Kerala overlooks environmental aspects of proposed small hydropower plants

Last October, the Kerala government launched a scheme to construct 62 small hydro power projects to increase electricity generation in the state by 262 MW. As the time limit for submitting the pre-qualification bids by project developers draws to a close on April 2, a scrutiny of the plan shows that crucial technical and environmental aspects are missing from the small hydro power (SHP) policy.

The stated objective of the policy is to achieve 10 per cent of energy generation through renewable sources by 2016-17. This target is termed as renewable purchase obligation (RPO)—an obligation to be followed by transmission and distribution agencies by sourcing certain fixed percentage of power from renewable sources. At present, 2.94 per cent of the energy generated in Kerala is through renewable sources.

The list of projects in river basins has been made available to the Energy Management Centre (EMC), an autonomous organisation under the Ministry of Power looking after SHP projects. However, the exact coordinates of the project sites are not mentioned. This hampers ascertaining whether these projects are in the ecologically sensitive zones of the Western Ghats. It is imperative to ascertain this, especially in view of the recommendations made by the Western Ghats Ecology Expert Panel (WGEEP), chaired by Madhav Gadgil. The panel’s recommendations clearly define the zones where hydro power development activities are permissible.

“Since SHPs do not require environmental clearance under the EIA Notification, they should at least have clearance from the state environment impact assessment agency (SEIAA),” says Latha Anantha, director of River Research Centre, a non-profit based in Kerala.
“However, given the cumulative environmental impacts that could be created in the downstream by many SHPs in a single river basin, there is a need to include SHPs under the EIA Notification,” adds Anantha.

Tricks to avoid environment clearance
The highest installed capacity of SHPs in the country is in Karnataka, the state adjoining Kerala, which contains three-fourth of the Western Ghats. Conservation activists have brought to light how private developers along with the local state government are flouting environmental protection laws by reducing the capacities of individual power plants to below 25 MW. This allows them to evade the environment clearance requirement. The projects in Kerala will also be of less than 25 MW capacity.

To curb replication of such fraudulent practices, it is necessary to enforce cumulative impact assessment (CIA), which analyses the impact of cascade power plants on the same river basin.

“As for those rivers which already have irrigation or hydroelectric projects operating upstream or downstream of the proposed SHPs, there is a need to carry out cumulative impact assessment of the same,” adds Anantha.

Anantha goes on to recommend that “no project should be permitted in buffer zones, protected areas, national parks and sites which are at altitudes higher than 1,000 m, or are in ecologically sensitive zone (ESZ)  1 as per the WGEEP report.”

Praveen Bhargav of Wildlife First says it is not only the development over the river which needs to be factored into cumulative impact assessment. “All major infrastructure development—construction of roads, railways, bridges, petroleum pipelines which have severely fragmented the Western Ghats landscape—must be factored in, too.”

Power shortfalls

In Kerala, the status of electricity generation is unsatisfactory. It is anticipated that for the year 2012-13, energy deficit in the state will be around 15 per cent while peak deficit will be around 18.5 per cent. These figures, however, are misleading when compared to the actual energy deficit for the year 2011-12, which was 2.5 per cent against the estimated 12.3 per cent. The reason cited for this is that there is a high energy generation dependence on hydroelectric power plants. These comprise roughly 72 per cent of the total installed capacity in the state, and are thus dependent on adequate rainfall for electricity generation.

The current SHP policy has been launched almost a decade after the first round of competitive bidding. This was held in 2003-04, when eight projects were allocated to independent power producers (IPP) and five projects were allotted to captive power producers (CPP).

As of now, only one project stands commissioned. According to P K Nair, managing director of Viyyat Power Pvt. Ltd, who commissioned the project, “The major reason for such slack performance is attributed to factors like procurement of land for establishing power plants from individuals and/or government departments like the forest department. In the protracted process of land procurement, the tariff quoted also become non-viable over a period of time and hence the developers lose interest and leave the projects in between.”

Plant efficiency and rains

Another important criterion is the efficiency with which the small hydropower plant can function in Kerala. The rivers in Kerala are rainfed, unlike in the Himalayas where rivers are both rainfed and snow-fed. Most of the rivers will remain dry for six months during the winter and summer seasons. This fact is supported by an analysis of plant load factor (PLF) of existing SHP plants. PLF quantifies the time for which power is generated in a year. A higher PLF implies higher energy generation.

Analysis demonstrates that though IPP projects have fared well, with around 48 per cent PLF against the benchmark of 30 per cent set by the Kerala State Electricity Regulatory Commission (KSERC), in almost all the projects electricity generation from November to May is only one-fourth the capacity, while three-fourths is realised in the four monsoon months starting June.

“An assessment of climatic suitability—availability of water throughout the year in the power plant catchment area based on the assessment of the status of the SHP plant catchment—needs to be done before taking up these projects. If the projects run dry for six months, then those projects should not be taken up in the first place, thus avoiding the inevitable environmental damage,” says Anantha.

However, since these SHP projects have the provision of banking—supplying excess electricity and using it at a time when generation is less and demand is more—for almost two months, the state government is willing to generate excess electricity during the monsoon period and import from the regional grid during the lean winter or summer seasons. This is in order to save on the cost of buying electricity from the Central power station, which has allocated 1,030 MW to Kerala during 2012-13.

Developers’ concerns

Under the Kerala SHP policy, another area of concern for developers is certain provisions in the build-own-operate-transfer (BOOT) policy. According to this, for 30 years from the date of allotment of the project, the developer can construct, own and operate the project before transferring it to the state government on an as-is-where-is basis. Under the current system, developers have only about 24 years to reap profits from the project as six years are usually spent in construction and the securing  statutory approvals. This BOOT period granted in Kerala is far less compared to the period of 35 years applicable in states like Uttarakhand and Himachal Pradesh.

The good news for developers is the tariff of Rs 4.88/kWh (for less than 5 MW) and Rs 4.16/ kWh (for projects between 5 MW and 25 MW) as notified by the KSERC for small hydropower plants. These tariffs, however, do not consider the capital cost towards installing the transmission line to the nearest substation, although SHP policy makes this obligatory for the project proponent.

Builders choosing to bid for the tariff for projects in Kerala are left deliberating how much the transmission costs will be, and whether expenses will be retrieved through a component in the tariff charged, or through some other means.