Small Hydro Power (SHP) India - Institutional Set-up

India has an estimated SHP potential of about 15,000 MW. From 495 SHP projects an aggregate installed capacity of 1,693 MW has been installed to date. Besides these, 170 SHP projects with an installed capacity of 479.26 MW are under implementation. The share of SHP in all renewables is 31%, only wind is larger at 55%. A database has been created for most potential sites by collecting information from various sources and the State Governments. The database for SHP projects created by the Ministry of Non-Conventional Energy Sources (MNES) now includes 4,233 potential sites with an aggregate capacity of 10,324 MW.
India has exploited 30% of its low-head SHP but there is still minimal development in remote and mountainous areas. Overall, the share of hydro in the Indian electricity grid mix has dropped from 50% to 25% in the last few decades. Yet hydropower is highlighted as playing a key role in expanding the current power capacity, which is 20-30% below demand.

SHP Policy in India

The overall policy of the government is to encourage private sector participation for the power generation field and the SHP sector is moving towards attaining commercial status in the country. SHP projects are increasingly becoming economically viable. It has been recognised that SHP can play a role in improving the energy position in some parts of the country and in particular in remote and inaccessible areas. SHP in remote areas can be focussed on contributing to a national clean energy strategy as well as electricity for processing, communications and health care needs.

Financing SHP in India

A special incentive package has been developed for the promotion of the SHP programme in the North-Eastern states (Sikkim, J&K, Himachal Pradesh and Uttaranchal), giving capital grants per MW. The capital support is to cover 90% of the project cost with support limits for various ranges of projects (below 100 kW, 100kW to 1MW and up to 25 MW).
The development of commercial projects has been the emphasis in 2003-04 covering projects up to 25 MW with subsidy from MNES. In total, 47 commercial projects with a total capacity of 164 MW have so far been supported and 35 of these (in Andhra Pradesh, Karnataka and Himachal Pradesh) have been commissioned by the private sector.
The Indian Renewable Energy Development Agency (IREDA) is the financial institution that provides the loans for setting up SHP projects. It has a strong track record with US$128 million disbursed for 118 SHP projects (180MW) so far and is currently handling a second World Bank financing package designed for SHP.

The MNES has been implementing a scheme of providing financial support for Renovation / Modernisation and capacity up-grading of old SHP Stations. The main aim of the scheme is to renovate the plants, to extend their life with improved performance and reliability. The MNES has so far supported 12 projects for their renovation and modernisation and the scheme has been rationalised and extended to cover projects up to 25 MW.

SHP Industry in India

In comparison to China, much of the demand for equipment cannot be met locally, so there are opportunities for export of systems, or joint venture manufacture under license. There is a lack of major SHP players in India and relatively inexperienced first generation entrepreneurs are coming forward for setting up the projects, therefore there is scope for selling SHP expertise and services.
Certain European manufacturers already have joint ventures in place. Norway has a bilateral agreement to supply turbines, and USA and China are both strongly promoting their technology.