Kathmandu. The Indian government has started talks with domestic reinsurer GIC Re for setting up an insurance bridge as the risk of hydropower projects has increased due to the risk of climate change in recent times. “We are in discussions with the Ministry of Power to build bridges to provide cover to all hydropower plants in the country,” N Ramaswamy, Chief Managing Director of GIC Rai, was quoted as saying by Asian Insurance Post.
India has limited reinsurance capacity available for hydropower projects due to the devastating risks involved. “Most destructive covers are subliminal. With the increasing frequency and intensity of climate risks and natural disasters, the risks are only getting bigger and some appropriate arrangements have to be made for hydropower projects to bear adequate risks,” Ramaswamy explained.
Discussions are underway regarding the features of the proposed hydropower insurance bridge to make it larger and stronger. It will also include other global reinsurers and domestic non-life insurers who have set up their operations in India.
Hydropower has always played an important role in India’s energy landscape. Which provides the necessary support to the electrical grid. This has increased the reliability and flexibility of the power system.
The development of hydropower projects has been affected by various problems such as natural disasters and geographical surprises. As a result, hydropower capacity has slowed down further in recent years.
Hydropower projects in india’s northern and eastern regions, comprising more than 60 per cent of the total power generation capacity, have been severely affected by natural disasters in recent years. In July 2023, flash floods in Himachal Pradesh disrupted the operation of several power stations in the region. In addition, flash floods in the eastern region in October 2023 further disrupted the operation of many hydropower stations. As a result, production has been severely affected.
