In a bid to encourage Small Hydro Power (SHP) generation capacity addition and achieve economies of scale, the New and Renewable Energy Ministry will soon finalise guidelines for tariff-based bidding of projects.
“The ministry has invited comments on the draft guidelines for the tariff-based competitive bidding process for grid-connected SHP projects (of up to 25 MW),” an official said.
The official said, “The comments on draft guidelines can be sent by September 10, 2016. The norms for bidding of these SHP projects would be finalised very soon.”
The ministry is responsible for the development of small hydro projects of up to 25 MW station capacity. The estimated potential of power generation from small hydro projects (up to 25 MW) is about 20,000 MW in the country.
According to information available with the ministry, so far nearly 4,300 MW SHP capacity has been harnessed at 1,075 sites all across the country.
Promoting competition in the electricity industry in India is one of the key objectives of the Electricity Act, 2003. Power purchase costs constitute the largest cost element for distribution licensees.
The official said that the competitive procurement of electricity by the distribution licensees is expected to reduce the overall cost of procurement of power and facilitate development of power markets.
The norms will enhance standardisation and reduce ambiguity and hence time for materialisation of projects.
These guidelines will also provide flexibility to sellers on internal operations while ensuring certainty on availability of power and tariffs for buyers.
These are expected to bring uniformity in tendering by various agencies including state utilities which will facilitate investment and also ensure bankability.