Although fossil
fuels lead the world’s electricity generation market, more than 60 countries
are now using hydropower to meet more than half of their electricity needs. The
benefits of producing electricity from small hydropower, together with
increasing interest in the sector, have led to improved policies and support
from governments. Both are expected to engender new installations in many
countries in coming years. P2 Solar is one of the companies developing
mini-hydropower projects for public and private sectors that are actively
seeking to incorporate it into their electricity consumption profiles and have
favorable renewable energy policies.
Mini-hydropower’s
attractiveness is partly driven by its ability to quickly respond to changing
demand for electricity, water management, and flood control. Small and
mini-hydropower generation plants boast a shorter development period, roughly
two to five years, compared to large hydropower plants, which usually have a
development period of about seven years. Additionally, small and mini-hydro
have a higher return on investment attributable to the low capital investment,
construction, operational and maintenance costs. Construction of a small
hydropower plant also does not disturb the local habitat as large hydropower
plants do.
Last month, P2 Solar
announced that its subsidiary in India signed a power purchase agreement with
the Punjab energy distribution company for its Rajgarh Mini-Hydro Project. A
crucial event for P2 Solar, this agreement is a result of the company’s
substantial efforts in recent years.
The power purchase
agreement provides a payment term for 35 years, at an estimated tariff of
US$0.10. These are terms the company believes will facilitate a high rate of
return and create free cash flow for the firm. The signing of the agreement
means P2 can now close bids for construction and proceed to build the project.
The company’s management will be returning to India shortly to move ahead with
the project’s development, including selecting the lead contractor and
initiating construction.
For more
information, visit www.p2solar.com
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