The curious case of Hydro Power’s downturn

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    Fresh data sourced from the Indian Meteorological Department (IMD) shows an overall 7 per cent rise in rainfall at 16.5 mm in the current monsson season when compared to last year. However, water reservoir levels aross the country stands at 45 per cent of total capacity as compared to the ten year-average of 47 per cent.

    If you thought the better than expected monsoon this year will boost water reservoirs and hydro power generation, you might need a rethink. Despite improved rainfall, the level of water in India’s 91 major reservoirs is below the long-period average and hydel generation this fiscal is down by over a tenth.

    Fresh data sourced from the Indian Meteorological Department (IMD) shows an overall 7 per cent rise in rainfall at 16.5 mm in the current monsson season when compared to last year. However, water reservoir levels aross the country stands at 45 per cent of total capacity as compared to the ten year-average of 47 per cent. Also, overall hydro power generation dipped 11 per cent to 30.8 billion units in the first quarter current fiscal as against 34.7 billion units in the same period last year, according to the latest Central Electricity Authority data.

    Experts attribute the unexpected development to a combination of low energy demand and poor reservoir levels in the suthern states. “Hydro power generation has fallen short largely on account of poor inflows to reservoirs in southern states, especially in Karnataka, Kerala, Andhra and Telangana,” said Kameshwara Rao, Partner at accounting and consultancy firm PwC.

    He added the combination of two factors — poor reservoir levels and low energy demand — makes hydro plants adopt a strategy to improve storage and minimise power generation to levels just adequate for maintaining required flow. “This gives them flexibility of energy source later when demand pick up,” Rao said.

    India has a total installed power generation capacity of around 300,000 Megawatt. Hydro power plants account for around 17 per cent of this capacity. Thermal plants account for a bulk of the rest of the capacity. The country generated 296 Billion Units of power in the quarter ended June, up 9 per cent over the last year’s 272 billion units.

    The overall improvement in power availability has impacted spot market prices of the commodity which fell ten per cent to Rs 2.31 per unit in the April-June 2016 period as compared to the same period last fiscal.

    Power is one of the eight core infrastructure sectors which have a combined weight of 38 per cent in the Index of Industrial Production (IIP). The core sectors of the economy registered a 5.2 per cent yearon-year increase in June led by better-than-expected performance of the power, coal and cement sectors.

    By : Yaruqhullah Khan