Incentives to Investors for SHP
Financial Support for New SHP Projects (Up to 25 MW)
The Ministry of New and Renewable Energy (MNRE) offers incentives for small hydro power (SHP) projects up to 25 MW in private, cooperative, and joint sectors:
- Financial Support: Up to Rs. 5 crores per project in Northeast, J&K, Himachal Pradesh, and Uttarakhand; Rs. 1 crore per MW in other states.
- Subsidies: 30-50% subsidy for projects under 25 MW.
- Central Financial Assistance (CFA): Reimbursed post-commissioning to the beneficiary’s bank account.
Financial Support Scheme
| Schemes | Areas | Above 100 kW to 25 MW |
|---|---|---|
| Financial Support for New SHP Projects | NE Region, J&K, HP, Uttarakhand | Rs. 1.5 crore/MW, max Rs. 5 crores/project |
| Other States | Rs. 1 crore/MW, max Rs. 5 crores/project |
MNRE Subsidy Release
| Installment | Conditions | Percentage |
|---|---|---|
| 1st (Optional) | Advance on E&M works award, 50% loan disbursement, 50% progress, and submission of progress reports, photos, and bank guarantee. | 50% |
| 2nd | Completion report, expenditure statement, utilization certificate, generation data, audited accounts, and 80% generation for 3 months or 1 year as per DPR. | 50% |
Financial Support for Projects (100 kW to 25 MW)
| Schemes | Areas | 100 kW to 1 MW | Above 1 MW to 25 MW |
|---|---|---|---|
| Financial Support for New SHP Projects | NE Region, J&K, HP, Uttarakhand | Rs. 75,000/kW | Rs. 7.5 crore/MW, max Rs. 20 crore/project |
| Other Regions | Rs. 35,000/kW | Rs. 3.5 crore/MW, max Rs. 20 crore/project |
MNRE Subsidy Release (Four Installments)
| Installment | Conditions | Percentage |
|---|---|---|
| 1st (Optional) | Award of work orders and contract agreements with documentary proof. | 25% |
| 2nd | 25% progress, submission of physical reports, expenditure statement, utilization certificate, and photos. | 30% |
| 3rd | 50% progress, submission of physical and financial reports, expenditure statement, utilization certificate, and photos. | 35% |
| 4th | Completion report, expenditure statement, utilization certificate, generation data, audited accounts, and 6 months generation post-commissioning. | 10% |
Incentives for Small Hydel Projects in India
- Financial Assistance: Soft loans via IREDA, PFC, and other institutions.
- Subsidies and Grants: State government capital subsidies to reduce investment costs.
- Tax Benefits: 100% tax deduction on profits for 10 years under the Income Tax Act.
- Renewable Purchase Obligation (RPO): Ensures market for generated electricity.
- Accelerated Depreciation: Reduces taxable income through asset depreciation.
- Grid Connectivity: Facilitates efficient power transmission.
- Single Window Clearance: Streamlines approval processes.
- State-Specific Policies: Additional support like land acquisition and regulatory ease.
Environmental Benefits of Small Hydel Projects
- Reduced Greenhouse Gas Emissions: Lower emissions compared to fossil fuel plants.
- Minimal Land Disruption: Smaller ecological footprint preserves ecosystems.
- Sustainable Water Management: Maintains natural river flows and hydrological cycles.
- Habitat Preservation: Avoids large dams, minimizing impact on aquatic life.
- Promotion of Local Ecosystems: Stable water sources benefit agriculture and wildlife.
- Community Resilience: Reliable renewable energy enhances climate resilience.
- Reduced Soil Erosion: Maintains river flows to protect water quality.
- Support for Local Economies: Creates jobs and promotes clean energy.
Conclusion
- Small hydel projects support ecological health and community well-being.
- Their sustainable approach aligns with global climate change and clean energy goals.
Project Rates
- Up to 2 MW: No upfront premium.
- Above 2 MW to 5 MW: Rs. 1,00,000/MW in two stages (Rs. 50,000/MW at allotment, Rs. 50,000/MW at IA signing).
- Capacity Enhancement (Up to 5 MW): Rs. 1,00,000/MW on entire capacity as enhancement charges.
Milestones for Micro Hydel Developers
| Sr. No. | Milestone | Time Period | Extension/Consequential Action |
|---|---|---|---|
| 1 | Submit project report based on lean season discharge data. | Within 6 months of consent letter issuance. TEC by Directorate of Energy. | Extendable by 4 months with Rs. 10/kW/month fee. Failure leads to cancellation. |
| 2 | Sign Implementation Agreement with Himurja. | Within 1 month of TEC. | Extendable by 6 months with Rs. 10/kW/month fee. Failure leads to cancellation. |
| 3 | Obtain statutory clearances/NOCs. | Within 1 year of IA signing. | Extendable by 6 months with Rs. 10/kW/month fee, except for forest clearance and government land lease delays. Failure leads to cancellation. Proposals submitted to Deputy Commissioner, processed within 30 days via single window clearance. |
Quick Information
- Projects up to 2 MW reserved for Himachalis.
- Separate applications with fees and EMD required for multiple projects.
- Government of Himachal Pradesh may reject applications without reason.
- IPPs must verify project sites to avoid conflicts with existing schemes.
- Applications overlapping with allotted schemes will be rejected without refund.