Centre Approves ₹2,584 Crore Small Hydro Scheme to Boost Clean Energy, Focus on J&K and Hilly Regions

Ziraat Times Team Report 

New Delhi, April 26: The Union government has approved a ₹2,584.60 crore Small Hydro Power (SHP) Development Scheme aimed at strengthening India’s energy security and expanding clean power generation, with a particular focus on hilly regions including Jammu & Kashmir.

The scheme, cleared by the Union Cabinet for the period 2026–27 to 2030–31, targets the addition of around 1,500 MW of small hydro power capacity across the country. It is expected to play a key role in improving electricity access in remote and difficult terrains while supporting India’s transition towards a sustainable energy mix.

According to the government, small hydro projects—defined as those with a capacity of up to 25 MW—offer a reliable and round-the-clock power supply, unlike intermittent renewable sources such as solar and wind. The initiative seeks to promote decentralised energy generation by utilising locally available water resources, thereby reducing dependence on conventional fuels and long transmission networks.

India currently has an estimated small hydro power potential of 21,133.61 MW across over 7,000 sites, of which about 5,171 MW has already been harnessed. A significant portion of the untapped potential lies in northern and northeastern states, including Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.

Financial incentives and implementation framework

The scheme provides targeted financial support to improve project viability, especially in challenging geographies. For projects in northeastern states and international border districts, central assistance will be up to ₹3.6 crore per MW or 30% of the project cost, subject to a ceiling of ₹30 crore per project. For other regions, support will be up to ₹2.4 crore per MW or 20% of the project cost, capped at ₹20 crore.

In addition, the government has allocated ₹30 crore for the preparation of Detailed Project Reports (DPRs) for at least 200 projects to ensure a steady pipeline of future developments.

The initiative is also expected to attract investments of around ₹15,000 crore and promote the use of indigenous equipment, contributing to domestic manufacturing and the broader goal of self-reliance.

Employment and regional impact

The construction phase of the scheme is projected to generate approximately 51 lakh person-days of employment, with further long-term job opportunities in operation and maintenance, particularly in rural and remote areas.

Officials said the scheme is designed not only to expand energy capacity but also to drive inclusive growth by supporting local economies and improving infrastructure in underserved regions.

Small hydro projects are considered environmentally sustainable due to their minimal land requirements, low ecological impact, and long operational life. Many projects operate as “run-of-the-river” systems, which generate electricity without the need for large dams.

Strategic importance for energy transition

The government emphasised that small hydro power will remain an important component of India’s clean energy strategy, particularly for ensuring grid stability and resilience.

With a large share of potential located in mountainous regions, the scheme is expected to benefit states like Jammu & Kashmir by enhancing local energy access, reducing transmission losses, and supporting regional development.

Officials said the initiative represents a balanced approach to energy security and sustainability, combining clean power generation with socio-economic benefits for remote communities.

The scheme is part of broader efforts to diversify India’s renewable energy portfolio and accelerate progress towards a low-carbon and self-reliant energy future.