No ‘capacity payments’ for small hydel units

The government has decided to eliminate the concept of ‘capacity payments’ for small hydropower projects, aiming to reduce the financial burden on power consumers. Currently, consumers are shouldering 70% of electricity costs due to these payments made to Independent Power Producers (IPPs), totalling around Rs2.2 trillion annually to those not producing a single unit of electricity. During discussions on standard security agreements for small hydropower projects under the Power Generation Policy 2015, the cabinet committee on energy (CCoE) was briefed that hydrological risk has now been parked on the power producers, though the policy provided that it would be borne by the power purchasers.