Taking a holistic approach to planning and developing hydropower

The chronic shortage of electricity supply in India impedes economic development and poverty reduction. More than 40 percent of households, most of them in rural areas, lack access to electricity. With the aim of extending access to electricity to all households by 2012, the government has launched a program to add 100,000 megawatts of generating capacity. Recognizing that meeting much of this need with hydropower, a renewable energy resource, offers many advantages, the government calls for its expansion from 24 percent of the country's generation capacity today to almost 40 percent by 2012. With this national development objective in mind, Himachal Pradesh and Uttarakhand, two states in northern India, have launched ambitious programs to harness their substantial hydropower potential. Himachal Pradesh has identified more than 20,000 megawatts of hydropower potential , with less than 7,000 megawatts developed. Uttarakhand has nearly 15,000 megawatts of hydropower potential, with less than 3,000 megawatts developed. Both states are pursuing an untried and thus somewhat risky strategy of attracting public and private developers to build and operate hydropower projects. A few projects are operating today—five on the Satluj River, in Himachal Pradesh, and one on the Alaknanda River, in Uttarakhand (table 1). The hydropower development plans for the two rivers call for a total of 50 projects, adding about 15,000 megawatts of capacity. Slightly less than half the projects have been allocated to the private sector; the rest have been distributed among state and central government hydropower companies. These are significant development programs that face considerable challenges in ensuring effective coordination and efficient development and operation. Many of the private developers are new to the sector, and their ability to manage the hydrological , geological, construction, and commercial risks of the sector is still untested. Planning for hydropower development has traditionally been oriented toward individual projects. There are compelling reasons for a project-based approach. But this approach has several Plummer, senior financial analyst, are both members of the South Asia Energy Team of the World Bank working on hydropower projects in India and Nepal.