Small Hydro Power (SHP) India - Institutional Set-up

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India has an estimated small hydro power (SHP) potential of about 15,000 MW. From 801 SHP projects (up to 25 MW) an aggregate installed capacity of 2,953 MW has been installed by 31.01.2011. Besides these, 271 SHP projects with an overall capacity of 914 MW are under construction. A database has been created for most potential sites by collecting information from various sources and the State Governments. The database for SHP projects created by the Ministry of New and Renewable Energy (MNRE) now includes 5,718 potential sites with an aggregate capacity of 15,384 MW.[1]

The biggest barrier for successful implementation of small hydro projects by private stakeholders are the long lead times. This is due to the numerous permits and clearances required for such a project.

Small Hydro Power (SHP) Policy in India

The overall policy of the government is to encourage private sector participation for the power generation field and the SHP sector is moving towards attaining commercial status in the country. SHP projects are increasingly becoming economically viable. It has been recognised that SHP can play a role in improving the energy position in some parts of the country and in particular in remote and inaccessible areas. SHP in remote areas can be focussed on contributing to a national clean energy strategy as well as electricity for processing, communications and health care needs.

While in early 90s, most of the SHP projects were set up in the public sector, in the last 10 years most of the capacity addition is now coming through private sector projects. Beginning of the 21st century saw near commercialization in the small hydro sector. Private sector entrepreneurs found attractive business opportunities in small hydro and state governments also felt that the private participation may be necessary in tapping the full potential of rivers and canals for power generation. The private sector has been attracted by these projects due to their small adoptable capacity matching with their captive requirements or even as affordable investment opportunities. In line with Government of India policy, 18 states have announced their policy for inviting private sector to set up SHP projects. The Government of India announced the Electricity Act in 2003, Electricity Policy in 2005 and Tariff Policy in 2006 to create a conducive atmosphere for investments in the power sector. Small hydropower projects are now governed by these policies and the tariff is decided by the State Electricity Regulatory Commissions (SERCs) as per the Tariff Policy.[2]

Financing Small Hydro Power (SHP) in India

  • A MNRE subsidy scheme is available for projects below 25 MW which covers up tp 50% of the approved project costs. For more information on the current MHP subsidy scheme see (page 7)
  • The Alternate Hydro Energy Centre (AHEC) Roorkee is the knowledge hub for small hydro development. All plants have to be tested and verified by AHEC before any subsidy from MNRE can be accessed.
  • The Indian Renewable Energy Development Agency (IREDA) is the financial institution that provides loans for setting up SHP projects.

Small Hydro Power (SHP) Industry in India

India has a wide base of manufacturers of equipment for small hydro power projects. State-of-the-art equipment is available indigenously. 20 manufacturers fabricate almost the entire range and type of SHP equipment. Manufacturers capacity is estimated at about 300 MW per year.[3]

Further Information