Hydro Energy



The electricity generated from Small Hydro Power (SHP) projects is cost-effective. Such projects are simple to operate, have a relatively short gestation period, and are environment friendly. In addition, SHP projects can be located in remote areas for generating power. The global estimated potential of SHP is about 180,000 MW.


India has an estimated potential of 15,000 MW of small hydro power projects (up to 25 MW) is estimated at 15,000 MW, whereas the country has so far set up SHP projects with a cumulative installed capacity of 1,976 MW only, which indicates the substantial possibilities for future growth.

The Government envisages a capacity addition of 1,400 MW during the 11th Five-Year Plan period (2007-2012). Apart from this, projects aggregating to a 394 MW capacity are under implementation.

Business opportunities by scale of investments

Scale of Investment Type of Opportunity
  • Consulting for the Hydel energy sector
  • Training people for the hydro energy industry
  • Setting up micro-hydro energy plants
  • Setting up / implementing small and medium scale hydro energy plants
  • Setting up manufacturing plants for components and accessories for the hydel energy
  • Setting up R&D facilities for research into hydro energy
  • Large-scale manufacturing of components and parts for the hydel energy industry

Advantage India

Attractive on various counts:
  • Proven Technology
  • Low O&M costs
  • Equipments have longer lifetime
  • High energy conversion efficiency (around 70%)
  • The Government of India is encouraging the development of small hydro projects through public and private sector participation in various States
  • Due to the wide distribution of small hydro power stations, India has a well-functioning network of manufacturers and dealers with established international connections and partnerships
  • The Government of India has launched a specific nation wide scheme for the financial support for identification of new Potential SHP sites & preparation of state perspective plan

Incentives offered

Tax incentives such as enhanced capital allowances are available to developers of hydro projects and low interest rate government finance is available to support hydro schemes.

The Indian Renewable Energy Development Agency (IREDA) arranges low-interest loans for Hydel power stations with capacities up to 25 MW. A package of incentives and subsidies, including fiscal concessions, are available for SHP projects. Many states have announced preferential tariff structures for SHP projects.

Incentives, Financial Support and subsidy for commercial SHP project developers:

  • Incentives for Detailed Project Report preparation (to the Government Department & Agencies);
  • Financial support renovation, modernization and capacity up-rating of old SHP stations (to the Government sector);
  • Financial support for development/up-gradation of water-mills;
  • Government of India provides capital subsidy through financial institutions, which is intended for making payment of the term loan provided to the developer of the SHP Projects by the financial institution
  • Incentives for New SHP projects:
Areas Private, Co-operative, Joint Sector etc. Government / State / Public Sector
  100 kW to 1000 kW Above 1 MW & upto 25 MW 100 kW to 1000 Kw Above 1 MW & upto 25 MW
NE Region, J&K, H.P. & Uttarakhand
(Special Category States)
Rs. 20,000 per kW Rs. 2.00 crores for 1st MW + Rs. 30 lakhs for each addl. MW Rs. 50,000 per kW Rs. 5.00 crores for 1st MW + Rs. 50 lakhs for each addl. MW
Other States Rs. 12,000 per kW Rs. 1.20 crores for 1st MW + Rs. 20 lakhs for each addl. MW Rs. 25,000 per kW Rs. 2.50 crores for 1st MW + Rs. 40 lakhs for each addl. MW