China has the world’s largest hydro power capacity at 200 GW and it plans to double the capacity by 2020.China is mostly dependent on Coal Power and Hydro Power to meet the electricity demand from its fast growing economy.China has the world’s second largest electricity capacity at 850-900 GW second only to USA at ~1000 GW.This will be soon be overtaken as China continues to grow at 8-10% and its electricity per capita is still much below developed world standards.China is already the world’s biggest consumer of Energy and emitter of Greenhouse Gases.Despite rapidly investing in Nuclear and Renewable Energy,China’s voracious demand has made the growth of Fossil Fuel Energy unsustainable.It already consumes 3 Billion Tons of Coal per year and is already importing around 180 million tons per year.
India has set up ambitious targets of meeting 15% of its Energy Needs from Renewable Sources up from around 5.5-6% in 2010.WIth India’s Electricity Capacity expected to rise to 450 GW from around 165 GW,this would imply that around 67.5 GW of Electricity Capacity would be needed up from around 16 GW.This would mean around 5 GW of Capacity addition every year in the next decade which is a very tall order.20 GW could be met by Solar Energy according to the Jawaharlal Nehru Solar Mission (JNNSM).Most of the rest would have to met by Wind Energy.Biomass Energy has high costs and reliability problems which mini hydro potential is only 1 GW.Note this is just the capacity I am talking about,for meeting the electricity generation,capacity additions would have to be greater as Solar Energy and Wind Energy have only 20-30% Load Factor compared to 60-80% for Fossil Fuel Energy Sources.Nuclear Energy can contribute another 20 GW.
Renewable Energy in India is growing at a rapid pace increasing its share of the total capacity from 2% in 2003 to around 10% in 2010.However the share of electricity generation is still quite low at 3% due to the lower capacity load factors of Green Energy Sources compared to Fossil Fuel Sources.The Total Installed Capacity of Renewable Energy in India is around 16 GW with Wind Energy taking the Lion’s share at almost 70% followed by Small Hydro at 15% and Biomass Energy at 12%.Solar Energy in India till now has a capacity of just 6 MW which is estimated to grow to 22 GW by 2022 making Solar Energy one of the Biggest Growth Opportunities in the Field of Indian Energy.
Earthquake Vulnerability – Large Dam Construction has been linked to increased propensity of Earthquakes.Massive Earthquakes in China and Uttarakhand in India were linked to the building of Massive Dams in these countries.Building of Massive Man Made Structures along geologically sensitive areas has not been properly studied and understood till now
Summary
While Hydro Power is a necessity for an energy starved and growing economy like India,its effect have to be properly assessed and understood before going on a hydro binge.NTPC lost almost $300 million after its 600 MW project was canceled 5 years after getting permission.This was done in the face of large scale protest by local groups and NGOs.2 other projects in Uttarkhand have also been rejected leading to more losses.
Note this Hydro Plant will cost around $31 Billion which is quite costly at $15/watt if the the $31 Billion is used for the 1800 MW capacity.This is is almost 15x the cost of a typical Hydro Capacity and would need massive subsidies.Papua New Guinea is a poor country and might receive aid from Australia but the $31 Billion would make even the richest country balk at this price.Australia is not exactly energy deficient with massive resources of coal,wind and solar energy.In Renewable Energy the country has been quite slow with provinces like NSW and South Australia promoting renewable energy through regional subsidies.Hydro Power is the main source of Clean Power accounting for 90% of the Clean Energy Mix.The Project will take 10 years to build and their remains an outside chance that Oil Prices become so high that 24 hr Hydro Power at that time might make sense at $15/watt.
Now Blackstone has decided to gamble on India’s Power Deficit Story by investing $300 million for an undisclosed stake in the company.With investment plans of $6.5 billion and parent company sinking under loads of debt,Moser Baer Projects desperately needed equity which has been provided by Blackstone.Its previous track record in Solar and Optical Media does not inspire a lot of confidence.But India’s 8-9% Growth Rate is like a Rising Tide which will lift all sorts of Boats.Blackstone is perhaps gambling more on that rather than on Moser Baer.