Whose electricity is it, Anyway?

 

Whose electricity is it, Anyway?

“Barely two months after being awarded for construction, the Dulhasti Stage II project's future electricity has already been committed to Uttar Pradesh for the next four decades.”

Peerzada Mohsin Shafi

Jammu and Kashmir has long been regarded as India's hydropower treasure. Endowed with mighty rivers such as the Chenab, Jhelum and Indus and their tributaries, the Union Territory possesses one of the country's richest renewable energy resources. For decades, experts have recognised that these rivers have the potential to generate thousands of megawatts of clean electricity, making Jammu and Kashmir a vital contributor to India's energy transition. Yet this extraordinary natural wealth presents a striking paradox. Whenever river flows diminish and hydropower generation declines, the Union Territory grapples with electricity shortages and remains heavily dependent on power imported from the national grid. This contrast between immense resource potential and persistent seasonal shortages raises an important question that deserves thoughtful public discussion that Whose electricity is it, anyway?

The latest development bringing this question into focus is the 260 MW Dulhasti Stage II Hydroelectric Project in Kishtwar. Awarded only in April 2026, the project is still in the earliest stages of construction. The ink on the construction contract has barely dried, yet the electricity it is expected to generate has already been committed for the next forty years. NHPC Limited and Uttar Pradesh Power Corporation Limited have signed a long-term Power Purchase Agreement under which Uttar Pradesh will purchase electricity generated from the project from the date of its commercial operation. Before the first turbine has been installed, before the reservoir has been impounded and before a single unit of electricity has entered the national grid, the future destination of the project's generation has already been determined.

It is important to recognise that there is nothing unusual or improper about such an arrangement. Long term Power Purchase Agreements are a well-established feature of the electricity sector. They provide financial certainty to project developers, reduce commercial risk and enable banks and financial institutions to finance capital intensive infrastructure projects. Hydroelectric projects require enormous upfront investment and several years of construction before they begin generating revenue. Without assured buyers, many such projects would struggle to achieve financial closure. From this perspective, the agreement for Dulhasti Stage II reflects accepted industry practice.

However, recognising the commercial rationale behind these agreements does not prevent a broader policy discussion. The question is not whether Power Purchase Agreements should exist. Rather, it is whether sufficient attention is being given to Jammu and Kashmir's own long term energy requirements before future electricity generated within the Union Territory is committed through agreements spanning four decades. As demand for electricity continues to grow because of urbanisation, industrial development, tourism, electrification of transport and rising household consumption, the choices made today will influence the region's energy security for generations.

Nor is Dulhasti Stage II an isolated example. The 850 MW Rattle Hydroelectric Project, also under construction in Kishtwar, has already entered into a forty-year Power Purchase Agreement for supply of electricity to Rajasthan. The 624 MW Kiru Hydroelectric Project has similarly committed 100 MW of its future generation to Odisha through a long-term agreement. Even earlier, the 330 MW Kishanganga Hydroelectric Project had signed a thirty-five-year agreement for supply of 100 MW to Chhattisgarh Viewed individually, each agreement serves a commercial purpose. Viewed collectively, however, they reveal an emerging pattern in which future electricity from major hydroelectric projects is increasingly being contractually committed long before the projects themselves begin producing power.

This trend becomes particularly significant when considered alongside Jammu and Kashmir's own electricity situation. The Union Territory has an installed hydropower generation capacity of approximately 3,700 MW, including both Central Sector and Union Territory owned projects. Of this, only around 1,197 MW belongs to JKSPDC. During winter, when river flows reduce substantially, local hydropower generation frequently falls to merely 300 to 500 MW, while electricity demand rises to around 4,200 to 4,300 MW. To bridge this gap, Jammu and Kashmir imports approximately 2,900 to 3,100 MW of electricity from the national grid. Despite these substantial imports, the region can still experience a peak winter shortfall of around 800 MW. These figures illustrate that while Jammu and Kashmir possesses abundant hydropower resources, it continues to face significant seasonal constraints in meeting its own electricity requirements.

This reality calls for looking beyond the conventional framework of project financing. Every new hydropower project is more than an engineering accomplishment or a commercial investment. It is a strategic public asset with long term implications for economic development, industrial growth, employment generation and regional energy security. As the Union Territory's economy expands and electricity demand continues to rise, future hydropower projects will play an increasingly important role in determining whether Jammu and Kashmir remains dependent on imported electricity or gradually strengthens its own energy resilience.

None of this should be interpreted as an argument against interstate cooperation or the national electricity market. Hydroelectric projects in Jammu and Kashmir are important national assets and naturally contribute to India's broader energy security. Nor is this a suggestion that electricity generated within the Union Territory should not benefit consumers elsewhere. Rather, the issue is one of balance. A region that contributes significantly to India's renewable energy future should also have confidence that its own long term energy needs have been comprehensively assessed before future generation is committed through multi decade agreements.

The recent Dulhasti Stage II agreement therefore offers an opportunity to initiate a wider and more informed discussion on future power planning. It invites policymakers to examine whether existing allocation mechanisms adequately account for Jammu and Kashmir's evolving energy requirements alongside national priorities. Such a review need not undermine the importance of long-term Power Purchase Agreements. Instead, it can help ensure that commercial viability, national energy objectives and the long-term interests of the host region progress together.

The discussion also extends to the everyday concerns of electricity consumers. In recent years, the affordability and reliability of power have become matters of increasing public interest, particularly during the winter months when demand peaks and curtailments continue to affect many areas. The present government has announced its intention to provide up to 200 units of free electricity to eligible domestic consumers, reflecting an effort to ease the burden on households. As this commitment is implemented, it will need to be considered alongside the Union Territory's evolving power requirements and the realities of its seasonal electricity deficit.

A further dimension of this challenge is that many of Jammu and Kashmir's major hydropower projects are Central Sector projects, with power allocation governed through national mechanisms. Addressing the Union Territory's long-term energy needs therefore requires close coordination between the Government of India and the Government of Jammu and Kashmir. As future projects are planned and commissioned, it may be useful to periodically review whether existing allocation arrangements adequately reflect the region's changing demand, seasonal generation patterns and development priorities. Such a review could also examine whether the mechanisms for allocating power continue to strike an appropriate balance between national energy objectives and the long-term needs of the host region.

As more hydroelectric projects move from planning to commissioning across Jammu and Kashmir, energy policy will increasingly shape the Union Territory's economic future. The rivers of Jammu and Kashmir have the capacity to illuminate millions of homes across the country and make an important contribution to India's clean energy transition. The challenge for policymakers is to ensure that, while serving national objectives, these projects also support the Union Territory's own long term energy security, economic aspirations and the welfare of its people.