The Indian government has changed its policy to accord the renewable energy status and new funding provisions on all large hydroelectric projects from FY2020. Previously, only hydroelectric power projects of less than 25 Megawatts (MW) were categorized as renewable energy projects in India.
From now on, any large hydroelectric projects in India with more than 25MW generating capacity will be extended the status of renewable energy projects. This will extend various incentives to these projects such as financial assistance and cheaper credit. These projects will also be added under the non-solar renewable energy purchase obligation, encouraging power purchasers to source electricity from large hydropower projects.
The current hydro-power tariffs are higher than other energy sources due to natural problems faced by most projects as they are in difficult underdeveloped areas, with geographical concerns, flood moderation and enabling infrastructure resulting in higher costs and time delays. The new policy will help address some of these issues and help in reducing tariffs to make hydropower competitive. Independent credit rating agency ICRA has lauded the policy changes and fund allocations, calling it a positive move.
These projects will be allowed to reduce their tariff after increasing their project life to 40 years, enhancing the debt repayment period to 18 years from 12 years and introducing an escalating tariff of 2%. The cabinet also approved funding of enabling infrastructure like bridges and roads of INR1.5 crore per MW for projects up to 200MW and Rs one crore per MW for projects above 200 MW. India has a hydro-power potential of 145,320 MW, of which only about 45,400 MW has been utilized so far.
Date: 22.04.2019 | Source: Economic Times