New Delhi, March 7 : In a major policy shift, the government has decided to give the "renewable energy" tag to large hydro power projects.
The tag allows these to qualify as part of the framework for non-solar Renewable Purchase Obligation (RPO) of the states.
The decision taken by the Union Cabinet is part of a series of measures aimed at rationalising tariffs and promoting hydro power in the country.
Development of hydro power projects is important to provide India a stable grid, given the country's committment towards 160 GW capacity addition from infirm sources of power like solar and wind by 2022.
Under the existing policy, only hydro power projects less than 25 MW are categorised as "renewable energy" and enjoy the benefits associated with such projects.
With the latest decision, large projects of public and private sector companies such as NHPC, Jindal Steel and Power (JSPL) and JSW would also qualify as "green" and help states meet their RPO obligations.
This, however, will apply only to large hydro power projects commissioned after the notification of these measures.
The trajectory of annual large hydro power project targets will be notified by the Ministry of Power based on the sector's projected capacity addition plans.
The new measures give developers the flexibility to determine tariff by backloading it after increasing the project life to 40 years, increasing the debt repayment period to 18 years and introducing an escalating tariff of 2 per cent.
This will help bring down the initial tariff of hydro power projects, which is normally on the higher side on account of including flood moderation and enabling infrastructure costs in the project cost.
The government will also provide budgetary support to fund the cost of the enabling infrastructure.
Power distribution companies (discoms) are reluctant to sign hydro power purchase agreements (PPAs) owing to higher tariffs, particularly in the initial years.
India is endowed with a large hydro power potential of 1,45,320 MW, of which only about 45,400 MW has been utilised so far.
The country has added only about 10,000 MW of hydro power in the last 10 years.
The importance of hydro power increases significantly with the country targeting to add 40 per cent of the total capacity from non-fossil fuel sources by 2030 to honour its Nationally Determined Contribution for Climate Change.
The sector is, hoeever, going through a challenging phase as the share of hydro power in the total capacity has declined from 50.36 per cent in the 1960s to around 13 per cent in 2018-19.--IANS