Hydro
Energy
Small Hydro
India has a fairly developed capacity for designing, constructing,
and operating small hydropower plants. Small hydro technology
has improved steadily over time and is now more efficient,
reliable, and automatic compared with several years ago.
Some of the new technological advances include the replacement
of mechanical governing systems by electronic governors
and analogue controls by digital systems. The projects are
now completely automatic from start to grid synchronization.
The concept of remotely operating projects and Supervisory
Control and Data Acquisition systems have been introduced
in this sector. Apart from improvement in equipment designs,
there is a need to improve/standardize civil design and
hydraulic structures to reduce construction time. The areas
of technological interventions include development of direct-drive
low-speed generators for water sources with low heads; standardized
control and monitoring hardware packages; submersible turbo-generators;
compact equipment, which requires the laying of few cofferdams;
appropriate turbine design suitable to electrical output
below 1 MW; variable-speed operation (optimal use of low-
and variable-head sites); flexible small hydro turbines
for very low heads (<2.5 m); and adaptation of high-pole
permanent magnet excitation generators to SHP.
Currently, most SHP capacity additions are being achieved
through private investment. State Nodal Agencies for renewable
energy provide assistance for obtaining necessary clearances
in allotment of land and potential sites. The MNRE has been
providing subsidies for public sector as well as private
sector SHP. For the private sector, the subsidy is released
to the participating financial institution after successful
commissioning and commencement of commercial generation
from the project. The subsidy is provided as an offset against
the term loan provided to the developer. To ensure quality,
equipment used in projects is required to meet international
standards. Projects are also required to be tested for performance
by an independent agency in order to receive the subsidy.
Various financial institutions, namely, IREDA, Power Finance
Corporation (PFC), and the REC, provide loan assistance
for setting up small hydropower projects. In addition to
these agencies, loans are also available from IDBI, IFCI,
ICICI, and some nationalized banks.
Private-Sector Participation
The private sector is involved in implementation of Build,
Own, Operate, and Transfer (BOOT) and Build, Own, and Operate
(BOO) Projects. These models are actively followed in the
small hydropower sector as evidenced in Uttarakhand, where
clear guidelines have been defined by the government. The
GOI is also promoting public–private partnerships
(PPPs) in infrastructure development, including waste- to-energy
and solid waste management. PPP projects with at least 51
percent private equity receive support from this facility
through viability gap funding, reducing the capital cost
of projects and making them attractive for private sector
investment.
Viability gap funding can take various forms, including
capital grants, subordinated loans, O&M support grants,
and interest subsidies. The total government support required
by the project must not exceed 20 percent of the project
cost. The projects may be proposed by any public agency
at the central or state level, the ULB that owns the underlying
assets, or a private agency, with sponsorship from the relevant
central or state government agency. The government has also
set up a special-purpose vehicle—India Infrastructure
Finance Company Limited (IIFCL)—to meet the longterm
financing requirement of potential investors involved in
PPPs. The majority of companies involved in PPPs to date
have been mostly domestic. This trend indicates the increasing
participation of domestic companies and paves the way for
foreign companies to enter through either joint ventures
or equity participation.
