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Hydro Energy

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Small Hydro
India has a fairly developed capacity for designing, constructing, and operating small hydropower plants. Small hydro technology has improved steadily over time and is now more efficient, reliable, and automatic compared with several years ago. Some of the new technological advances include the replacement of mechanical governing systems by electronic governors and analogue controls by digital systems. The projects are now completely automatic from start to grid synchronization. The concept of remotely operating projects and Supervisory Control and Data Acquisition systems have been introduced in this sector. Apart from improvement in equipment designs, there is a need to improve/standardize civil design and hydraulic structures to reduce construction time. The areas of technological interventions include development of direct-drive low-speed generators for water sources with low heads; standardized control and monitoring hardware packages; submersible turbo-generators; compact equipment, which requires the laying of few cofferdams; appropriate turbine design suitable to electrical output below 1 MW; variable-speed operation (optimal use of low- and variable-head sites); flexible small hydro turbines for very low heads (<2.5 m); and adaptation of high-pole permanent magnet excitation generators to SHP.

Currently, most SHP capacity additions are being achieved through private investment. State Nodal Agencies for renewable energy provide assistance for obtaining necessary clearances in allotment of land and potential sites. The MNRE has been providing subsidies for public sector as well as private sector SHP. For the private sector, the subsidy is released to the participating financial institution after successful commissioning and commencement of commercial generation from the project. The subsidy is provided as an offset against the term loan provided to the developer. To ensure quality, equipment used in projects is required to meet international standards. Projects are also required to be tested for performance by an independent agency in order to receive the subsidy. Various financial institutions, namely, IREDA, Power Finance Corporation (PFC), and the REC, provide loan assistance for setting up small hydropower projects. In addition to these agencies, loans are also available from IDBI, IFCI, ICICI, and some nationalized banks.

Private-Sector Participation
The private sector is involved in implementation of Build, Own, Operate, and Transfer (BOOT) and Build, Own, and Operate (BOO) Projects. These models are actively followed in the small hydropower sector as evidenced in Uttarakhand, where clear guidelines have been defined by the government. The GOI is also promoting public–private partnerships (PPPs) in infrastructure development, including waste- to-energy and solid waste management. PPP projects with at least 51 percent private equity receive support from this facility through viability gap funding, reducing the capital cost of projects and making them attractive for private sector investment.

Viability gap funding can take various forms, including capital grants, subordinated loans, O&M support grants, and interest subsidies. The total government support required by the project must not exceed 20 percent of the project cost. The projects may be proposed by any public agency at the central or state level, the ULB that owns the underlying assets, or a private agency, with sponsorship from the relevant central or state government agency. The government has also set up a special-purpose vehicle—India Infrastructure Finance Company Limited (IIFCL)—to meet the longterm financing requirement of potential investors involved in PPPs. The majority of companies involved in PPPs to date have been mostly domestic. This trend indicates the increasing participation of domestic companies and paves the way for foreign companies to enter through either joint ventures or equity participation.

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