WHSB ENERGY VENTURES SDN

BHD
(A Subsidiary of Warisan Harta Sabah Sdn. Bhd., the wholly owned investment
arm of the Sabah State Government)

(1080599 W)

SMALL HYDROPOWER POLICY IN INDIA

12 AUGUST 2016

PREPARED BY

APPROVE BY

FIERA NADILAH SUHAIMI

EN. SHAIFUL BATONG

CHIEF EXECUTIVE OFFICER

CONTENTS
1.

INTRODUCTION..............................................................................................................2

2.

SMALL HYDROPOWER PROGRAMME......................................................................2

2.1 Hydropower Project Classification..................................................................................3

3.

POLICY LIBERALIZATION............................................................................................3
3.1 HYDROPOWER POLICY 2008.....................................................................................4
3.1.1 Objectives of The Hydropower Policy......................................................................4
i.

Inducing private investment in Hydro Power Development.......................................4

ii.

Harnessing the balance Hydro Electric potential.....................................................4

iii.

Improving Resettlement and Rehabilitation............................................................4

iv.

Facilitating financial viability..................................................................................4

3.2 ELECTRICITY ACT 2003..............................................................................................4

3.2.1

Rupees two thousand five hundred crores, provide that......................................5

3.2.2

Rupees five hundred crores for any other scheme not covered by clauses (a) and

(b) of the above..................................................................................................................5

3.3 NATIONAL WATER POLICY 2005...............................................................................6
3.4 NATIONAL ELECTRICITY POLICY 2005...................................................................6
3.5 NATIONAL TARIFF POLICY 2006...............................................................................7
3.6 NATIONAL REHABILITATION &RESETTLEMENT POLICY 2007.........................7
4.0 REFERENCES.....................................................................................................................9

1. INTRODUCTION
India has an estimated small hydropower (SHP) potential (less than 25 MW) of about 20,000
MW. In December 2012, 6474 small scale sites with 19,749 MW aggregated small
hydropower potential have been identified in the country with 4,143 sites with total of 15,151
MW capacity and are located on small streams that uses the run-of-river scheme. 379 sites of
total 1,645 MW capacity are located on the toe of existing irrigation dams and 1,952 sites
with total capacity of 2, 953 MW are located on existing canal, falls and barrages.

Figure 1: Small Hydropower capacities in India; WSHDR INDIA 2013

The Indian Ministry of New and Renewable Energy (MNRE) that is in charge of
small scale hydro up to 25MW is contemplating a small hydropower assessment programme
in its 12th plan period (2012-2017). The focus for the SHP Programmes is to lower the cost of
equipment, increase its reliability and set up projects I area which gives the maximum
advantages in terms of capacity utilization. (United Nations Industrial Development
Organization, 2013)

2. SMALL HYDROPOWER PROGRAMME

Ministry of New and Renewable Energy has been vested with responsibility of
developing Small Hydropower (SHP) projects up to 25MW station capacities. Most of the
potential is in the Himalayan States as the river-based projects and in the other States on
irrigation canals.

Small Hydropower (SHP) programme is one of the thrust areas of power generation
from renewable in the Ministry of New and Renewable Energy. Hydropower projects has
been recognized where the projects can be a critical role in improving the overall energy
scenario of the country and in particular for the remote and inaccessible areas. The Ministry
is encouraging the development of small hydropower projects both in the public as well as
the private sector. Equal attention is being paid to the grid-interactive and decentralized
projects. (Ministry of New and Renewable Energy, 2012)

2.1 Hydropower Project Classification

Hydropower project are categorized in small and large hydro. In India, small hydropower
project is categorized as project up to 25 MW station capacities and the mandate for the small
hydropower is given to the Ministry of New and Renewable Energy while, the Ministry of
Power, Government of India is responsible for the large hydropower projects. The small
hydropower projects can be classified as below. (Ministry of New and Renewable Energy,
2012)
Classification of Hydropower Project
Micro Hydro
Mini Hydro
Small Hydro

Station Capacity (KW)

Up to 100
101 to 2,000
2,001 to 25,000

3. POLICY LIBERALIZATION
Private sector entrepreneurs were allowed to set up enterprises, either as the generating
companies or as licensees. The generated power was to be sold to state electricity boards
(SEBs) on the basis of a power purchase agreement. In order to ensure that the investor
brings in additionality of resources to the sector where it was stated that not less than 60% of
the total outlay for the project has to come from sources other than Indian public financial
institutions (FIs).

3.1 HYDROPOWER POLICY 2008

Emphasised the development of hydropower capacity and increasing private sector
participation. It is a policy on accelerated development of Hydro Power was announced in
January 2008 with the following objectives. (SINGH, 2008)
3.1.1 Objectives of The Hydropower Policy
The programmed capacity addition from hydro projects during 11th Plan is 16553 MW of
which the Central and State Sectors will contribute 9685 MW and 3605 MW respectively and
the balance 3263 MW will be contributed by the Private Sector. Based on the demand
forecast and on the level of preparedness of various agencies, a hydro capacity addition of
about 30,000 MW is envisaged during the 12th Plan.
The government of India as set the following broad policy objectives for accelerating
the pace of hydro power development.
i.

Inducing private investment in Hydro Power Development

ii.

Harnessing the balance Hydro Electric potential

iii.

Improving Resettlement and Rehabilitation

iv.

Facilitating financial viability

3.2 ELECTRICITY ACT 2003

Changed the industry structure and laid the foundation for open access which suits
hydropower projects that are naturally best suited to meet peak power requirements in the
country. The Electricity Act, 2003 has come into force on 10th June 2003 repealing the earlier
Electricity Act 1910, the Electricity Supply Act 1948 and the Electricity Regulatory Act 1998.
This act has permitted direct commercial relationships between generating companies and
consumers. The Act has provided a generating company the right to open access through
state/central transmission utilities.
The Act has also enlarged the cope of captive power plants permitting Group Captive
Plants wheeling power to their consumers. Reforms in the Electricity sector in the country
have brought into existence many more organization s like the Central Electricity Regulatory
Commission and State Regulatory Commissions.
The Act has also emphasized that any generating company intending to set up a hydro
generating station shall prepare and submit to the Authority for its concurrence, a scheme

estimated to involve a capital expenditure exceeding such sum as may be notified by the
Central Government from time to time. The limit notified is as the following
3.2.1

Rupees two thousand five hundred crores, provide that

a) The scheme is included in the National Electricity Plan (NEOP) as notified by
the Authority and the scheme conforms to the capacity and type (run-of-river
storage) as mentioned in the NEP.
b) The site for setting u the hydro generating station has been allocated through
the transparent process of bidding in accordance with the guideline issued by
the Central Government.

3.2.2

Rupees five hundred crores for any other scheme not covered by clauses (a)
and (b) of the above.

The CEA shall before be concurring in any scheme submitted to it under sub-section (1) have
particular regards to the following opinion;
a) The proposed river-works will prejudice the prospects for the best ultimate
development of the river or its tributaries for power generation consistent with
the requirements of the drinking water, irrigation, navigation, flood-control or
other public purposes. This purpose the Authority shall satisfy itself, after
consultation with the State Government, the Central Government or such other
agencies as it may deem appropriated that an adequate study has been made of
the optimum location of dams and other river-works.
b) The proposed scheme meets the norms regarding dam design and safety.
The above provision is applicable to all hydroelectric projects irrespective of State/
CPSUs/IPPs. Ministry of Water Resources or Central Water Commissions will examine the
following aspect of hydroelectric schemes.

Hydraulic Structures for Hydropower

Water Management
Flood Control
Dam Safety
Regulation and Development of Inter-State River and River Basins
Water Laws Legislation
International Water Laws
The matter regarding river common to India Commission for Bangladesh and India,
Indus Water Treaty, Indus Commission.

(Ministry of Power Government of India, 2008)

3.3 NATIONAL WATER POLICY 2005

The government has brought out a National Water Policy in the year 2005 which inter-alia,
envisages that water is a prime national resources, the basic need and a precious national
asset. Planning development and management of water resources need to be governed by
national perspective.
It has further stated that in the planning and operation of system, water allocation
priority should broadly be in the order of drinking water, irrigation, hydropower, ecology,
agro-industries and non-agriculture industries, navigation and other uses.

3.4 NATIONAL ELECTRICITY POLICY 2005

Emphasised on full development of feasible hydropower potential issues of long-term
financing, centre and state participation were addressed. In the National Electricity Policy
announced by the Government in February 2005and the following are the thrust areas that
have been identified for Hydro Generation.

Hydroelectricity is a clean and renewable source of energy. Maximum

emphasis would be laid on the full development of the feasible hydro potential
in the country. The 50,000 MW hydro initiative has been already launched and
is being vigorously pursued with DPRs for projects of 33,000 MW capacities

already under preparation.

Harnessing hydro potential speedily will also facilitate economic development
of States particularly the North-Eastern States since a large proportion of the
hydropower potential is located on the states. The States with hydro potential

are needed to be focused for full development of the potential.

Hydro projects call for comparatively larger capital investment. Therefore,
debt financing of longer tenure would need to be made available for hydro
projects. Central Government is committed to policies that ensure financing of

viable hydro projects.

The State Governments need to review procedures for land acquisition and

other approval for speedy implementation of hydroelectric projects

The Central Government will support the State Government for expeditious
development of their hydroelectric projects by offering services of Central
Public Sector Undertakings

Proper implementation of National Policy on Rehabilitation and Resettlement

(R&R) would be essential in this regard so as to ensure that the concerns of
project-affected families are addressed adequately.

Adequate safeguards for environmental protection with suitable mechanism for

monitoring of implementation of Environmental Action Plan and R&R Schemes will
be put in place. (SINGH, 2008)

3.5 NATIONAL TARIFF POLICY 2006

In compliance with section 3 of the Electricity Act 2003, the Central Government hereby
notifies the Tariff Policy in continuation of the National Electricity Policy (NEP) notified on
12th February 2005.
The government has finalised the National Tariff Policy for the power sector which
addresses some important issues like the method of calculation of cross subsidy under open
access and the competitive bidding route for the private players. The NTP deals with the
general approach to tariffs where it talks about issues such as return on investment and equity
norms to be abided by project developers.
On generation, the policy talks about setting up of separate capacities for meeting
peak demand and introduction of differential rates for peak and non-peak power. In
transmission, the policy talks about putting in place a transmission pricing framework, but
does not specify a specific methodology for doing so.

3.6 NATIONAL REHABILITATION &RESETTLEMENT POLICY 2007

Emphasises a need for a more transparent and participative rehabilitation and resettlement
process in improvement in the quality of life of PAPs.
A National Policy on Resettlement and Rehabilitation for Project Affected Families was
formulated in 2003 and it came to force on February 2004. Experience of Implementation of
this policy indicated that there are many issues addressed by the policy which need to be
reviewed.
There should be a clear perception through a careful quantification of the costs and
benefits that will accrue to society at large of desirability and justifiability of each project. A
national policy must apply to all projects where involuntary displacement takes places and

such policy must specify clear time frame within which the implementation of the
rehabilitation package as well as the utilization of the land shall be accomplished.
The provisions of the National R&R Policy 2007 provide for the basic minimum
requirements and all projects that leads to involuntary displacement of people must address
the rehabilitation and resettlement issues comprehensively. The State Governments, Public
Sector Undertaking or agencies and other requiring bodies shall be at liberty to put in place
greater benefit levels than those prescribed in the NRRP 2007.
The policy shall address the need to provide succour to the asset-less rural poor,
support the rehabilitation efforts of the resource poor sections. Besides, it seeks to provide a
broad canvas for an effective dialogue between the Project Affected Families (PAFs) and the
Administration for Resettlement and Rehabilitation to ensure timely completion of project
with a sense of definiteness as regards costs and adequate attention to the needs of the
displaced persons.
The objectives of the Policy are to minimize displacement, to plan R&R of PAFs
including special needs of Tribal and vulnerable sections, to provide a better standard of
living to PAFs and to facilitate harmonious relationship between the Requiring Body and
PAFs through mutual cooperation.
(Ministry of Power Government of India, 2008) (Ministry of New and Renewable Energy,
2012)

4.0 REFERENCES
a) Ministry of New and Renewable Energy. (2012). Small Hydro. Retrieved from
Ministry

of

New

and

Renewable

Energy

India

(MNRE):

http://mnre.gov.in/schemes/grid-connected/small-hydro/
b) Ministry of Power Government of India. (2008). Hydropower Policy 2008.
International Enviromental Law Research Centre (IELRC).
c) SINGH, D. N. (18 May, 2008). Hydropower: An Indian Experience and Future
Trends.

Retrieved

from

UNIDO

https://www.unido.org/fileadmin/media/documents/pdf/Energy_Environment/rre_braz
ilforum_Singh_080520.pdf
d) United Nations Industrial Development Organization. (2013). World Small
Hydropower Development Report 2013 - India. United Nationas Industrial
Development Organization (UNIDO) and International Centre on Small Hydropower
(ICSHP).