Government Mulls Longer Fixed Cost Recovery Period For Hydro Power

Government Mulls Longer Fixed Cost Recovery Period For Hydro Power

The government is looking at extending fixed cost recovery period of hydro projects to 30- 35 years, from 12 years at present, to bring the tariff down to as low as Rs 2 per unit, Power Minister R K Singh has said.

The ministry is working on the hydropower policy to provide Rs 16,000 crore assistance to projects to promote the clean source of energy and it is expected to be tabled before the Union Cabinet for approval this month.

“The depreciation period should also be increased to reduce the (fixed) cost of hydro plants. The life of hydropower plants is above 70 years,” Singh, who is also the minister of new and renewable energy, told PTI in an interview.

“Thus, the depreciation should be spread over 30-35 years instead of 12 because tariff is linked with depreciation,” he added.

He said it happens with a lot of hydropower plants that the tariff remains high at Rs 6 per unit during the recovery period and after realisation of fixed cost, it comes down to 80 paisa per unit.

Extending the recovery period will levelise the tariff and bring it down to as low as Rs 2 per unit, making it more viable, Singh said.

Talking about other steps being considered for hydro projects, he said: “We want to segregate irrigation and power components of hydro plants from the project cost so that it gets subsidy (for irrigation components).”

India, he said, has realised about 45 GW, out of 145 GW hydropower potential in the country.

“That is the cleanest energy available. But it has to be viable. Solar and wind would not work without hydro. Thus, time of the day tariff would be part of Electricity Act amendment bill. We are also bringing also bringing the hydro policy to boost the segment,” he said.

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Singh also talked about boosting domestic manufacturing capacity of solar equipment saying that the new tenders would provide for setting up production capacities here by bidders.

“We want to bring two expressions of interest for setting up domestic manufacturing capacities of solar equipment. That would be for polysilicon…,” he said.

Only those bidder would be able to bid who would set up manufacturing capacities here in India from polysilicon onwards, Singh added.

He further said that the government would buy equipment to aid generation of 20 GW but the bidders would set up manufacturing capacity in stages.

“They would set up manufacturing capacity for solar cell and modules in first year. In the second year they would set up capacity for solar wafers. In third stage, they would set up capacity for polysilicon,” he said.

Singh also talked about government’s plans to embark upon floating solar capacities at hydro plants where evacuation facility is already available.

He was of the view that that the hydropower can also help as balancing power for such capacities.

On the storage solutions for solar and wind, he said that for renewable they are expensive at present but are expected to become cheaper.

On the stressed plants he said, “Two are operational now and 7 more would be functional under SHAKTI scheme (for providing coal linkage). Some plants are still on ground and have not taken off. Nothing can be done about those.”

In some plants, promoters could not bring equity, he said, adding that the government is examining different options for them like bringing in new promoters or operators.

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On the finalisation of Ultra Mega Power Projects (UMPP) bidding document, Singh said the future in thermal is for pit head UMPPs, otherwise it would not be competitive. We have sought comments from states. They still have one more week’s time to send their views. Thereafter the ministry will start processing it.” Read More

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