The Union Cabinet has recently approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31. This initiative aims to expand India’s renewable energy portfolio by promoting small hydro projects across the country, with a particular focus on hilly and North-Eastern states, which possess significant untapped potential for hydroelectric generation.
About Small Hydro Power (SHP) Development Scheme
The SHP Development Scheme supports the installation of small hydro projects with a capacity of 1–25 MW each, targeting a cumulative capacity of 1,500 MW nationwide. The scheme prioritizes environmentally sustainable, run-of-the-river technology, which harnesses the natural flow of rivers without requiring large dams. This approach minimizes ecological disruption, deforestation, and displacement of local communities, making SHP projects a green and socially responsible solution for energy generation.
Key Features of the Scheme
1. Financial Support and Incentives
The scheme offers higher central financial assistance (CFA) for projects in strategically important regions:
North Eastern States and Border Districts: CFA of ₹3.6 crore per MW (or 30% of project cost, capped at ₹30 crore).
Other States: CFA of ₹2.4 crore per MW (or 20% of project cost, capped at ₹20 crore).
This financial support aims to catalyze investment in regions with high potential but limited private sector involvement.
2. Detailed Project Report (DPR) Pipeline
The government has allocated ₹30 crore to support agencies in preparing DPRs for about 200 future SHP projects. This ensures that projects are technically and financially viable before execution, facilitating systematic growth in small hydro capacity.
3. Employment Generation
The scheme is expected to create 51 lakh person-days of employment during the construction phase. Additionally, it will generate long-term opportunities in operation and maintenance, particularly benefiting local communities in project areas.
4. Indigenous Sourcing
The scheme mandates 100% sourcing of plant and machinery from domestic manufacturers, which aims to strengthen the local industrial base and promote ‘Make in India’ in the renewable energy sector.
Significance
The SHP Development Scheme holds multiple benefits:
Environmentally Sustainable: Avoids large-scale land acquisition, deforestation, and displacement of people.
Decentralized Energy Generation: Enhances energy security in remote and hilly regions.
Economic Boost: Creates employment, encourages local industrial manufacturing, and attracts investment in renewable energy.
Strategic Importance: Supports the development of border areas and North-Eastern states, aligning with national infrastructure and security priorities.
In conclusion, the SHP Development Scheme represents a strategic and sustainable step in India’s renewable energy journey. By combining financial incentives, local employment generation, and ecological safeguards, the scheme seeks to harness small hydro potential efficiently and responsibly, contributing to both energy security and environmental sustainability.
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In every Lecture. Director Sir will provide conceptual understanding with around 800 Mindmaps.
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