MNRE Revises Small Hydro Power Guidelines to Boost Sector Growth

The Ministry of New and Renewable Energy (MNRE) has rolled out updated guidelines for Small Hydro Power (SHP) projects, aiming to boost implementation and address developer concerns.

The latest changes focus on stricter monitoring, financial accountability, and realistic timelines for project completion. Under the new rules, SHP projects must generate at least 80 percent of their projected power in any month to qualify for full Central Financial Assistance (CFA). Falling short will lead to proportional reductions in funding. Developers are now required to submit monthly generation reports supported by certification from State Electricity Boards or power transmission entities. In the event of grid failures, relevant documentation must be submitted to justify any shortfall.

To accommodate unforeseen delays, a grace period of 12 months from the scheduled commissioning date has been introduced. Beyond that, financial support will be cut by 5 percent for each quarter of delay, capped at a 50 percent reduction. Extensions beyond the five-year project completion deadline will only be granted if physical progress exceeds 50 percent, with no allowances beyond seven years.

Project certification processes have been strengthened, mandating physical inspections and performance tests by authorised bodies such as IIT Roorkee. Smaller projects under 1 MW will undergo verification of installation and commissioning, while larger projects require full performance certification.

The revised framework also tightens documentation standards for fund disbursement, including proof of equipment orders, loan disbursements, audited expenditures, and generation data verified by State Nodal Agencies.

The MNRE’s move reflects a firm commitment to streamlining financial support while enhancing accountability in the SHP sector. The updated guidelines, effective immediately for all ongoing and future projects, were approved by the Minister of New and Renewable Energy following recommendations from the Department of Expenditure.