Based on the notified Hydro Purchase Obligation (HPO) criteria and trajectory, India's incremental hydropower generation capacity requirement is expected to be around 18 GW by 2030, which corresponds to a 39% increase over the existing installed hydro base.
Girishkumar Kadam, Senior Vice President & Co-Group Head - Corporate ratings, Investment Information and Credit Rating Agency of India Limited (ICRA) told the media that HPO requirements have only been announced by State Electricity Regulatory Commissions (SERCs) in a few states, following policy objectives. As a result, consistency and timeliness in the notification of HPO requirements by SERCs in other states, as well as subsequent implementation by the obligated entities, would be closely monitored. According to the rating agency, hydro capacity development in India has been slow due to considerable execution issues, as seen by the incremental capacity addition of around 22 GW between 2000 and 2021, a compound annual growth rate (CAGR) of more than 3% in the hydro segment. The share of hydropower in total generation capacity has decreased significantly over time, with a considerable increase in thermal capacity expansion from 2005 to 2015, and then in the renewable energy segment after that. ICRA said that with enhanced solar and wind energy tariff competitiveness and a strong policy focus by the government, the share of renewables, especially solar and wind energy, in the energy generation mix is expected to grow significantly in the future. From a grid standpoint, the hydro energy segment is critical for meeting flexibility and peaking power supply requirements. Over the previous two years, the government has detailed policy initiatives to encourage investment in hydropower through the notification of HPO norms, a long-term HPO trajectory, and tariff rationalisation measures. According to the Ministry of Power, the hydro power purchase obligation for 2021-22 is set at 0.18%, rising to 2.82% by 2029-30 at the national level. Image Source
