Large hydro power (LHP) projects have been accorded the status of renewable energy in India by the Union cabinet. The measure will help boost energy generation from hydro power plants. LHP projects will also be a part of non-solar renewable purchase obligation.
Change in the definition:
Currently, only those hydro power projects which are less than 25 MW fall under renewable energy classification. Now all such power projects installed after the notification of these measures will get the status of renewable energy technology at par with any other technology such as Solar, Wind, WTE, Biomass and Small Hydro projects.
Introduction of mandatory purchase obligation:
Obligated entities are supposed to meet a certain minimum of their electricity demand from renewable energy sources. Commonly known as Renewable Purchase Obligation (RPO) these are broadly classified as Solar RPO and Non-Solar RPO. Hydro Purchase Obligation (HPO) will be within Non-Solar RPO. Ministry of Power will soon notify the trajectory of annual HPO targets. Cabinet will amend the Tariff regulations and Tariff Policy will be accordingly to operationalize HPO.
HPO will drive the demand for power from large hydropower plants. India has set a target of 5 GW of hydro power plants by 2022 which is a part of the overall 175 GW renewable energy mix.
Hydro power tariff rationalization:
Tariff rationalization measures include providing flexibility to the hydro power developers to determine tariff by backloading of tariff after increasing project life to 40 years, increasing debt repayment period to 18 years and introducing escalating tariff of 2%.
Budgetary support will fund flood moderation component of hydropower projects on case to case basis and also fund the cost of enabling infrastructure i.e. roads and bridges on case to case basis as per actual, limited to Rs. 1.5 crore per MW for up to 200 MW projects and Rs. 1.0 crore per MW for above 200 MW projects.
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