(Seminar on Private Sector Participation in Hydropower Development, 7-9 May 2002, pp. RM 79-84)
In the early 1990s, opening of the power sector to investors, including hydro, was considered as an attractive and viable means of development of hydropower. However, due to certain peculiar characteristics, hydro projects do not find favour with the private sector. This paper tries to explore the reasons due to which investment in hydropower generation plants is seen as unviable by the private sector and the lenders, and thereby tries to suggest an approach to make Hydro Power Sector more viable.
India’s power problems are not on account of any shortage of energy generation but because of peak load deficits. Setting up huge base load plants can help solve the problem of power shortage, but will create altogether the other set of problems like backing down of low cost power plants during off-peak hours and compulsory drain on the revenues of SEB’s. India aims to add 55,000 MW of generation in the next five years. The Indian mining system may not be able to give a coal output for such a huge capacity. Hence a part of the capacity will necessarily be needed to be based on hyder. The hydel stations help in obtaining thermal-hydel mix to meet larger peak demands and reduce backing down of thermal stations. Though the initial costs of hydel project is quite high and it takes lot of time to build these projects, yet in terms of long-term costs, hydel power projects offer cheapest rates among all sources of power. Besides hydro power is non-polluting and has lesser effect on environment and helps in conserving fossil fuels and 75% of surface water which otherwise gets drained in the sea without proper utilization, gets partially used. Moreover, the life of hydel station is double than that of a thermal station and its auxiliary consumption is virtually negligible. Despite this fact the thermal: hydel ratio of India is . much less as compared to developed countries.
