Hydropower, which accounts for 33,320.80 MW of India’s total installed power capacity of 200,000 MW, still has undeveloped potential for an estimated 36 GW, says India's Central Electricity Authority, a statutory body under the Ministry of Power.
Projects to develop 12 GW of that potential are under construction or in planning, but many are confounded by problems commonly encountered in infrastructure development in India, including difficulty in obtaining environmental clearances, local resistance, project implementation delays and financing issues.
The Indian government, which is behind most of the country's hydroelectric, or "hydel," facilities development, hopes to bring 9,800 MW of new capacity on line by 2017. In the same period, the private sector is expected to set up another 3,640 MW.
In fact, the government is beginning to look to the private sector as a way to speed up project delivery by reducing barriers and delays that are more likely to stall public projects.
The prospect of attracting private-sector interest was encouraged by a report released by HSBC Global Research in April. It expressed confidence that India’s hydroelectric development projects could attract foreign direct investment.
One of the largest hydropower companies, the government-owned National Hydro Power Corp. (NHPC), is exploring the private investment tactic. NHPC has more than $2 billion in investments stuck in stalled projects. That total includes projects representing 10,000 MW in capacity that have been awaiting clearances for three to four years as well as projects representing more than 2,000 MW of capacity that have been suspended in response to protests by environment activists.
NHPC Chairman and Managing Director A.B.L. Srivastava recently said India needs "political will" to get development up to speed. The company has a target of setting up 4,000 MW during the next five years. “We would definitely like to achieve it,” says Srivastava.
Now, NHPC is holding preliminary talks with private companies to form joint ventures for developing hydel facilities. NHPC proposes to come in as a minority partner so the projects will be treated as private-sector ones. About 30% of investment is planned from equity funding and 70% from raising debt.
HSBC Global Research's optimistic prognosis for attracting foreign investment cites as an example the $1.4-billion, 1,200-MW Teesta Stage III Hydro Electric Project being developed by Teesta Urja Ltd. on a build-own-operate-transfer basis for the government of the state of Sikkim in India's far northeast. The project will transfer to state ownership in 35 years.
Six players have invested in the joint venture to build the largest hydroelectric project in India. It cleared environmental assessments in 2010, and construction is now about 70% complete. Generation from the first unit is expected early next year.
The project lies on the 309-kilometer-long River Teesta, which is said to be the lifeline of Sikkim; it drains an area of 12,540 sq km. It flows for almost the entire length of the state before joining the Brahmaputra as a tributary in Bangladesh.
Construction includes building a 60-meter-high concrete-faced rockfill dam with a plastic-concrete cutoff wall as well as 35 km of underground excavation. The facility has two tunnel spillways, one high-level surface spillway, a 13.86-km-long, 7.5-m-dia headrace tunnel and a 1,080-m-long, 8-m-dia tailrace tunnel. Six 200-MW, vertical-shaft Pelton turbines are being installed in the underground powerhouse.
The Teesta Stage III project is one of more than 30 projects either built, under construction or planned for harnessing the hydroelectric potential of the river basin.