Resources / Central Water Commission

Continuous process of improvement

Procedures streamlined

Speedy clearances

System of regular Inter Ministerial reviews in force

Contd...

Contd…...

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Compressing Construction cycle

Construction management

• Construction lead reduced - 4 to 5 years

• Clearance / approval period reduced by 18 to 24 months with Three stage clearance procedure

Construction technology

• Choice of technology

- mitigate the geological / hydrological surprises

- faster implementation

Contd…...

Contd...

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Communication

Consensus arrived through regular consultation process

• Political consensus

• Public awareness

• Media support

Contd…...

Contd...

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Hydro Capacity addition target :

2002-07 - 14,000 MW

2007-17 - 50,000 MW

Detailed investigations and preparation of DPRs

EPC contracts for development of projects

Package contracts in other projects

Investment as equity partner / J.V. opportunities

Funding for the project

Opportunities in Indian hydroelectric sector

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Major concern, so long, of the investors

- Poor financial health and creditworthiness of the Sector :

Distribution Reforms, the key confidence indicator

Electricity Act, 2003 notified and A.P.D.R.P. scheme introduced by Government of India :

Distribution business to become commercially viable within next 3 to 5 years

Competitive Environment, Power Trading

Hydro as inexpensive power more viable

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Thank youMinistry of Power

Website

http://powermin.nic.in