India’s Power Minister Piyush Goyal said disputes blocking a hydroelectricity project worth at least $1.4 billion have been cleared, part of a drive to revitalize the industry as he targets an unprecedented expansion in renewable energy.
Resolving the years-long delay in the Teesta-III project in northeastern Sikkim state near China will make hydroelectricity more alluring to investors, according to Goyal. One of his major challenges is finding the $200 billion India needs for a goal of 175 gigawatts of green-energy capacity by 2022.
“If you go back in history for the last five years, the entire hydel industry has come to a standstill in India,” Goyal, a 51-year-old former banker and chartered accountant, said in an interview in New Delhi on Tuesday. “We’re going to revive it.”
India’s solar, wind and hydroelectric ambitions are in focus as pressure grows on one of the world’s biggest polluters to pledge emissions curbs at a key United Nations global warming summit in December. Aside from environmental gains, flexible supplies from hydroelectric plants such as Teesta-III help stabilize the power grid, according to Goyal.
The minister said about 90 billion rupees ($1.4 billion) has been invested in the 1,200 megawatt Teesta project, whose backers include Goldman Sachs Group Inc. and Morgan Stanley. The plant was supposed to be commissioned in September 2012.
Hydroelectricity is strategically significant as it boosts economic expansion and employment in India’s northeast, Goyal added. The region is sensitive for India as it borders China, Myanmar and Bangladesh. China lays claim to 90,000 square kilometers (34,749 square miles) of land in Arunachal Pradesh, one of the states there.
India has roughly 42 gigawatts of hydroelectric power generation capacity, about 15 percent of the nation’s total installed capacity. The country’s hydro-power potential is 149 gigawatts, state-run NHPC Ltd. estimates.
“Our power sector is coal-heavy and hydropower can bring the much-needed balance,” said Anish De, New Delhi-based partner for infrastructure and government services at KPMG. “Hydropower is very easy to stop and start to meet peak requirements. The biggest potential is in northeastern India, but environmental clearances, acquiring land, evacuations and even plain accessible roads are problems.”
Some 90 percent of works at Teesta-III are complete and construction of the rest will start shortly, said New Delhi- based PTC India Ltd.’s Chairman Deepak Amitabh. All units are expected to be commissioned by March 2017, he said. PTC India is a minority investor in the plant.
The Sikkim government holds 51 percent in the Teesta project and Singapore-based Asian Genco Pte. about 37 percent, according to Amitava Sengupta, the company’s group chief financial officer. Asian Genco is backed by funding from international investors including Goldman Sachs and Morgan Stanley, he said.
Goyal said his next objective is to speed up NHPC’s 2,000 megawatt Subansiri hydroelectricity project spread across Assam and Arunachal Pradesh states. It’s about eight years behind schedule and may cost more than twice the original forecast, according to government estimates.
Delays in hydroelectricity projects raise costs and ultimately lead to higher tariffs, said Sambitosh Mohapatra, a partner at PricewaterhouseCoopers in India who covers power and utilities.
“It’s necessary for the government to push the hydro sector through wholesome planning because it can help keep the grid stable,” he said. “That’s absolutely necessary to support our solar and wind plans.”
Prime Minister Narendra Modi pledged to end blackouts when he took office last year. He also dramatically boosted India’s green-energy objectives. Billionaires such as SoftBank Group Corp.’s Masayoshi Son have vowed major solar investment in India since then.
The government on Wednesday adopted a policy for India’s offshore-wind industry, potentially paving the way for developments as much as 200 nautical miles into the surrounding seas.
The question now is whether the administration can overcome India’s history of missed infrastructure targets and turn promises of investment into actual spending.
“People have lost interest about investing in hydro,” Goyal said. “I want to reignite that interest.”