1. Potential and Investment Challenges in Small Hydro in India N arasimhanSanthanam EAI – www.eai.in

2. About EAI Leading Indian renewable energy business intelligence, market strategy consulting firm Work on all primary renewable energy sectors – solar, wind, bio-fuels / biomass, waste-to-energy and small hydro Work on market research, entry and diversification strategy, economic and financial modeling and pre-feasibility analysis Team comprises professionals from IITs and IIMs, with renewable energy, industry research and economics backgrounds Based out of Chennai, India More at www.eai.in

4. Investment Trends in Small Hydro in India

5. Costs

6. Tariffs and RoI

7. Key Challenges

8. Looking Forward

11. Potential sites of small hydro and 5,415 potential sites with an aggregate capacity of 14,305.47 identified.

12. MW Total installed capacity = approx 2500 MW (15% of total)

14. Small Hydro in India – Intro and Potential High capacity factors

16. Proven technology

17. Indigenously available.

18. More enviro friendly than large hydro.

19. Low scales of investment make them affordable to small and medium entrepreneurs.

20. Shorter gestation periods than large hydro

21. Relevant for off-grid, rural, remote area applications.

23. High operation and maintenance cost - Inaccessibility of small hydro plants could result in high O&M costs.

24. Statutory clearances – Getting the various clearances required take considerable amount of time in some cases.

26. Small Hydro in India – Intro and Potential SHP High Potential States (M W )

29. Small Hydro - Investment Trends Installed capacity grew from 1693 MW in 2005 to 2403 in 2009. (CAGR of 9.2%). CAGR expected to be higher for the 2010-2015 period – approx 13%

31. Significant variation in capex based on scales (10-15%), locations (15-20%).

33. State Policies For Private Sector Small Hydro Power Projects

36. Significant advances are being made in hydroelectric equipment.

37. Developments focused on low-head installation, turbines (Eg. “ fish friendly” turbines), improving environmental integration.

39. Tariffs(2009)

42. Lifetime = 30 years

43. Project capex = 5.5 crores/MW

44. D/E = 70:30

45. Interest on loan = 12%

46. O& M = 17 lacs / MW / year (5.7% escalation annual)

47. Depreciation = 3% SLM

48. Residual value = 10% of capex

49. Tariff + carbon credits = Rs 3.35 per kWh

52. Poor Transmission and Distribution

53. Geological and Social Uncertainties

55. Key Challenges Delays and Long Timelines Long Implementation Phase Owing to Relative Inaccessibility Resource mobilisation Installing safety measures Delays owing to transportation issues Testing procedures Overcoming geological surprises Grid connectivity Commissioning

57. More acute owing to the relative remoteness and inaccessibility of SHP sites

58. Results in power evacuation

60. Key Challenges Regulatory Challenges Tariff fixing still contentious Regulators need to curb tendency to change rules and targets on which investment decisions are made Regulatory commitment need to be sustained through long term contract

62. State utilities more proactive in improving the grid infrastructure and connectivity with SHP projects

63. Regulators sticking by contracts and more “generous” on incentives

65. SHP can provide economically sustainable power production

66. SHP could be favored by states owing to its ability to provide power to remote areas

67. Has fewer environmental bottlenecks than large HP