The Indian government has approved a scheme with a total outlay of INR124.61bn ($1.48bn) aimed at supporting the development of 31.35GW of hydropower projects.
Granted by the Union Cabinet chaired by Prime Minister Narendra Modi, the Ministry of Power’s scheme is set to run from the financial year 2024-25 to 2031-32.
The new plan is a modification of an existing scheme that seeks to provide budgetary support for enabling infrastructure for hydroelectric projects.
It will also address the challenges that have hindered the development of hydropower facilities in remote and hilly areas, such as the lack of infrastructure.
One of the key modifications to the scheme involves expanding the scope of budgetary support for enabling infrastructure beyond the construction of roads and bridges.
The modified scheme will include transmission lines from powerhouses to the nearest pooling points, ropeways, railway sidings, and communication infrastructure.
In addition, the upgradation of existing roads and bridges that lead to project sites will also be eligible for financial assistance under the scheme.
The scheme applies to hydropower projects with a capacity of more than 25MW, including private-sector projects that have been transparently allocated.
All pumped storage projects (PSPs), including captive and merchant PSPs, will also be eligible, with around 15GW of PSP capacity expected to receive support.
To qualify for the scheme, projects must have a letter of award of first major package issued up to 30 June 2028.
The budgetary support limit will be INR10m/MW for projects up to 200MW. For hydropower projects above this capacity, the cap is set at INR2bn plus INR7.5m/MW above the 200MW threshold.
In exceptional cases, support could rise to INR15m/MW if justified. Funding will be provided after a detailed appraisal by relevant authorities.
The budgetary support for the infrastructure will be granted following an appraisal by the Delegated Investment Board and Public Investment Board (DIB/PIB) and approval from the relevant authorities, in line with existing guidelines.
Through the revised scheme, the government expects to accelerate the development of hydropower projects in remote areas and improve local infrastructure. It is also anticipated to generate significant direct and indirect employment opportunities.
Additionally, the scheme aims to encourage new investments in hydropower projects and support the timely completion of projects.
In a post on social media platform X, Modi said: “The modifications in the Hydro Electric Projects scheme approved by the Cabinet will boost infrastructure development in remote areas. It will accelerate Hydro Power growth, create jobs and drive investments in the sector.”
According to the Ministry of Power, several policy initiatives have been introduced to support the hydropower sector. In 2019, thegovernment declared large hydropower projects as renewable energy sources and introduced hydropower purchase obligations (HPOs).
It also offered tariff rationalisation measures through escalating tariffs, budgetary support for flood moderation in storage hydroelectric projects, and budgetary support for infrastructure.
Earlier this year, India’s state-run hydropower company NHPC unveiled plans to invest around INR40bn in the proposed 750MW Kuppa pumped hydro storage project, located in Chhota Udaipur, Gujarat.
