Shimla: By permitting free sale of power for small hydro projects, the government has made a major policy shift from the earlier practice where companies executing such projects were bound to sell power only to HP State Electricity Board (HPSEB) on a long term power purchase agreement (PPA) basis.
Following a cabinet decision to make a policy change for the purpose, principal secretary power, Deepak Sanan said, â€œit a win win situation for all.â€
He said that under the earlier the PPAâ€™s power was to be sold to HPSEB at a levelised rate over the duration for which the project site had been leased out to an independent power producer (IPP).
Small hydro projects sites with a generation potential of 5 MW are normally given out for a 40 year period after which they are to be handed back to the government.
â€œThe policy changes being incorporated will now permit third party sale of power by small hydro producers,â€ he said.
However, power producers and HPSEB were free to enter into a mutually acceptable power purchase agreement that would need to have their tariff plans determined by the state electricity regulatory commission,â€ said the power secretary.
Work on many small hydro projects has not been able to get started because of the demand from the project owners for allowing third party sale of power and not binding them down to selling it to HPSEB.
Though the changes in policy were approved by the cabinet on Wednesday, but apprehensions have been expressed that power producers have got it both ways.
â€œThird party sale of power would deprive the state utility of power in summer as demand from outside the state is high but during winters when the state turns power deficient, these small producers would have nothing to offer as hydro generation simply slumps then, said a senior electricity board official who did not want to be named.