First Small Hydro Electric Project (SHP) in Himachal Pradesh was installed more than 90 years ago in the year 1912 at Chaba near Shimla. The pace of SHP development in India has been extremely slow as in the last century only 1340 MW SHP capacity was created though India has more than 15000 MW exploitable small hydropower potential.
Although challenges remain, small hydro development is gaining momentum in India. The increasing role that private and mixed public-private institutions play in financing of hydro development is presenting new opportunities for project developers, financiers, and suppliers and service providers. As these opportunities unfold, small hydro will provide important contributions to the India’s energy needs.
The initiative taken by Government of India and HP Government to involve the private sector in small hydropower development has yet to deliver expected results. With the public sector being unable to mobilize the funds required to set up hydropower projects, it is necessary to address the issues hindering the flow of private fund in small hydropower sector. There still remains grave concern about slow development of small hydropower projects in private sector through these projects do not face environmental and social issues, do not require huge capital and have short gestation period.
