Lok Sabha Question No. 3278 (UNSTARRED), answered on 2025-03-20
Subject: Hydro Power Projects
Ministry: POWER
Asked by: Shri Arun Bharti

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.3278 ANSWERED ON 20.03.2025

## HYDRO POWER PROJECTS

## 3278.  SHRI ARUN BHARTI:

Will the Minister of POWER be pleased to state:

- (a) the initiatives undertaken by the Government to declare large hydropower projects as renewable energy sources;
- (b) the provisions of Hydro  Renewable  Energy  Consumption  Obligation  for the designated consumers;
- (c) the measures implemented to rationalize tariffs for hydropower projects and their impact on electricity prices;
- (d) the  quantum  of  budgetary  support  provided  for  flood  moderation  and  storage hydroelectric projects; and
- (e) the  progress  made  in  developing  the  enabling  infrastructure  like  roads,  bridges, and transmission lines for harnessing hydro potential?

## A N S W E R

## THE MINISTER OF STATE IN THE MINISTRY OF POWER

(SHRI SHRIPAD NAIK)

- (a) : The Government of India vide OM dated 08.03.2019 (Annexure-I) issued measures to  promote  hydropower  sector  which,  inter-alia,  included  declaring  Large  Hydropower Projects (capacity more than 25 MW) as Renewable Energy source.
- (b)  :   Ministry  of  Power  vide  Gazette  Notification  dated  20.10.2023  (Annexure-II)  has specified  the  minimum  renewable  energy  consumption  targets  for  different  designated consumers  viz.  electricity  distribution  licensees,  open  access  consumers  and  captive users to promote consumption of non-fossil energy sources.
- (c) : The Government of India vide OM dated 08.03.2019 (Annexure-I) issued measures to promote hydropower sector which, inter-alia, included tariff rationalization measures viz. providing flexibility to the developers to determine tariff by back loading of tariff after increasing  project  life  to 40 years, increasing debt repayment period to 18 years and introducing escalating tariff of 2%.  Also, Central Electricity Regulatory Commission vide Tariff Regulations, 2024 has taken specific measures to rationalise hydropower tariff viz. recovery  of  depreciation  extended  till  first  15  years  of  the  useful  life  and  remaining depreciable  value  to   be  spread  over  the  balance  useful life  besides  allowing   hydro

generating stations to charge depreciation lower than rates specified in Tariff Regulations,  2024  to  enable  reduced  front  loading  of  tariff,  incentives  for  efficiency, optimized  Return  on  Equity  (RoE)  of  17%  for  new  storage  /  pondage  projects  etc.  The details of these measures are in Annexure-III.

(d) : Cabinet Committee on Economic Affairs (CCEA) on 27.02.2023 has sanctioned an amount of ₹6159.40 crore towards flood moderation component of Dibang Multi Purpose Project (MPP) to be reimbursed on quarterly basis to NHPC. The quantum of budgetary support  provided  by  Ministry  of  Power  for  flood  moderation  and  storage  hydroelectric projects is as under:

|   Sl. No. | Name of the project &Installed Capacity   | Project Developer   | State             |   Grant released by Ministry of Power till date (₹ in crore) |
|-----------|-------------------------------------------|---------------------|-------------------|--------------------------------------------------------------|
|         1 | Dibang MPP (2880 MW)                      | NHPC                | Arunachal Pradesh |                                                       546.86 |

(e) :   Ministry of Power, vide O.M. dated 28.09.2021 has issued guidelines for providing budgetary  support  towards  cost  of  enabling  infrastructure  for  construction  of  roads  / bridges.  The ambit of budgetary support for the cost of enabling infrastructure has been widened  vide  O.M.  dated  30.09.2024  by  including  the  cost  incurred  for  construction  of transmission line from powerhouse to the nearest pooling point (including upgradation of pooling sub-stations of State or Central Transmission Utility), ropeways, railway sidings and communication infrastructure.

The budgetary support is in the form of 'reimbursement' after achievement of 25% financial progress w.r.t. approved/original project cost. The amount released by Ministry of Power for construction of roads / bridges for hydroelectric projects is given below:

| Sl. No.   | Name of the project &Installed Capacity   | Project Developer   | State            |   Grant released by Ministry of Power till date (₹ in crore) |
|-----------|-------------------------------------------|---------------------|------------------|--------------------------------------------------------------|
| 1.        | Luhri Stage-I HEP (210 MW)                | SJVNL               | Himachal Pradesh |                                                        42.75 |
| 2.        | Dhaulasidh HEP (66 MW)                    | SJVNL               | Himachal Pradesh |                                                         6.38 |
| Total     | Total                                     | Total               | Total            |                                                        49.13 |

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## ANNEXURE  REFERRED  IN  REPLY  TO  PARTS  (a)  &  (c)  OF  UNSTARRED QUESTION NO. 3278 ANSWERED IN THE LOK SABHA ON 20.03.2025 *************

New Delhi, dated the 8' March, 2019

Shram Shakti Bhawan, Rafi Marg

OFFICE MEMORANDUM

Subject: MEASURES TO PROMOTE HYDRO POWER SECTOR

Government has approved the following measures to promote hydropower sector:-

In reference to communication received from Cabinet Secretariat vide D.O. No. 11/CM/2019(iii) dated 7.3.2019, the undersigned is directed to inform that the

Declaring LPs (> 25 MW projects) as Renewable Energy source:

2.1

Renewable Energy source. However, LPs would not automatically be eligible for any differential treatment for statutory clearances such as Forest Clearance, environmental clearance, NBWL clearance, related Cumulative Impact Assessment & carrying Capacity study, etc., available to Small Hydropower Projects (SHPs), i.e., projects of capacity up to

## Large Hydropower Projects (LHPs, ie. > 25 MW projects) are declared as

- 25 MW. Ministry of Power shall continue to be the administrative Ministry for LPs.
- Hydro Purchase Obligation (HPO) as a separate entity within Non - solar Renewable Purchase Obligation (RPO): 3.1 Hydropower Purchase Obligation (HPO) is notified as a separate entity within Non - Solar Renewable Purchase Obligation (RPO). The HPO shall cover all LPs commissioned after issue of this Office Memorandum as well as the untied capacity (i.e., without PPA) of the commissioned projects. This HPO will be within the existing Non-
- Solar RPO after increasing the percentage assigned for it so that existing Non-Solar RPO for other renewable sources remains unaffected by the introduction of HPO. The trajectory of annual HPO targets will be notified by Ministry of Power based on the
- projected capacity addition plans in hydropower sector. Necessary amendments will be introduced in the Tariff Policy and Tariff Regulations to operationalize HPO. 4.. Tariff rationalisation measures for bringing down hydropower tariff: 4.1 Tariff rationalisation measures including providing flexibility to the developers to determine tariff by back loading of tariff after increasing project life to 40 years, increasing debt repayment period to 18 years and introducing escalating tariff of 2%.

4.2

The levellized tariff over the useful life of the project may be calculated on the

- basis of the norms specified in the CERC regulations and thereafter, the determination of

year wise tariff, for a long term PPA for procurement of Hydro Power for a period of not

- less than specified years (depending upon the repayment plan for the debt raised by the generator such that major part of the loan is repaid during the tenure of such PPA), may be left to the Developer and DISCOMs as per their feasibility and depending upon the

terms of repayment of loan negotiated with the lenders subject to-

- (a) submission of such complete calculations with assumptions to be provided by the generator of hydro power at the time of filing of the application: and (b) upfront approval by the appropriate Regulatory Commission.
5. Budgetary Support for Flood Moderation/ Storage Hydro Electric Projects (HEPs):
- In-principle approval is accorded for providing budgetary support through the budgetary grant of Ministry of Power for Flood Moderation component for Storage HEPs to be set up in future. The value of flood moderation component will be worked by technical agencies, viz., CWC, etc. in accordance with the guidelines. The amount required for flood moderation/ storage costs shall be released, through MoP budgetary provisions after appraisal of each project, on a case to case basis, by Public Investment Board (PIB)/ Cabinet Committee on Economic Affairs (CCEA) as per due process.

## Budgetary Support to Cost of Enabling Infrastructure, i.e., roads/ bridges:

- 6.1 In-principle approval is accorded for providing budgetary support through the budgetary grant of Ministry of Power for funding enabling infrastructure for hydropower projects i.e. roads / bridges. This support shall be applicable for projects starting construction after notification of this Office Memorandum. This budgetary support would be provided after appraisal/ approval of each project by PIB/ CCEA as per the extant rules/ due process. The limit of this grant for such roads and bridges would be as follows:
- a) Rs. 1.5 crore per MW for projects upto 200 MW,
- b) Rs. 1.0 crore per MW for projects above 200 MW.
- This issues with the approval of the Competent Authority.
1. The Chairman, All State Electricity Boards / State Power Utilities
3. The Principal Secretary / Commissioner (Power), All State Government and U.T.s
2. The Chairman, Central Electricity Authority, New Delhi.
4. The CMDs of all PSUs under the administrative control of Ministry of Power
5. Chairperson, CERC
6. Chairpersons of all SERCs

S. Benjamin.

(S Benjamin) Under Secretary to the Govt of India Telefax: 23324357 Email: ben.gangte@nic.in

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## Copy to:

1. Secretary, Department of Economic Affairs, Ministry of Finance
3. Secretary, Department of Financial Services, Ministry of Finance
2. Secretary, Department of Expenditure Ministry of Finance
4. Secretary, Department of Revenue, Ministry of Finance
5. Secretary, MNRE
6. Secretary, MoEF
7. Secretary. DoNER
8. CEO, NITI Aayog
9. Secretary, MoWR
10. Chairperson, CWC

## Copy also for kind information to:

1. Director, Cabinet Secretariat, Rashtrapati Bhawan, New Delhi w.r.t D.O. No. 11/CM/2019(iii) dated 07.03.2019
2. Director, PMO, South Block, New Delhi.
3. All Joint Secretaries/ FA /EA of the Ministry of Power, Shram Shakti Bhawan, New Delhi.
4. All Director, Ministry of Power, Shram Shakti Bhawan, New Delhi.
5. Director (Tech.) NIC cell, MoP with the request to upload on the website of Ministry.

## Copy to:

1. Chief Engineer (R&R) Ministry of Power, Shram Shakti Bhawan, New Delhi- with a request to issue appropriate directions to CERC/SERCs per Section 107 of the Electricity Act-2003 to incorporate above tariff rationalization measure as mentioned at Para 3.1, 4, 4.1 & 4.2 above in the Tariff Regulations and also for appropriate changes for other Paras above.
2. Chairperson, CEA- with a request to take necessary action to implement the above decisions.

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ANNEXURE-II

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## MINISTRY OF POWER NOTIFICATION

New Delhi, the 20th October, 2023

- S.O. 4617(E).—In exercise of the powers conferred by clauses (n) and (x) of section 14 of the Energy Conservation Act, 2001(52 of 2001), the Central Government in consultation with the Bureau of Energy Efficiency, hereby specifies the minimum share of consumption of non-fossil sources (renewable energy) by designated consumers as energy or feedstock and different share of consumption for different types of non-fossil sources for different designated consumers in respect of electricity distribution licensee and other designated consumers who are open access consumers or captive users to the extent of consumption of electricity from sources other than distribution licensee as a percentage of their total share of energy consumption indicated in the Table below:

## TABLE

| SI.No   | Year    | Wind renewable energy   | Hydro renewable energy   | Distributed renewable energy*   | Other renewable energy   | Total renewable energy   |
|---------|---------|-------------------------|--------------------------|---------------------------------|--------------------------|--------------------------|
| (1)     | (2)     | (3)                     | (4)                      | (5)                             | (6)                      | (7)                      |
| 1.      | 2024-25 | 0.67%                   | 0.38%                    | 1.50%                           | 27.35%                   | 29.91%                   |
| 2.      | 2025-26 | 1.45%                   | 1.22%                    | 2.10%                           | 28.24%                   | 33.01%                   |
| 3.      | 2026-27 | 1.97%                   | 1.34%                    | 2.70%                           | 29.94%                   | 35.95%                   |
| 4.      | 2027-28 | 2.45%                   | 1.42%                    | 3.30%                           | 31.64%                   | 38.81%                   |
| 5.      | 2028-29 | 2.95%                   | 1.42%                    | 3.90%                           | 33.10%                   | 41.36%                   |
| 6.      | 2029-30 | 3.48%                   | 1.33%                    | 4.50%                           | 34.02%                   | 43.33%                   |

Note 1: *For hilly and North-Eastern States/Union Territories, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Ladakh, Himachal Pradesh and Uttarakhand, the distributed renewable energy component shall be half

L4212213

of that given in the Table and the remaining component for these States shall be included in the other renewable energy sources.

- The wind renewable energy component shall be met by energy produced from Wind Power Projects (WPPs) commissioned after the 31" March, 2024.
- Note 3: The hydro renewable energy component shall be met only by energy produced from Hydro Power Projects [including Pump Storage Projects (PSPs) and Small Hydro Projects (SHPs)], commissioned after the 31" March, 2024:

Provided that the hydro renewable energy component may also be met out of the free power being provided to the State/DISCOM from the Hydro Power Projects commissioned after the 31" March, 2024:

Provided further that the hydro renewable energy component may also be met from Hydro Power Projects located outside India as approved by the Central Government on a caseto-case basis.

Note 4: The distributed renewable energy component shall be met only from the energy generated from renewable energy projects that are less than 10 MW in size and shall include solar installations under all configurations (net metering, gross metering, virtual net metering, group net metering, behind the meter installations and any other configuration) notified by the Central Government:

Provided that the compliance against distributed renewable energy shall ordinarily be considered in terms of energy (Kilowatt hour units):

Provided further that in case the designated consumer is unable to provide generation data against distributed renewable energy installations, the reported capacity shall be transformed into distributed renewable energy generation in terms of energy by a multiplier of 3.5 units per kilowatt per day (kWh/kW/day).

- Note 5: The other renewable energy component may be met by energy produced from any renewable energy power project other than specified in Note 2, 3 and 4 and shall comprise energy from all WPPs and Hydro Power Projects [including Pump Storage Projects (PSPs) and Small Hydro Projects (SHPs)], including free power, commissioned before the 1" April, 2024.
2. Any shortfall in achievement of stipulated wind renewable energy consumption in a particular year may be met with hydro renewable energy which is in excess of that energy component for that year and viceversa.
3. The balance excess energy consumption under wind renewable energy or hydro renewable energy component in that year, may be considered as part of other renewable energy component.
4. Any excess energy consumption under Other renewable energy component in a particular year, may be utilised to meet the shortfall in achievement of stipulated Wind renewable energy or Hydro renewable energy consumption.
5. The designated consumers who are open access consumers or consumers with Captive Power Plants shall fulfil their obligation as per the specified total renewable energy target irrespective of the non-fossil fuel source.
6. The specified renewable energy consumption targets shall be met either directly or through Certificate in accordance with the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022, published in the Gazette of India, Extraordinary, Part III, Section 4, dated the 24* May, 2022:

Provided that any shortfall in specified renewable energy consumption targets shall be treated as non-compliance and penalty shall be imposed as such rate specified under sub-section (3) of section 26 of the said Act.

5

- consumers) and submit report to the Central Government. 8. This notification shall come into force on the 1 day of April, 2024 and till such time, the RPO
- trajectory specified in paragraphs 5 to 14 vide the Ministry of Power Order No. 9/13/2021-RCM, dated 22nd July, 2022 read with Corrigendum, dated the 1gt September, 2022, shall remain in force. [F.No. 9/13/2021-RCM]

AJAY TEWARI, Addl. Secy.

Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064

## ANNEXURE  REFERRED  IN  REPLY  TO  PART  (c)  OF  UNSTARRED  QUESTION  NO. 3278 ANSWERED IN THE LOK SABHA ON 20.03.2025

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Specific measures to rationalise hydropower tariff:

1. Measures to reduce front loading of Tariff: Until 2019-24 tariff period, recovery of  Depreciation  for  the  first  12  years  of  the  useful  life  of  hydro  generating station  was  based  on  the  Straight-line  method  (@  5.28%)  and  remaining depreciable value to be spread over the balance useful life.

Under  the  Tariff  Regulations,  2024  applicable  for  2024-29  tariff  period,  to reduce front loading of tariff, a new provision has been introduced specifically for new projects wherein recovery of Depreciation, based on the Straight-line method has been extended till first 15 years (@ 4.22%) (considering repayment period  of  15  years)  of  the  useful  life  and  remaining  depreciable  value  to  be spread over the balance useful life. There is no change for projects existing as on 31.3.2024.

Further, Hydro Generating stations are allowed option to charge depreciation lower than the rates specified in the Tariff Regulations, 2024 so as to enable reduced  front  loading  of  tariff.  Enabling  provision  introduced  in  the  Tariff Regulations, 2024 are as under:

'Provided further that in the case of an existing hydro generating station, the generating  company,  with  the  consent  of  the  beneficiaries,  may  charge depreciation at a rate lower than that specified in Appendix I and Appendix II to these Regulations to reduce front loading of tariff '

2. Incentives for efficiency:  Tariff  Regulations  provides for incentives  for  hydro generating companies whose performance exceeds the normative parameters. This rewards efficient operators and encourages them to continuously improve their  performance  and  optimal  usage  of  plants,  which  may  result  in  cost savings  to  beneficiaries  to  avoid  expensive  procurement  of  power  from  the market.  Various  incentives  provided  to  hydro  generating  companies  are  as follows:
- a) Additional  Annual  Fixed  Charges  upto  3%  of  Capacity  Charge  if  primary frequency response is provided beyond a threshold level of 30%.
- b) Incentive shall be payable to a ROR Hydro generating station @ 50 paisa/ kWh corresponding to the saleable scheduled energy during peak hours of the day in excess of average saleable scheduled energy during the day (24 hours).
- c) Secondary energy charge rate increased from ₹ 1.20/unit to ₹ 1.30/unit.
3. Optimized Return on Equity (RoE): RoE is set at 17% for new storage/pondage projects, while existing projects retain previous rates (16.50%/15.50%).
4. Separation  of  Insurance  Costs: Given  the  rising  cost  of  insurance  (due  to events like flash floods), insurance expenses will now be allowed separately based  on  competitive  bidding  and prudence  check. This  ensures  that  tariff calculations  are  more  reflective  of  actual  costs, preventing  unnecessary financial strain on consumers.
5. Support for Local Infrastructure: Up to ₹ 10 lakh/MW for development of local infrastructure, reducing project delays and cost and time over run.
6. Sharing of Non-Tariff Income: Hydro generating companies have considerable resources  in  the  form  of  assets  such  as  land  banks  and  other  enabling infrastructure that can be utilised to increase non-core revenues, ecotourism, etc. Accordingly, in order to encourage Hydro generating companies to further strengthen the eco-tourism, provision of sharing of Non-tariff income from ecotourism has been introduced:

'84.  Sharing  of  Non-Tariff  Income:  The  non-tariff  net  income  in  case  of generating  station  and  transmission  system  from  rent  of  land  or  buildings, ecotourism,  sale  of  scrap,  and  advertisements  shall  be  shared  between  the generating company or the transmission licensee and the beneficiaries or the long term customers, as the case may be, in the ratio of 1 : 1.'

7. Further,  under  the  CERC  (Sharing  of  Inter-state  Transmission  Charges  and Losses)  Regulations  2020  including  amendments,  the  power  scheduled  from hydro  generating  stations are  eligible  for  waiver  of  transmission  charges  as per the trajectory specified under the Regulations.

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