Small Hydro Power (SHP) Development Scheme

Why in News?

Recebtly, the Union Cabinet has approved the 'Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31.

About Small Hydro Power (SHP) Development Scheme

• It will support small hydro projects (between 1-25 MW capacity) with a total capacity of 1,500 MW to come up in different states across the country
• It will especially benefit hilly and North-Eastern states with high potential for such projects.
• Aim: To harness untapped small hydro potential in remote and rural areas, reduce transmission losses through decentralized power, and help achieve the 500 GW non-fossil fuel capacity target by 2030.
• Time Period: FY 2026-27 to FY 2030-31
• Nodal Ministry: Ministry of New and Renewable Energy (MNRE)

Key Features of the Scheme

• Financial Outlay: The scheme has a total outlay of ₹2,584.60 crore (FY 2026-27 to 2030-31) to install approximately 1,500 MW of small hydro capacity across India.
• Two-Tier Central Financial Assistance (CFA): NE States and border districts get ₹3.6 crore/MW or 30% of project cost (max ₹30 crore), while other states get ₹2.4 crore/MW or 20% of project cost (max ₹20 crore)
• Employment Generation: The scheme will generate 51 lakh person-days of employment during construction, plus long-term jobs in operation and maintenance of SHP plants in rural areas.
• DPR Pipeline: States are incentivised to prepare Detailed Project Reports (DPRs) for ~200 projects, with ₹30 crore set aside for this, ensuring a ready pipeline of future small hydro projects.
• Atmanirbhar Bharat: All plant and machinery must be sourced 100% from Indian manufacturers, supporting domestic industry and reducing import dependence.
• Environmental Sustainability: SHP projects avoid large-scale land acquisition, deforestation, and displacement, making them far more eco-friendly than large hydro or thermal power projects.

Source- PIB