Hydropower policy entangled in ‘fluctuating’ market trends

Hydropower policy entangled in ‘fluctuating’ market trends
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SRINAGAR: Bleeding losses in the hydropower business, the Jammu and Kashmir State Power Development Corporation (SPDC) is still studying “market trends” to prepare a new, commercially viable hydropower policy.
Sources in the corporation said that the government-owned company is studying the “fluctuating” market trends to make hydropower generated in the state economically viable. The corporation has been trying to come up with a new policy after losses suffered with a series of hydropower projects, most recently with the Baglihar II.
“The purpose of this (policy) paper is to give a picture of hydropower generation in India: its rates, market, demand and supply. It will also lay down a roadmap for large power projects in the state. This process is a little rigorous, but work is going on in a sustained way,” an official at SPDC said.
The surplus generation of hydropower in India has made its rates cheaper than that of Jammu and Kashmir hydropower projects. The new policy paper began to be drafted nearly eight months after SPDC submitted the draft of a new policy before the government in April last year. In December, an empowered committee led by the Chief Secretary returned it back to SPDC, and instead asked for an approach paper that would give a holistic picture of hydropower in India. This had to be submitted in two months.
“A good portion of work on the paper has been done, but the work is going on. It will still take some time before it is submitted,” the official said.
At present, there is a 2011 policy in vogue, which was formed nine years after the first one was drafted. This policy focused only on power generation without taking into account market requirements.
The lack of foresight made the company invest in projects whose generation costs were high. The 450-MW Baglihar II project has failed to lure any buyer for more than a year, as its selling cost of per unit of energy – Rs 4.4 – was nearly Rs 2 higher than the market rate. The SPDC finally managed to sell the power at about Rs 4 per unit to the Uttar Pradesh government, but for one year only. The SPDC may have to struggle again next year if UP does not continue the contract.
Another example is that of Nimuno Bezgo and Chutak hydropower projects, which sell energy at Rs 13 per unit. The SPDC also buys power from the Dulhasti project at Rs 7 per unit, when the available rates for power in the market are about Rs 2 and Rs 4 per unit.