| Small hydro


infrastructure characteristics. The northern states account for the largest share of untapped potential, reflecting the country’s extensive Himalayan river systems and mountainous terrain. The northern region alone contains an estimated 7,978MW of SHP potential, equivalent to around 38% of the national total. Himachal Pradesh leads with approximately 3,460MW of identified capacity, followed by Uttarakhand with 1,664MW and Jammu & Kashmir with more than 1,300MW. Ladakh also possesses considerable untapped resources despite its relatively small population and isolated geography. Many of the projects in these states are expected


to follow run-of-the-river designs, which generate electricity using natural river flow without requiring the construction of large reservoirs. These systems generally involve diverting a portion of river water through channels or pipelines to drive turbines before returning the water downstream. Because they avoid large dams and extensive flooding, run-of-the-river schemes are often viewed as environmentally less disruptive than conventional hydropower projects. India’s North Eastern region represents another major opportunity. Official estimates place the region’s SHP potential at more than 3,260MW, with Arunachal Pradesh alone accounting for over 2,000MW. Meghalaya, Assam, Nagaland, Mizoram and Manipur also possess sizeable undeveloped resources. For these states, decentralised hydropower development could provide an alternative to long- distance electricity imports and help electrify isolated communities where extending the central grid is costly and technically difficult. The government hopes the new incentives will encourage both public and private investment into projects that have historically struggled to secure financing. Southern India also remains an important contributor


to the sector. Karnataka dominates the region with more than 3,700MW of estimated SHP potential and already has comparatively strong levels of utilisation thanks to established infrastructure and supportive policy frameworks. Kerala and Tamil Nadu possess smaller but still significant opportunities, particularly through optimisation of existing water infrastructure. Meanwhile, western states such as Maharashtra, Rajasthan and Gujarat are increasingly exploring canal- based and dam-toe projects. These schemes utilise drops in water levels within irrigation canals or below existing dams to generate electricity, reducing the need for major new infrastructure. Such projects are often seen as cost-effective because they leverage existing water management systems.


Sustainability and development According to policymakers, SHP projects generally


require minimal land acquisition, avoid large-scale deforestation and involve negligible displacement of local communities. Their relatively small physical footprint can make them more socially acceptable than larger hydro developments, which have historically faced opposition linked to resettlement and ecological impacts. Project lifespans are also unusually long. Many small


hydro facilities can continue operating for 40 to 60 years or more with proper maintenance, offering a durable source of renewable electricity. This longevity improves long-term project economics and can provide stable local employment over several decades.


The decentralised nature of SHP also offers technical benefits for the electricity system itself. By locating generation close to consumption centres, projects reduce dependence on long transmission corridors and help minimise transmission losses. In mountainous and remote areas where building extensive transmission infrastructure is difficult and expensive, local generation can significantly improve reliability. At the same time, India’s broader energy transition is


creating a stronger case for hydropower’s balancing capabilities. As solar and wind capacity expands rapidly, grid operators increasingly require flexible resources capable of stabilising fluctuations in generation. Hydropower’s ability to ramp output quickly and provide firm electricity complements intermittent renewables in ways that battery storage alone may not yet fully address at scale. The government also sees industrial benefits in the


programme. Officials have stated that the scheme will leverage domestically manufactured plant and machinery, aligning with India’s “Atmanirbhar Bharat” or self-reliance agenda. Encouraging indigenous manufacturing within the hydropower supply chain could support local engineering industries and reduce dependence on imported equipment.


Long-term role in India’s energy mix Although small hydropower represents only one


component of India’s wider renewable energy strategy, the renewed policy focus suggests the sector is being repositioned as a more important contributor to long-term energy security. India’s clean energy transition has so far been dominated by the rapid expansion of utility-scale solar and wind power, sectors that have attracted enormous investment and experienced dramatic cost declines. Yet policymakers increasingly acknowledge that achieving a reliable low-carbon power system will require a diversified renewable portfolio that includes dispatchable resources. Small hydropower is particularly attractive because it can combine electricity generation with rural development objectives. Many projects are located in economically underdeveloped regions where infrastructure investment and employment opportunities remain limited. By creating local jobs during both construction and operation, SHP projects can contribute to broader socio-economic development while simultaneously expanding renewable generation. The government’s latest projections suggest the scheme could help rejuvenate a sector that has underperformed relative to its technical potential. More than 15,900MW of identified SHP resources remain undeveloped across India, leaving considerable room for future growth if financing, permitting and infrastructure barriers can be addressed effectively. The success of the programme, however, will depend on implementation. Hydro development in India has historically faced challenges linked to environmental clearances, land acquisition, financing delays and logistical difficulties in remote terrain. Ensuring that projects progress efficiently from planning to commissioning will be critical if the targeted 1,500MW capacity addition is to be achieved within five years. Nevertheless, the approval of the Small Hydro Power Development Scheme sends a clear signal that India views decentralised hydropower as an essential part of its future energy landscape.


Northern Region - 7,978 MW North-Eastern Region - 3,262 MW Eastern Region - 1,440 MW Southern Region - 5,490 MW Western Region - 2,963 MW


Region-wise distribution of small hydro power potential in India. Source: MNRE


21,133 MW


7,133 sites


Potential 5,171 MW


1,202 sites


Utilised


Small hydro power in India, potential versus utilisation. Source: MNRE


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