Small Hydro Power (SHP) Development Scheme

Small Hydro Power (SHP) Development Scheme Latest News

Recently, the union cabinet 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 supports the installation of small hydro projects (1-25 MW capacity each) with a total capacity of 1,500 MW across the country.
• Its special focus is on hilly and North-Eastern states that hold high untapped potential.
• Time Period: FY 2026-27 to FY 2030-31’

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Key Features of Small Hydro Power Development Scheme

• North East & Border Incentives: Higher central financial assistance (CFA) of ₹3.6 crore per MW (or 30% of cost, capped at ₹30 crore per project) for North Eastern states and international border districts.
• General State Support: CFA of ₹2.4 crore per MW (or 20% of cost, capped at ₹20 crore per project) for other states.
• DPR Pipeline: Allocation of ₹30 crore to support government agencies in preparing Detailed Project Reports (DPRs) for about 200 future projects.
• Employment Generation: Expected to create 51 lakh person-days of employment during construction, plus long-term roles in operations and maintenance.
• Indigenous Sourcing: Mandates 100% sourcing of plant and machinery from domestic manufacturers to boost the local industrial base.
• The initiative emphasises environment-friendly “run-of-the-river” technology that generates power directly from the natural flow of rivers without large dams, minimising displacement, deforestation and ecological disruption.
• Significance:  SHP projects are environmentally sustainable, as they avoid large-scale land acquisition, deforestation, and displacement of communities.

Source: PIB