Cabinet Approves Rs 2,584 Crore SHP Scheme To Boost Renewable Capacity

New Delhi, Mar 19 (KNN) The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the ‘Small Hydro Power (SHP) Development Scheme’ for the period FY 2026–27 to FY 2030–31, with a total outlay of Rs2,584.60 crore to support installation of projects with an aggregate capacity of around 1,500 MW.

The scheme is aimed at promoting small hydro power projects with capacities ranging between 1 MW and 25 MW across states, with a particular focus on hilly and North Eastern regions where such potential remains largely untapped.

In these regions, including districts along international borders, central financial assistance will be provided at Rs3.6 crore per MW or 30per cent of the project cost, subject to a cap of Rs30 crore per project. For other states, assistance will be capped at Rs2.4 crore per MW or 20per cent of the project cost, with a maximum of Rs20 crore per project.
 
Out of the total allocation, Rs2,532 crore has been earmarked for project development, which is expected to catalyse investments of around Rs15,000 crore in the sector. The scheme also emphasises the use of domestically manufactured plant and machinery, aligning with broader self-reliance objectives.

In addition, Rs30 crore has been allocated to support the preparation of detailed project reports (DPRs) for nearly 200 prospective projects, aimed at creating a robust future pipeline. The initiative is expected to generate approximately 51 lakh person-days of employment during the construction phase, along with sustained opportunities in operation and maintenance.

Given their decentralised nature, small hydro projects typically require limited transmission infrastructure, thereby reducing transmission losses. They are also considered environmentally sustainable due to minimal land acquisition requirements and lower ecological impact compared to large hydro projects.

The scheme is expected to accelerate the development of the small hydro sector, improve energy access in remote areas, and contribute to local economic development through increased investment and long-term employment generation.

(KNN Bureau)