Cabinet Approves Small Hydro Power Development Scheme

On 18th March 2026, the Union Cabinet approved the Small Hydro Power (SHP) Development Scheme for FY 2026-27 to 2030-31 to promote clean, decentralised energy through environmentally sustainable technologies.

Key Points

Scheme Outlay & Target: ₹2,584.60 crore allocated to develop ~1500 MW capacity through small hydro projects (1-25 MW each).
Focus Areas: Special emphasis on hilly and North-Eastern states due to high untapped hydro potential.
Run-of-the-River Technology: Promotes eco-friendly power generation using natural river flow without large dams, reducing displacement and environmental damage.
Financial Assistance:
- NE & border areas: ₹3.6 crore/MW or 30% of project cost (max ₹30 crore/project)
- Other states: ₹2.4 crore/MW or 20% of project cost (max ₹20 crore/project)
Future Pipeline: ₹30 crore allocated for DPR preparation of ~200 upcoming projects.
Investment & Employment: Expected to attract ₹15,000 crore investment and generate ~51 lakh person-days of employment.
Cost & Efficiency: Lower generation cost (₹4.5-5.5/unit), shorter construction time, and suitable for decentralised rural electrification.
National Potential: Around 7,000 sites identified with a potential of ~21,000 MW using small hydro technology.