Cabinet approves Small Hydro Power (SHP) Development Scheme with outlay of Rs 2,584 cr

New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi has approved the ‘Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31’ with an outlay of Rs 2,584.60 crore. The scheme will focus on the installation of Small Hydro Power (SHP) Projects of an approximate capacity of 1,500 MW, said the government in a statement on Wednesday.

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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.

Financial assistance under Small Hydro Power (SHP) Development Scheme

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 percent of the project cost, whichever is lower with an upper limit of Rs 30 crore per project will be available. In other states Rs 2.4 crore per MW or 20 percent 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," said the government.

According to official estimates, 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. The investment will also leverage 100 percent of the plant and machinery from indigenous sources, fulfilling the objective of Aatmanirbhar Bharat.

Scheme to incentivise states for DPR for 200 projects

The scheme will also incentivise the states to prepare the Detailed Project Report (DPR) for about 200 projects to create a pipeline of small hydro projects in the future. An amount of Rs 30 crore has been kept to support Central and state government agencies to prepare such DPRs, said the government.

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"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. SHP projects being decentralised in nature, the requirement of long transmission line is minimal, which also reduces the transmission losses," said the statement.

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"Launching of this scheme will rejuvenate the Small Hydro Power sector and will help in exploiting the available potential at a much faster pace. 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," the statement added.

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