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Tags Current Affairs

Cabinet approves measures to promote Hydro Power Sector

Date: 08 March 2019 Tags: Infrastructure

Union Cabinet chaired by Prime Minister Narendra Modi has approved measures to promote hydro power sector in the country. These include declaring Large Hydropower Projects (HPO) as part of non-solar Renewable Purchase Obligation (RPO)

Some measures are

  • Large Hydropower Projects to be declared as renewable energy source. Earlier, only hydropower projects less than 25MW are categorized as renewable energy.
  • HPO will be considered as separate entity within non-solar renewable purchase obligation.
  • Necessary amendments will be introduced in Tariff Policy and Tariff Regulations to operationalize HPO.
  • Ministry of Power will notify trajectory of annual HPO targets based on projected capacity addition plans in hydropower sector.
  • Tariff rationalization measures: It will include providing flexibility to developers to determine tariff by back loading of tariff after increasing project life to 40 years.
  • Moreover, debt repayment period will be increased to 18 years and escalating tariff of 2% will be introduced.
  • Budgetary support: It will be provided for funding flood moderation component of hydropower projects on case to case basis.
  • It will be also provided for funding cost of enabling infrastructure i.e. roads and bridges on case to case basis as per actual.
  • In this case, it will bel limited to Rs. 1.5 crore per MW for upto 200 MW projects and Rs. 1.0 crore per MW for above 200 MW projects.

 Benefit of these measures

  • It will aid in providing stable grid considering 160 GW capacity addition by 2022 from infirm sources of power like solar and wind.
  • It will result in overall socio-economic development of Himalayas and North- East Region as most of the hydro power potential is located in these regions.
  • It will provide direct and indirect employment in the power sector and entrepreneurial opportunities in the field of transportation, tourism and other small scale businesses.


  • India is endowed with large hydropower potential of 1,45,320 MW of which only about 45,400 MW has been utilized so far. Only about 10,000 MW of hydropower has been added in last decade. Moreover this sector is currently going through challenging phase and share of hydropower in total capacity has declined from 50.36%  in 1960s to around 13% in 2018-19.
  • Hydropower also plays important achieving India’s set target of installing 175GW of renewable energy by 2022 and achieving 40% of total capacity from non-fossil fuel sources by 2030 to honour its nationally determined contribution for climate change.

Benefits of Hydropower

  • It is environment friendly and has ability for quick ramping, black start, reactive absorption etc. during peaking power demand, spinning reserve and grid balancing/ stability.
  • Hydropower project also provides water security, irrigation and flood moderation benefits and brings socio-economic development of entire region by providing employment opportunities and boosting tourism etc.
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