The government has approved a ₹2,584 crore Small Hydro Power scheme to add 1,500 MW capacity, with a focus on remote regions, investment generation, and decentralised clean energy projects.
The Union Cabinet has approved the Small Hydro Power Development Scheme, which is applicable from FY 2026-27 to FY 2030-31, with an overall allocation of ₹2,584.60 crore, with the objective of adding 1,500 MW of capacity through schemes of 1-25 MW.
As per an official statement, the scheme is aimed at supporting the development of small hydro schemes across states, with a focus on the hilly and North Eastern states, where the potential remains underutilised. The central assistance is going to be higher in these states, with the possibility of getting an assistance of ₹3.6 crore per MW, or 30 per cent of the project cost, subject to a maximum of ₹30 crore per project. In the case of other states, the assistance is going to be up to ₹2.4 crore per MW, or 20 per cent of the project cost, subject to a maximum of ₹20 crore per project.
Out of the overall allocation, an allocation of ₹2,532 crore has been earmarked as project support, with the scheme expected to facilitate an investment of around ₹15,000 crore in the sector. The schemes are expected to utilise equipment procured from local sources, with the objective of boosting local manufacturing.
The scheme also includes provisions to support the preparation of detailed project reports (DPRs) for approximately 200 potential projects. An allocation of ₹30 crore has been set aside for state and central agencies to develop this project pipeline.
Officials said the programme is expected to generate around 51 lakh person-days of employment during the construction phase. Additional jobs may be created during operation and maintenance, particularly in rural and remote areas where most of these projects are expected to be located.
Small hydro projects are decentralised and typically require shorter transmission networks, which can reduce transmission losses. They also involve limited land use compared to larger hydropower projects.
The government said the scheme is intended to address delays in the development of the small hydro sector and improve the utilisation of available potential. It also noted that such projects can contribute to local economic activity in remote areas through infrastructure development and job creation.
SHP projects generally have operational lifespans of 40 to 60 years or more, depending on maintenance and site conditions.
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