The Union government on Tuesday, 9 June launched the guidelines for the Small Hydro Power (SHP) Development Scheme covering FY 2026-27 to FY 2030-31, committing a financial outlay of ₹2,584.60 crore to accelerate small hydro project development across India. The scheme targets the installation of approximately 1,500 MW of new small hydro capacity, tapping into a national potential estimated at 21 GW — much of which remains unharnessed.

What the Scheme Covers

The guidelines, unveiled at a national workshop organised by the Ministry of New and Renewable Energy (MNRE), outline Central Financial Assistance (CFA) for project development, support for preparation of Detailed Project Reports (DPRs), assistance to technical institutions, and funding for capacity building, awareness programmes, international cooperation, and project monitoring.

The workshop brought together representatives from state governments, public sector undertakings, developers, technical institutions, and industry stakeholders associated with the small hydro power sector.

What the Government Said

Santosh Kumar Sarangi, Secretary, MNRE, told the gathering that India's clean energy transition requires diversification of renewable energy sources and greater focus on region-specific solutions. He described small hydro power as a 'mature, reliable and environmentally sustainable technology' that can strengthen energy security, promote rural development, and support balanced regional growth.

Sarangi noted that while India holds an estimated small hydro potential of about 21 GW, only a limited portion has been harnessed so far, leaving substantial scope for expansion. He urged states to proactively identify viable project sites, facilitate statutory clearances, and create an enabling environment for faster project implementation.

Focus on Remote and Border Regions

Rajesh Kulhari, Joint Secretary, MNRE, highlighted the scheme's importance in unlocking untapped hydro resources particularly in hilly, remote, and border regions. He said small hydro power can play a significant role in improving energy access, supporting local economic development, and enhancing grid stability — areas where large-scale renewable projects are often impractical.

SECI's Role as Implementing Agency

Akash Tripathi, Managing Director of Solar Energy Corporation of India Limited (SECI), underscored small hydro power's role in India's broader renewable energy transition. He stressed the need for close coordination among implementing agencies, developers, and state governments, and reiterated SECI's commitment to efficient implementation of the scheme in its capacity as the National Programme Implementing Agency.

Why This Matters

India has set ambitious renewable energy targets, and small hydro — with its round-the-clock generation capability and minimal land footprint — fills a critical gap that solar and wind cannot. This comes amid growing pressure on states to decarbonise remote grids where diesel generation remains common. The FY 2026-31 scheme is the latest in a series of MNRE-led pushes to mainstream small hydro, and its success will hinge on how quickly states move on site identification and clearances — historically the biggest bottleneck in this sector.