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Impediments in Development

Published: 3rd Mar, 2022

The main barriers/concerns that have come in the way of development of hydropower projects are briefly discussed below.

  1. Longer gestation period and capital intensive nature of the projects: Preparation of detailed projects reports (DPRs) for hydropower projects takes relatively longer period than for thermal projects because reliable hydrological, geological, seismological and environmental studies have to be carried out for a longer period. Thus hydropower projects generally entail a long gestation period. In addition to this, these projects are comparatively capital intensive. In the context of resource shortages and continuing power shortages, thermal projects (coal, liquid fuel and gas), which need a relatively short gestation period, have been getting priority in fund allotments.
  2. Dearth of good contractors: A matter of concern in the execution of large projects is the dearth of competent and resourceful contractors, as it often results in time and cost overruns of hydro projects. Inter-state aspects: A large number of hydropower projects having common river systems between adjoining states are held up on account of inter-state aspects. Some of these projects have received the techno-economic clearance (TEC) of CEA but the investment sanction could not be accorded due to inter-state aspects. A number of projects have also not been accorded CEA clearance on account of inter-state issues.
  3. Environmental impact and rehabilitation issues: Important environmental concerns in hydro-electric projects are: (a) rehabilitation of project-affected people; (b) deforestation; (c) likely submergence of archaeological, religious and historical monuments; (d) protection of flora, fauna, forests, and wildlife; (e) degradation of catchment area; and (f) disaster potential in the event of earthquakes, reservoir induced seismicity, surplusing of reservoirs, etc. Rehabilitation of project-affected people is also a major issue in implementation, especially in case of storage-based hydro development. It is essentially a human problem and has to be dealt with understanding and sensitivity. In fact, many times it is one of the main reasons for the delay in the execution11 of projects. Sardar Sarovar, Indira Sagar, Bansagar Tons and Tehri are some of the hydro projects where the progress had been severely hampered in the past from sustained opposition to project construction by environment activists and project-affected people.
  4. Valuation of forestland based on net present value: The manner of valuation of forest land diverted for non-forestry purposes based on the net present value (NPV) of diverted land has been a matter of concern for developers of hydropower projects. As per the recommendations of a Centrally Empowered Committee (CEC), the NPV of forestland diverted for non-forest use has been charged at Rs5.80−9.20 lakhs per hectare, depending upon the density of forest involved. Under NPV, the state government has to pay to the CEC the NPV of forestland lost to mining and other projects, including resettlement. State governments, in turn, have asked for exemption in case of projects such as government hospitals, schools, and rainwater harvesting meant for public welfare. In some cases, it is argued that loading of NPV on the project may result in increase in tariff of hydro-electricity.11 There is thus an urgent need to rationalize NPV calculations of forestland in case of hydroelectric projects. The matter had also come up before the Supreme Court of India, which has directed the formation of a committee to look into various issues pertaining to assessment of NPV. The Energy and Resources Institute is also undertaking a study to analyze various aspects of NPV calculation for hydroelectric projects in India.
  5. Law and order problems: Disturbed law and order is one of the factors causing delay in project execution and even suspension of work. Some of the hydropower projects affected due to these problems are Dulhasti, Upper Sindh, Doyang and Dhansiri.
  6. Land acquisition problems: The problems arising in acquisition of land for hydropower project are causing suspension and delay in the construction activities. Thein Dam, Doyang, Ghatgar pumped storage plants are some of the projects affected in the past due to this problem.
  7. Geological surprises: The features of the hydropower projects being site specific, depend on the geology, topography and hydrology at the site. The construction time of a hydro project is greatly influenced by the geology of the area and its accessibility. Even when extensive investigation using new techniques of investigations are undertaken, an element of uncertainty remains in the sub-surface geology and the geological surprises during actual construction cannot be ruled out. This in turn adds to the construction risks.
  8. Power evacuation: A number of the hydropower projects are located in remote sites and the home states do not have adequate demand. Timely provision of power evacuation system presents many complexities in such cases, since (a) the beneficiaries are to be identified well in advance, and (b) where there are serious right-of-way constraints, excess capacity would have to be built in one go considering likely future development of projects in the evacuation corridor. This could result in high transmission tariffs initially and also adversely affect sustainability of the project in case of slippages in projects. These issues are especially relevant in case of projects in NER.
  9. Lack of private sector interest: The private sector has also not been evincing much interest in taking up hydro projects in view of non-availability of adequately investigated projects, construction risks, etc.
  10. Tariff and regulatory issues: The existing tariff formulation norms for hydro projects (based on a cost plus approach) with no premium for peaking services and the provision for 12% free power13 to distressed states from the initial years are also proving to be deterrents. Small hydro segment: Development of small hydro often suffered due to inaccessibility of the sites, lack of power evacuation infrastructure, investigation and construction difficulties, land acquisition and financing difficulties, inadequacies in institutional support and in some cases law and order problems.
  • In the context of imminent oil price rise and depleting re­sources of natural fuel, the pri­orities of power sector is fo­cused on development of hydro power for capacity addition in forthcoming Five Year Plans.
  • As a result, the responsibilities of hydro power sector have in­creased manifold.
  • In terms of development, the hydro sector has not been given its due share, owing to its long gestation pe­riod resulting in cost and time over run, delay in clearances from various departments and also for the want of funds.
  • These impediments can be removed by effective planning and making the hydro policy more flexible.
  • Helps in the fighting Climate Change & Sustainability issues, helps in bringing down carbon emissions & carbon footprint.
  • Environment friendly &Non Polluting – Unlike Nuclear and Thermal Power
  • Plants, Hydro Power Plants hardly discharge any form of solid, liquid or gaseous wastes into the ecosystem.
  • Relatively longer useful plant life.
  • Run- of -River (ROR) projects have comparatively low environmental damage.
  • Helps in providing inexpensive power, especially once the Project achieves financial breakeven/depreciates its assets as Operations & Maintenance costs are much lower & consistent (independent of cost escalations in fuel) as compared to Thermal Power Plants.
  • Offloads the pressure on current account deficit as it helps in lowering fuel Import bills for the country.
  • Helps in sustainable usage of coal for power demands of the country.
  • Helps in meeting the peak power demand in the country, enhancing power system stability.
  • Improved Plant Load Factor of thermal units- Grid stability and Peak Load Management.
  • Spontaneous starting, stopping and load variation ability.
  • Hydropower provides high level of service to power system (reliability, flexibility, efficiency).
  • Many International studies consider hydropower as the best available option for reducing GHG emissions and present as a good candidate for CDM benefits.
  • Remote area development- Improves infrastructure of interior areas and local population gets manifold advantages including better economy, job opportunities, education & healthcare facilities and connectivity &communication facilities.
  • Multipurpose Hydro power projects- Help in flood moderation, irrigation, navigation and drinking water requirement.
  • Catchments of river basins get developed as Catchment Area are treated by the Hydro Project Developers. This helps in curtailing massive soil erosion & checking landslides in mountainous regions.
  • With relative independence from international market like oil prices, hydropower involves no extra foreign exchange outgo.
  1. The growing power demand in India warrants the need of increase in power generation which can be fulfilled by development of reliable energy sources such as Hydropower. Presently, the existing Scenario of Hydropower in India demands an urgent need of accelerated hydropower development.
  2. The public at large must be made aware that there is no alternative to the increased availability of energy in generating economic growth commensurate with the target of welfare and up-liftment desired by them and the sources of power that are capable of providing them without perpetual cost liabilities in terms of environmental degradation.
  3. The involvement of private sector and joint ventures with the neighboring countries can go a long way towards achieving the goal of “power to all” in the coming years.
  4. To counter the problem of location disadvantage, The GoI in collaboration with The State Govts. and selected Project Developers should priorities stretches of approach roads to select priority project sites. These roads could be constructed on PPP or BOOT model, with Viability Gap Funding or Grants. Better security forces should be deployed in priority based interior areas, so as to nullify the impacts of local extremist groups.
  5. Amendments in Acts, Rules, Regulations, etc. should be methodically publicized by the various Ministries of Government of India / State Government. Strict adherence to Checklists of various clearances should be mandated from the Ministries thereby, keeping a check on the processes followed and documents required by the Clearing agencies for various clearances. Various Ministries, in collaboration with State Govt. Departments & Project Developers could organize regular workshops on new changes & amendments in Acts, Rules & Regulations so that all stakeholders have the same understanding of the clearance procedures & processes. The lowest level govt. officials actually working on clearance process & proposal files should be given good incentives on timely delivery of intermediate & final clearances. Such incentives could be funded by clearance fees to be submitted by Project Developers at intermediate & final clearances.
  6. Inter-state issues could be solved by conducting relevant stakeholder dialogues, understanding their core issues and addressing these issues through various modes of discussions, negotiations, arbitrations or at last legal proceedings.
  7. The Stringent Evaluation process for clearance of a selected project has to be accepted by all authorities and stake holders. Even though the process of TEC and EAC & FAC are stringent, but still if more aspects are required to be added for clearance shall be added to satisfy all the stake holders.
  8. After considering all technical & geological aspects at the time of TEC and consultation with stake holders at the time of public hearing, no midway stoppage of the project on any account shall be permitted. Once construction starts the project shall be treated as project of national importance.
  9. In principal approval on the feasibility report of the project must be given by MoEF so that later on project is not rejected on account of number of trees to be felled. MOEF may even give a formula every state and district wise about what number of trees would be allowed to be felled per hectare considering the density of the forest.
  10. Wild life areas and national parks or national reserves should be identified& Eco-sensitive zones well defined by respective state governments before handing over of the project to the developer.
  11. There should be two public hearings; one before the main Public Hearing where all doubts are cleared before hand, so that it is clearly known that public is in favour of or against the project. The second Public Hearing to be conducted on the due date when all the presentations are made and public views are heard.
  12. Tariff determination for hydro project must be relooked to provide adequate return to the developer.
  13. HPO (Hydro Power Obligation) of 10% to 15% should be provided as incentive so that it becomes mandatory for the large industrial consumers procure power from Hydro sources.
  14. For Regulatory and Control Aspect, strict monitoring of all conditions imposed during clearances to be monitored strictly.
  15. Respective Government to Provide support and subsidy for development and up gradation of roads and bridges, railway sidings, river jetties etc or develop infrastructure on cost sharing basis so that one project in the basin does not feel the pressure.
  16. Construction of Balancing Reservoirs intermittently in the large river basins so as to provide continuous water flow required for the bio diversity mechanism.
  17. Construction of Storage Dams for creating buffer storage in the technically feasible areas.
  18. Sustainability analysis shall form a part of the project development and should be carried out by identified and experienced agency before start of the project so as strengthen confidence with respective Government and stake holders.

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