India’s small hydro scheme targets 1,500MW amidst 21GW potential

It has harnessed about 5.2GW across more than 7,100 identified sites.

The Indian government has proposed the Small Hydro Power (SHP) Development Scheme for 2026-27 to 2030-31, with an outlay of INR2,584.60 crore and a target of about 1,500 megawatts of new SHP capacity.

Shripad Yesso Naik, Minister of State for New and Renewable Energy and Power, said the country has harnessed only about 5.2 gigawatts (GW) of its 21GW SHP potential across more than 7,100 identified sites.

The scheme will also incentivise states to prepare Detailed Project Reports for about 200 projects, creating a pipeline of SHP projects for future development.

Naik said SHP can support energy security, decentralised generation, employment and socio-economic development in remote areas.

He noted that run-of-river projects can require relatively less land and avoid the large-scale submergence and displacement associated with major reservoir projects, where technically and environmentally feasible.

Naik pointed to long lead times as a key challenge, noting that delays in obtaining forest, environment and right-of-way clearances can adversely affect timely project execution.

He also called for streamlined approvals, stronger Centre-State coordination and greater policy certainty to improve project bankability.

Santosh Kumar Sarangi, Secretary of the Ministry of New and Renewable Energy, highlighted the need to improve the bankability of SHP projects, stating that “their unique cash-flow profile necessitates access to long-term patient capital.”

Sarangi called for the Indian Renewable Energy Development Agency to lead efforts with banks and multilateral development institutions, including the Asian Development Bank and the World Bank, to facilitate greater availability of patient capital for project developers.