GS 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, and Railways etc.

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The Union Cabinet chaired by Prime Minister Narendra Modi has approved measures to promote the Hydro Power Sector, which include declaring Large Hydropower Projects (HPO) as part of non-solar Renewable Purchase Obligation (RPO).


  • Large Hydropower Projects to be declared as a renewable energy source. As per the existing practice, only hydropower projects less than 25MW are categorized as a renewable energy source.
  • HPO as a separate entity within non-solar renewable purchase obligation to cover large hydropower projects commissioned after notification of these measures. The small hydropower projects are already covered under the Non-Solar Renewable Purchase Obligation.
  • The trajectory of annual HPO targets will be notified by Ministry of Power based on the projected capacity addition plans in hydropower sector and the necessary amendments will be introduced in the tariff policy and tariff regulations to operationalise HPO. The tariff rationalisation measures include providing flexibility to the 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 per cent.
  • They also include budgetary support for funding flood moderation component of hydropower projects on case to case basis.
  • They also include budgetary support for funding cost of enabling infrastructure that is roads and bridges on case to case basis as per actual, limited to Rs 1.5 crore per MW for upto 200 MW projects and Rs 1.0 crore per MW for above 200 MW projects.


  • Considering most of the hydro power potential is located in the higher reaches of the Himalayas and north-east region, the new measures to promote the Hydro Power Sector are expected to result in the overall socio-economic development of the region by providing direct employment in the power sector.
  • The measures will also provide indirect employment and entrepreneurial opportunities in the field of transportation, tourism and other small-scale businesses.
  • Another major benefit would be of having a stable grid considering 160 GW capacity addition by 2022 from infirm sources of power like solar and wind.

India’s Hydropower potential:

  • India is endowed with large hydropower potential of 1, 45,320 MW of which only about 45,400 MW has been utilised so far.
  • Only about 10,000 MW of hydropower has been added in the last 10 years. The hydropower sector is currently going through a challenging phase and the share of hydropower in the total capacity has declined from 50.36 per cent in the 1960s to around 13 per cent in 2018-19.
  • Besides being environmental-friendly, hydropower has several other unique features like the ability for quick ramping, black start, reactive absorption, which make it ideal for peaking power, spinning reserve and grid balancing and stability.
  • Further, hydropower also provides water security, irrigation and flood moderation benefits, apart from socio-economic development of the entire region by providing employment opportunities and boosting tourism.
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