What Will It Take To Rescue 9 GW of Stalled Private Hydropower Projects

Union Power Minister RK Singh has shown intent to take over the stalled hydropower projects owned by private companies. That, however, depends if lenders take these projects to the National Company Law Tribunal or states deallocate them.

Of 22,768-megawatt hydropower projects that have not started construction, 9,200 MW are private projects, according to data with the Ministry of Power. Bulk of the public sector projects are stalled in Uttarakhand because of Supreme Court’s order.

For private players, however, the reasons for the delay range from environmental, forest clearances to land acquisition and funding-related issues. And these can be rescued if public sector companies take over.

Singh, in response to a parliamentary query in March, had said states have been requested to reconsider the projects allotted by them to the non-government sector and to allot them to central public sector enterprises for expeditious implementation.

Hydropower projects are still the costliest in terms of production at Rs 8–10 crore per megawatt, leading to higher tariffs on an average of Rs 5–6 per kilowatt hour for 35 years, Rupesh Sankhe, vice president and power sector analyst with Elara Securities, told BQ Prime.

“With renewable power available cheaply, electricity distribution companies had been reticent to sign power purchase agreements for hydropower projects that have a high gestation period and execution and funding risks,” Sankhe said.

Assuming a cost of Rs 10 crore per MW, the stalled projects entail estimated investments worth nearly Rs 2.28 lakh crore. For private players alone, that number would be Rs 92,000 crore.

Hydel power, however, is beginning to make sense now with renewable energy as a serious option to balance the grid. Since sunlight is available during a particular hours of the day and intensity varies, solar power poses a risk to grid stability, which is addressed through battery storage.

Another way is to use hydropower as it can be backed out and started at any point in time, unlike thermal power, which needs to be operated at a technical minimum capacity of 51% all the time, said a senior power consultant with top global firm on the condition of anonymity.

Hydro can be used for four to five hours to replace the high-cost peak power sourced from the market, the consultant said.

Stalled private projects, however, can only be taken over by state-run public sector undertakings such as National Hydro Power Corp., Sutlej Jal Vidyut Nigam Ltd., Tehri Hydro Development Corp., and NEEPCO—owned by NTPC—only if they are taken to the NCLT by lenders.

In that case, PSUs can bid for the projects, said the consultant quoted earlier said.

Projects awaiting environmental and forest clearances and where investors have not made substantial investments can be deallocated and re-awarded to the PSUs, the person said.