MNRE Approves ₹2,584 Crore Small Hydro Power Scheme To Add 1,500 MW Renewable Energy Capacity

The Government of India’s Ministry of New and Renewable Energy has officially approved the implementation of the Small Hydro Power Development Scheme, marking a significant step toward strengthening the country’s renewable energy infrastructure. The scheme will remain active for five years, from FY 2026-27 to FY 2030-31, and aims to promote the development of small hydroelectric power projects across India. The President of India has sanctioned a financial outlay of ₹2,584.60 crore for the nationwide initiative.

The scheme focuses on supporting small hydro projects with capacities ranging from 1 MW to 25 MW. These projects are considered environmentally sustainable because they generate electricity using the natural flow of rivers, streams, and canals without requiring large dams or major land submergence. The government believes that small hydro power can play a key role in improving regional energy security while contributing to India’s clean energy goals.

Under the scheme, the government plans to add nearly 1,500 MW of new hydro power capacity over the next five years. Apart from clean electricity generation, the initiative is expected to create substantial employment opportunities across the country. During the construction phase, around 51 lakh person-days of work are projected to be generated, while nearly 9,000 permanent jobs are expected after project commissioning.

The environmental benefits are also expected to be significant. According to the ministry, the projects developed under the scheme could help avoid nearly 4.3 million tonnes of carbon dioxide emissions annually once the targeted capacity becomes operational. This aligns with India’s broader climate commitments and renewable energy transition plans.

The implementation and monitoring of the scheme will be handled by the Solar Energy Corporation of India Limited, which has been appointed as the National Programme Implementing Agency. The agency will oversee developer applications, project approvals, and fund disbursement processes.

A major portion of the total outlay, amounting to ₹2,532.60 crore, has been allocated as Central Financial Assistance for project developers. Additionally, ₹30 crore has been earmarked for preparing Detailed Project Reports to support a future pipeline of around 200 projects. The remaining funds will support research, innovation, capacity building, international cooperation, and project monitoring activities involving institutions such as IITs and NITs.

To encourage development in difficult terrains, the government has provided higher financial incentives for projects in hilly and North-Eastern regions. Projects located in border areas and North-Eastern states can receive up to 30% of normative capital costs, capped at ₹30 crore per project. Other regions will receive support of up to 20%, capped at ₹20 crore per project.

The ministry has also introduced a transparent digital process for registrations, applications, and fund disbursements through a dedicated online portal. Developers whose projects began construction after March 18, 2026, will be eligible to apply. The scheme allows participation from private, public, and joint venture entities selected through competitive bidding. Projects approved under the scheme must be completed within four years to ensure timely execution and faster clean energy deployment.