Hydropower Oldest Giant of Renewable Energy Going Ahead With Bright Future

Hydropower has numerous benefits over other sources of power generation like providing flood control, irrigation support, and clean drinking water. Hydropower provides low-cost electricity and durability over time compared to other energy sources

Mumbai (Maharashtra) [India], December 28: Hydropower – Lucrative power segment

Hydropower, a reliable source of renewable energy for over 100 years, Hydropower is the backbone of low-carbon electricity generation, providing almost half of it worldwide today. Hydropower’s contribution is 55% higher than nuclear’s and larger than all other renewables combined, including wind, solar PV, bioenergy and geothermal. Hydropower also contributes significantly to the flexibility and security of electricity systems. Hydropower has numerous benefits over other sources of power generation like providing flood control, irrigation support, and clean drinking water. Hydropower provides low-cost electricity and durability over time compared to other energy sources.

Global scenario

In 2020, hydropower supplied one-sixth of global electricity generation, the third-largest source after coal and natural gas. Over the last 20 years, hydropower’s total capacity rose 70% globally, but its share of total generation stayed stable due to wind, solar PV, coal and natural gas growth.

Globally, around half of hydropower’s economically viable potential is untapped. The potential is particularly high in emerging and developing economies, reaching almost 60%. Over the life cycle of a power plant, hydropower offers some of the lowest greenhouse gas emissions per unit of energy generated and multiple environmental benefits.

Global hydropower capacity is set to increase by 17% or 230 GW between 2021 and 2030. However, net capacity additions over this period are forecast to decrease by 23% compared with the previous decade. The contraction results from slowdowns in developing projects in China, Latin America and Europe. However, increasing growth in Asia Pacific, Africa and the Middle East partly offset these declines. Growing electricity demand and export opportunities drive faster hydropower expansion in Southeast Asia and Africa.

The flexibility and storage capabilities of reservoir plants and pumped storage hydropower facilities are unmatched by any other technology. Pumped storage hydropower plants will remain a key source of electricity storage capacity alongside batteries.

India Scenario

With the integration of large quantities of renewable energy, especially Solar and Wind, in the Grid, the role of hydropower has gained wide attention due to its critical role in balancing the grid and in meeting the peak power demand Hydropower is gaining a lot of traction among the policymakers. There is now a positive vibe about the sector.

The average project cost for the commissioned hydro project capacity by CPSUs during FY17-FY21 remained at about ₹13-14 crore per MW. However, hydropower remains systemically important from the grid perspective to meet the flexibility requirements and peak power supply. Governments have an important role in ensuring hydropower’s potential is realised sustainably. Robust sustainability standards and measures are needed to increase investor confidence and gain public acceptance.

To promote hydropower, the government has outlined policy measures over the last two years to promote investments in the segment by notifying HPO norms, long-term trajectory for HPO, and tariff rationalisation measures. HPO is set at 0.18% for FY22, which is set to increase to 2.82% by FY30 at the national level.

In Dehradun, 20 power projects, with a combined capacity of more than 2,100 MW, are being considered for revival by the Uttarakhand government as it looks to cut down electricity bills that run into nearly ₹1,000 crore annually.

India is building 10 hydropower projects totalling 6.8 GW in Jammu, Kashmir, and Himachal Pradesh to fully utilize its share of waters under the 1960 Indus Waters Treaty with Pakistan. NHPC is actively engaged in constructing 08 Hydro Power Projects of 6434 MW Capacity (including JV & Subsidiaries). (NHPC AR22)

India and Nepal agreed to form a joint task force on a proposal to construct a hydropower project from investments of the 2 neighbouring countries.

India is marching towards a 24x7 Power Supply. The target is a 24x7 power supply without interruption. All States and Union Territories (UTs) have signed MoUs with the Central Government to ensure a 24x7 power supply to all households, industrial & commercial consumers, and adequate power supply to agricultural consumers. (Source: MOP AR FY22)

What does it mean for hydropower infrastructure developers?

The hydropower segment sees humongous growth opportunities with the government’s strong focus, development, and participation from private players. The leading power players having a presence in hydropower infrastructure development would reap the benefits from these opportunities.

NHPC has 8 hydropower projects of 6,434 MW capacity. HCC's order book includes ₹3,735 crore, accounting for 23% of its total order book of ~ ₹15,967 crore. Patel Engineering’s hydropower project order book is 65% of its total order book of ₹17,598 crore, including 17 projects. This indicates that hydropower is in need of time, and many companies, along with the government’s support, are building infrastructure for the same.

Patel Engineering – strategically positioned to benefit from a lucrative opportunity

Patel Engineering, one of the strong and old players in the sector, has a consistent track record in the execution of projects in the domestic and international arena. Seven decades of experience gives Patel Engineering a competitive edge over competitors. The Company has completed over 85 dams and more than 300 kilometres of tunnelling, with a presence in more than 16 states in India and an International presence in Nepal. Since its inception, it has been involved with the generation of over 12,000 megawatts, i.e. almost 25% of India’s installed hydropower capacity and has irrigated over 5.5 million acres of land in India. It has also constructed over 1,200 kilometres of roads.

Strengths:

• Seven decades of management experience in handling hydropower and other infra-segment projects
• Quality of work and timely execution
• Strong order book of ₹17,598 crore
• Strong government clientele

The company is currently executing several projects such as the Subansiri Hydroelectric project, IRCON T2 & T15 (Railway Tunnel), Khalwa Micro Lift Irrigation project, Selapass Road and Tunnel, Hindoli - Nainwa Water Supply Project etc.

For the first half of FY23, Patel Engineering reported revenues of ₹1,867 crore, reporting growth of 34.25% and a net profit of ₹50.97 crore, up by 1,152%. The Company’s current order book is ~ ₹17,598 crore, of which 65% is from hydropower, clearly indicating its strength in the hydropower segment and future earning visibility.

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same.