New Delhi: The Centre on Wednesday decided to provide up to 30 per cent of the project cost, or up to Rs 3.6 crore per MW, in aid for small hydro projects under a new Rs 2,585 crore scheme for the development of about 1,500 MW clean energy capacity.
The Union Cabinet, in its meeting on Wednesday, cleared the Small Hydro Power Development Scheme with an outlay of Rs 2,585 crore for five years from 2026-27 to 2030-31, an official statement said.
The scheme is expected to attract about Rs 15,000 crore in investment in small hydro projects of up to 25 MW capacity.
The Union Cabinet chaired by Prime Minister Narendra Modi has approved the ‘Small Hydro Power (SHP) Development Scheme for period FY 2026-27 to FY 2030-31’ with an outlay of Rs 2584.60 crore for installation of SHP projects of an approximate capacity of 1500 MW, the statement said.
The scheme will support small hydro projects (between 1-25 MW capacity) to come up in different states and will especially benefit hilly and North Eastern states with high potential for such projects.
In North Eastern States and in districts with international border, central financial assistance to the tune of Rs 3.6 crore per MW or 30 per cent of the project cost, whichever is lower, with an upper limit of Rs 30 crore per project will be available, it stated.
In other states, Rs 2.4 crore per MW or 20 per cent of project cost, whichever is lower, with a cap of Rs 20 crore per project, would be available.
This will help in tapping the small hydro potential in remote and difficult-to-reach locations.
An amount of Rs 2,532 crore has been earmarked for such projects.
This is likely to bring in Rs 15,000 crore of investment in the small hydro sector giving a boost to the clean energy initiative, investment in remote and rural areas and creating significant employment opportunities, it stated.
The investment will also leverage 100 per cent of the plant and machinery from indigenous sources fulfilling the objective of Atmanirbhar Bharat.
The scheme will also incentivise the states to prepare detailed project reports for about 200 projects, creating a pipeline of small hydro projects in the future.
An amount of Rs 30 crore has been kept to support state and central government agencies to prepare such DPRs.
The scheme will support 51 lakh person days of employment during the project construction and will also enable employment in maintenance and operation of these SHPs which will come up in largely rural and remote locations, the statement said.
The launch of this scheme will rejuvenate the Small Hydro Power sector and will help exploit the available potential at a much faster pace.
The SHP projects are environmentally sustainable, as they avoid large-scale land acquisition, deforestation, and displacement of communities.
It will also promote socio-economic development of remote areas by boosting local investment, apart from creating long-term employment with project lifespans typically ranging from 40 to over 60 years.
After the Cabinet meeting, Union Minister Ashwini Vaishnaw told reporters that this is an important decision from an environmental perspective for the country. The projects will be developed as run-of-river projects without constructing dams and displacing people.
Vaishnaw said that there is potential for small hydro projects at 7,133 sites with a total capacity of 21,000 MW in the country.
At present, 5,100 MW of small hydro power projects are operational at 1,196 sites in the country.
