Select Page

Himachal Pradesh asked mini hydropower project producers to provide funds for the development of the areas where the power plants have been commissioned, says this news article from Thaindian

A bit funny. Why would the government indirectly tax renewable energy producers? Intrigued, I started reading more.

The state government has decided that all private power producers generating hydroelectricity up to 100 KW will have to provide three percent of the income generated from the project to the local gram panchayat for the first 12 years and six percent thereafter, to be spent for developmental activities.

The same article says that Himachal Pradesh has about 25% of India’s total hydro potential and that with the cost of hydropower being quoted at about Rs 7 crores per MW in India ($1.5 million per MW), this is a significant renewable energy source. And HP has been doing a good job of approving projects fast, with over 50 MW approved in the past one and half years.

All these raise the simple question: Why is the government putting the additional financial pressure on mini hydro producers? In most cases, governments are actually subsidizing and incentivizing in other ways renewable energy projects. Is there some profound logic why the HP government is doing this?

Copyright © 2022 EAI. All rights reserved.