Cabinet okays Small Hydro Power Scheme with Rs 2584 cr for 1500 MW

The Union Cabinet approved the Small Hydro Power (SHP) Development Scheme for FY 2026-31 with a Rs 2584.60 crore outlay. The scheme targets installing 1,500 MW of SHP projects, with a focus on hilly and North Eastern states.

The Union Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday approved the, Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31, with an outlay of Rs 2584.60 crore for the installation of small hydro power projects of an approximate capacity of 1,500 MW.

Scheme Details and Financial Support

According to an official press release, 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 an international border, central financial assistance to the tune of Rs 3.6 crore per MW or 30%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% 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.

Economic and Strategic Impact

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. The investment will also leverage 100% of the plant and machinery from indigenous sources, fulfilling the objective of Atmanirbhar Bharat.

Support for Project Planning

The scheme will also incentivise the states to prepare the detailed project report for about 200 projects to create a pipeline of small hydro projects in future. An amount of Rs 30 crore has been kept to support state and central government agencies to prepare such a DPR.

Employment and Environmental Advantages

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 are decentralised in nature; the requirement for long transmission lines is minimal, which also reduces the transmission losses. 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 the 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. (ANI)

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