Himachal Small Hydro Power Association Association Draft Regulations on Tariff for Renewable Energy Wednesday July 22 nd , 2009
BACKGROUND BACKGROUND India India has India has India has been has been been bestowed been bestowed bestowed with bestowed with with huge with huge huge Renewable huge Renewable Renewable Energy Renewable Energy Energy Potential Energy Potential Potential Potential � � particularly the particularly the small small hydro hydro potential potential is is to to the the tune tune of of 15000 15000 MW MW. . However, However, the , the present present scenario p scenario of of generation g generation from from Renewable Renewable � Sources Sources particularly particularly of of small small hydro hydro sector sector is is not not very very encouraging encouraging. . In In the the last last 62 62 years years only only 10 10% % of of the the small small hydro hydro potential potential has has been been exploited. exploited . This This is is in in spite spite of of the the fact fact that that Electricity Electricity Act, Act, 2003 2003 and and every every other other � policy policy document document i i. .e e National National Electricity Electricity Policy, Policy, National National Tariff Tariff Policy Policy speaks speaks of of promoting promoting Renewable Renewable Energy Energy. . The The Electricity Electricity Act Act enjoins enjoins upon the upon upon upon the the Regulatory the Regulatory Regulatory Commissions Regulatory Commissions Commissions Commissions to to take to take to take effective take effective effective steps effective steps steps for steps for for the for the the the promotion promotion of of Renewable Renewable Energy Energy. . The The proposed p p proposed Draft p p Draft Regulation Regulation is g is further further going g g going to g g to discourage discourage and g and � demoralize demoralize the the developers developers of of small small hydro hydro projects projects. . It It is is devoid devoid of of the the ground ground realities, realities, problems problems and and the the non non supportive supportive environment environment being being faced faced by by the the developers developers. . Himachal Small Hydro Power Association 2
BLEAK SCENARIO OF SMALL HYDRO SECTOR BLEAK SCENARIO OF SMALL HYDRO SECTOR Major Major small small hydro hydro potential potential lies lies in in Himalayan Himalayan States States. . These These states states do do not not � have have enough enough infrastructures infrastructures to to support support the the various various developmental developmental activities activities because because of of their their terrain terrain and and inadequate inadequate resources resources with with them them. . Small Small hydro hydro projects projects being being located located on on Tributaries Tributaries or or on on the the Tributaries Tributaries of of � Tributaries Tributaries are are very very remote remote and and have have neither neither the the road road access access nor nor the the power power evacuation evacuation networks networks. . This This adds adds substantially substantially to to their their costs costs. . Small Small Hydro Hydro projects projects do do not not enjoy enjoy economics economics of of scale, scale, therefore therefore have have high high � per per MW MW costs costs. . Because of Because of their their remote remote location location and and narrow narrow terrains terrains Small Small Hydro Hydro Projects Projects � have have great great risks risks attached attached with with them, them, therefore therefore is is not not a a very very attractive attractive investment investment option option. . In In the the past past Small Small Hydro Hydro Projects Projects were were located located on on lower lower elevations elevations and and on on � the the confluence confluence of of tributaries tributaries and and main main rivers rivers. . However, However, in in future future Small Small Hydro Hydro Projects Projects are are going going to to be be remotely remotely located located on on higher higher elevations elevations. . As As a a result, result, they lt lt th th they are are not not going t going to i i to attract t attract investments tt tt t t i i investments easily t t t t easily. il il Himachal Small Hydro Power Association 3
In In many many recent recent Tariff Tariff determination determination orders orders the the per per MW MW cost cost of of the the � project project has project has project has been has been been taken been taken taken based taken based based on based on on historical on historical historical data historical data data data. This has This This This has has acted has acted acted as acted as as as the the dampener dampener for for the the developers developers. . The The result result is is that that till till now now only only 15 15% % of of the the projects projects allotted allotted in in Himachal Himachal � P Pradesh and Pradesh P d d h h and Uttarakhand d Utt Uttarakhand have Utt kh kh d h d have been b been commissioned commissioned. i i i i d d The The said said regulations regulations instead instead of of promoting promoting Renewables Renewables intends intends to to � regulate regulate these regulate regulate these these sources these sources sources. sources. Himachal Small Hydro Power Association 4
Comments on various provisions of draft regulations Himachal Small Hydro Power Association 5
1. 1. REGULATION 3 & 4 (2): SCOPE & EXTENT OF APPLICATIONS REGULATION 3 & 4 (2): SCOPE & EXTENT OF APPLICATIONS Section Section 79 79 a a & & b b of of the the Electricity Electricity Act, Act, 2003 2003 provides provides that that it it is is the the � function function of of the the central central commission commission to to regulate regulate tariff tariff of of central central generating generating companies companies or or those those generating generating companies companies which which enter enter into into or or otherwise otherwise have have a a composite composite scheme p scheme for for generation generation and g and sale sale of of electricity electricity in in more more than than one one state state. . As As per per the the Draft Draft Regulations Regulations these these regulations regulations will will not not apply apply to to � 1. . Those Those projects projects which which are are selling selling intrastate intrastate. . 2 Those 2. Those Those State Those State State and State and and self and self self identified self identified, identified projects identified, projects projects which projects which which are/will which are/will are/will be are/will be be going be going going in going in in in for for interstate interstate sale sale but but not not yet yet approved approved by by MNRE MNRE. . Himachal Small Hydro Power Association 6
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