IEEE Power & Energy Magazine - September/October 2020 - 26

It is also recognized that hydro, including pumped storage
hydro, provides one of the best supports for the grid
and for meeting peak period demand.
Transmission Charges on Actual Energy Transmitted

Final Remarks

The transmission charges for hydro projects should be energy
based. Solar and wind power projects have the benefit of no
wheeling charges for approximately 20% of the plant load
factor, while hydro projects have to pay transmission charges
based on capacity.

India's abundant hydropower potential is an important resource
that can help the country meet its clean energy targets in a
sustained manner and aid in reducing the present overdependence on coal-based thermal generation. Indian power
producers are rightfully following the global trend in developing solar and wind farms on a large scale. It is now up to
policy makers to ensure that the resulting imbalance does not
impede the quality and availability of power that is vital for
the country's growth and socioeconomic development. The
lessons learned from other countries clearly point out that
renewable penetration is to be carefully balanced lest the grid
become excessively susceptible to instabilities.
It is also recognized that hydro, including pumped storage
hydro, provides one of the best supports for the grid and for
meeting peak period demand. In recent years, the government has indeed taken the right steps toward the implementation of several recommendations in the new hydropower
policy. Developers hope that these steps will go a long way
toward reviving India's hydropower sector and encourage the
private sector to visualize the long-term value of investing in
the hydro industry, where its current participation is a meager
7.5% compared to 40% in thermal and 95% in renewables.
Despite several challenges, India continues to construct
new hydro projects, albeit at a slower pace than desired to
meet renewable goals. Recent government initiatives will
likely reverse this trend and, in addition to conventional hydro
schemes, the country will also likely develop some pumped
storage hydro plants, which will go a long way in terms of
integrating ever-expanding intermittent renewable capacity.

Goods and Services Tax on Par With Solar
Hydro projects attract a goods and services tax (GST) of
18% for equipment and 28% for cement. In comparison, a
solar plant attracts a GST at 5%. It has been recommended
that GST rates for hydropower be aligned with those of wind
and solar so that the value-added cost and tax are commensurate for all renewable power projects.

Recent Developments
In 2019, the government gave the hydro sector a shot in the arm by
approving some of the recommendations in the new hydropower
policy, including new funding provisions for hydro projects. It
was declared that all hydro projects, irrespective of size, will be
considered renewable energy projects and, thus, will be eligible
for various incentives like financial assistance and cheaper credit.
Indirectly, this decision has expanded India's renewable
energy basket (77 GW of solar, wind, and small hydro) by
about 45 GW (the installed hydro capacity). The country is
also better placed to not only meet but actually to exceed its
target of 175 GW of renewable energy by 2022.
Furthermore, the evaluation of tariffs for hydro projects
has been rationalized. Large hydro projects are also allowed to
back-load the tariff calculations through increased project life
(40 years), and a longer debt repayment period (18 years) is used
to assess the tariff, which is also allowed to escalate at 2%.
One other important decision is to provide funding for
enabling infrastructure like roads and bridges. Enabling
infrastructure is invariably lacking for otherwise feasible
and ready-to-develop projects, as most are located in remote
and undeveloped areas. Funding on the order of US$200,000
per megawatt has been earmarked for projects up to 200 MW,
and approximately US$150,000 per megawatt are earmarked
for projects above 200 MW.
Projects providing flood moderation will be supported
through budgetary provisions, which will help the viability
of these important multipurpose projects. Although some
of these benefits are currently limited to projects achieving
commercial operation within five years of the notification, it
is hoped that they will be extended to future projects as well
for sustained development of this important resource.
26

ieee power & energy magazine

For Further Reading
Government of India Ministry of Power. Accessed on: 2019.
[Online]. Available: www.powermin.nic.in
National Institution for Transforming India (NITI). Accessed on: 2019. [Online]. Available: www.niti.gov.in
Central Electricity Authority of India. Accessed on: Mar.
2020. [Online]. Available: http://www.cea.nic.in
National Power Portal. Accessed on: 2019. [Online]. Available: https://npp.gov.in

Biographies
Satish Kumar Sharma is with Hindustan Construction Co.,
Mumbai, India.
Vinod Batta is with SNC-Lavalin Inc., Vancouver, Canada.
p&e
september/october 2020

http://www.powermin.nic.in http://www.niti.gov.in http://www.cea.nic.in https://npp.gov.in

IEEE Power & Energy Magazine - September/October 2020

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