India Hydropower Development

March 23, 2012

  • Over 40 percent of the country’s people -- most living in the rural areas -- do not have access to electricity.
  • One-third of Indian businesses cite expensive and unreliable power as one of their main business constraints.
  • India’s energy shortfall of 10 percent (rising to 13.5 percent at peak demand) also works to keep the poor entrenched in poverty.

India’s critical need for power

Severe power shortage is one of the greatest obstacles to India’s development. Over 40 percent of the country’s people -- most living in the rural areas -- do not have access to electricity and one-third of Indian businesses cite expensive and unreliable power as one of their main business constraints.

India’s energy shortfall of 10 percent (rising to 13.5 percent at peak demand) also works to keep the poor entrenched in poverty. Power shortages and disruptions prevent farmers from improving their agricultural incomes, deprive children of opportunities to study, and adversely affect the health of families in India’s tropical climate.

Poor electricity supply thus stifles economic growth by increasing the costs of doing business in India, reducing productivity, and hampering the development of industry and commerce which are the major creators of employment in the country.

Hydropower development -- a key government initiative

To boost economic growth and human development, one of the Government of India’s top priorities is to provide all its citizens with reliable access to electricity by 2012. To ensure that the uncovered 40 percent of Indian homes get electricity by 2012, and to serve rising demand from those already being served by the power grid, the government estimates that the country will need to install an additional 100,000 MegaWatts (MW) of generating capacity by 2012, expanding grid-based generation to about 225,000 MW. Given that India added about 23,000 MW during the last Five Year Plan of 2002-2007, this will be quite a quantum jump.

The Government of India has decided to acquire an inreasing portion of this additional power from the country’s vast untapped hydropower resources, only 23 percent of which has been harnessed so far. India’s energy portfolio today depends heavily on coal-based thermal energy, with hydropower accounting for only 26 percent of total power generation. The Government of India has set the target for India’s optimum power system mix at 40 percent from hydropower and 60 percent from other sources.

Advantages of hydropower

When developed in accordance with good environmental and social practices, hydropower plants have the advantage of producing power that is both renewable and clean, as they emit less greenhouse gases than traditional fossil fuel plants and do not emit polluting suspended particulate matter (from the high ash-content of indigenous coal).

Hydropower plants can also start up and shut down quickly and economically, giving the network operator the vital flexibility to respond to wide fluctuations in demand across seasons and at different times of the day. This flexibility is particularly important in a highly-populated country like India where household electricity demand is a significant portion of total demand and this demand in concentrated in a short period of time (usually in the evening). As an illustration, if the approximately 150 million households in India were to turn on two 100 watt light bulbs at 7 pm, the power system would experience an instantaneous surge in demand of about 30,000 MW! Today, this peak demand is often met by households turning on small gasolene and diesel generation units, which, in addition to being polluting, are a serious health hazard in congested areas. And, with rising wealth, households are switching on a lot more than two light bulbs. Although hydropower plants are subject to daily and seasonal variations in water flows (which affects the production of electricity at that point in time), they are not subject to the fluctuations in fuel costs that trouble thermal power plants.

While hydropower plants have large up-front capital costs, they also have long and productive lives, which significantly help reduce costs over time. For example, the Bhakra Nangal plant, now more than 40 years old, has operating costs of only Rs 0.10 or US$ 0.002 per unit. Hydropower plants are thus generally cheaper in the long run than natural gas-based plants, which are constantly at risk from fuel price increases in the global market.

While India plans to develop mainly run-of-the-river projects, multipurpose hydropower plants with water storage facilities can help manage critical water resources in an integrated manner by serving as flood controllers as well as sources of irrigation and much-needed drinking water. The Tehri Dam in Uttarakhand, for instance, which was commissioned in 2006, today caters to one-third of the drinking water needs of Delhi, India’s capital.

Besides which, India’s hydro-resources are largely available in some of the least-developed parts of the country and hydropower plants, if designed appropriately offer significant potential for regional development and poverty alleviation. Hydropower projects that forge equitable systems of benefit-sharing and implement targeted local area development can help local communities improve the quality of their lives quite significantly.

Challenges of hydropower development

While hydropower plays an important role in the energy and development strategies of India, such natural resource projects are inherently challenging. Environmental and social impacts are inevitable but they can be mitigated. Hydropower development in India has seen significant strides in understanding and addressing these impacts and the lessons learned from past engagements are now being incorporated in project selection and design.

These lessons, coupled with suggestions from civil society, have resulted in changes to the laws and regulations that govern hydropower development today. As a result, there have been improvements on the ground, including greater public consultation with people affected by such projects; better monitoring of the environmental and social aspects of projects; and improvements in resettlement policy and practice. The Government has also ensured that the methodology used by Central power agencies to select sites has improved, as has the capacity of various hydropower developing agencies to deal with complexities in project identification, engineering and design.

World Bank Assistance

The Government of India has requested World Bank support for its plans to increase the country’s hydropower capacity. It has also requested Bank assistance to help its power sector agencies build on their recent achievements with the aim of attaining international standards in hydropower design, construction and operation.

The World Bank aims to assist the Government of India in meeting its targets for hydropower expansion in a sustainable manner. This entails not just ensuring financial, economical, and technical soundness but also meeting social practices which have been developed by the industry in recent years, and safeguarding environmental assets for future generations.

The Bank has been engaged in hydropower in India since the late 1950s. Several of its past engagements have been difficult, with Bank support for a number of potential hydropower projects, including the Sardar Sarovar project on the river Narmada, being cancelled before they were commissioned. The two most recent Bank engagements, the Nathpa Jhakri and Koyna IV projects which were completed in 2002 and 1998 respectively, have benefited from the lessons of earlier hydropower development, including more socially and environmentally sensitive safeguard policies.