Small Hydro Projects to Receive Aid Covering Up to 30% of Costs

04 Jun 2025

The government is implementing a scheme to encourage the establishment of small hydro power plants, offering developers up to 30% of the project cost as central assistance, according to the report. It said that if the plan is approved, the country’s installed capacity for such projects is expected to double to 10 GW within the next decade.

India operates just over 5 GW of small hydro projects, each with a capacity of 25 MW or less. The Ministry of New and Renewable Energy is responsible for formulating and implementing policies for these projects. The country’s small hydro projects have an estimated potential of 21 GW across various locations. Jammu and Kashmir alone has a potential of 1.3 GW, yet less than 200 MW has been harnessed so far.

On the contrary, India has an exploitable large hydro power potential of 133 GW. To date, 48 GW of large hydro capacity—including pumped storage projects—has been installed and is operational, with approximately 13 GW currently under construction. India's commitment to expanding non-fossil fuel energy sources has increasingly emphasised small hydro power projects, which offer numerous advantages such as minimal land requirements, extended lifespan, support for local irrigation, and job creation.

The report further states that these projects typically have a lower environmental impact compared to large hydropower projects, as they avoid displacing local communities and minimise deforestation. It highlighted that these projects are usually canal-based or run-of-the-river systems, which use running water without the need for large-scale storage, making them a cleaner and more environmentally sustainable choice.