SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP
PROJECTS UPTO 25 MW CAPAC ITY IN THE PRIVATE , CO-OPERATIVE , JOINT SECTOR ETC.
FINANCIAL SUPPORT FOR NEW SHP PROJECTS:
1. The Ministry of New and renewable Energy (MNRE) offers a variety of incentives for small hydro power (SHP)projects, including:
Financial support: – The MNRE provides financial support for SHP projects up to 25MW in capacity. The amount of support varies by region, with the Northeast region, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand receiving up to Rs. 5 crores per project. Other sates receive up to Rs. 1 crore per MW.
- Subsidies: – The MNRE may offer a subsidy of 30-50% for hydro projects under 25 MW.
- Central Financial Assistance (CFA): – The CFA is available on a reimbursement basis after the project is commissioned. The CFA is released to the beneficiary’s bank account.
SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP
PROJECTS UPTO 25 MW CAPAC ITY IN THE PRIVATE , CO-OPERATIVE , JOINT SECTOR ETC.
| Schemes | Areas | Above 100KW and up to 25MW |
| SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP PROJECTS UPTO 25 MW CAPAC ITY IN THE PRIVATE , CO-OPERATIVE, JOINT SECTOR ETC. | NE Region, J& K, H.P. & Uttarakhand (Special category States) | Rs. 1.5 crore/MW limited to 5.00 crores per project |
| Rs. 1.0 crore/ MW limited to 5.00 crores per project |
Sanction and release of Subsidy by MNRE
| 1st installment (optional) | Release an advance on award of E&M works, 50% loan disbursement, achieving 50% progress and submission of physical and financial progress reports, photographs and bank guarantee for proposed release of funds. | 50% |
| 2nd Installment | Receipt of “Completion Report” with Statement of Expenditure, Utilization certificate, generation data, audited account statement based on actual expenditure on the project etc. after successful commissioning of the project, performance testing & 80% of generation for the corresponding months as envisaged in the DPR for a minimum of three consecutive months OR 80% cumulative annual generation for one year as envisaged in the DPR. | 50% |
SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP
PROJECTS UPTO 25 MW CAPAC ITY IN THE PRIVATE, CO-OPERATIVE, JOINT SECTOR ETC.
| Schemes | Areas | Above 100KW and up to 1000MW | Above 1MW and up to 25MW |
| SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP PROJECTS UPTO 25 MW CAPAC ITY IN THE PRIVATE , CO-OPERATIVE, JOINT SECTOR ETC. | NE Region, J& K, H.P. & Uttarakhand (Special category States) | Rs.75000/- per KW | Rs. 7.5 crore/MW limited to 20 crore per project. |
| Plain and other regions of all other states | Rs.35000/- per KW | Rs. 3.50 crore/MW limited to 20 crore per project. |
Release of Subsidy by MNRE
Eligible and financial support to be sanctioned and released by MNRE in four installments as per following pattern:
| 1st Installment (optional) | Award of work orders and signing of contract agreements with submission of copies as documentary proof | 25% |
| 2nd Installment | Progressive release on achieving 25% progress and submission of physical reports, Statement of Expenditure (SOE), Utilization certificate (UC) for released funds and photographs. | 30% |
| 3rd Installment | Progressive release on achieving 50% progress and submission of physical and financial progress reports, Statement of Expenditure (SOE), Utilization certificate (UC) for released funds and photographs. | 35% |
| 4th Installment | Submission of “Completion Report” with Statement of Expenditure (SOE), Utilization certificate (UC), generation data, audited account statement based on total expenditure on the project etc. after successful commissioning, performance testing & 6 months generation. | 10% |
In India, several incentives are available for investors in small hydel projects, particularly those with a capacity of up to 25 MW. Here are some key incentives:
- Financial Assistance: The government offers soft loans through institutions like IREDA (Indian Renewable Energy Development Agency), PFC (Power Finance Corporation), and other financial institutions to support the development of small hydel projects.
- Subsidies and Grants: Various state governments provide capital subsidies and grants to encourage investment in small hydropower projects. These can significantly reduce the initial investment burden.
- Tax Benefits: Investors can benefit from tax exemptions under the Income Tax Act, including a 100% tax deduction on profits for the first 10 years of operation for eligible projects.
- Renewable Purchase Obligation (RPO): Small hydel projects contribute to fulfilling RPOs set by state electricity regulatory commissions, ensuring a market for the electricity generated.
- Accelerated Depreciation: Investors can claim accelerated depreciation on the assets used in small hydel projects, which helps in reducing taxable income.
- Grid Connectivity: The government facilitates grid connectivity for small hydel projects, ensuring that generated power can be efficiently transmitted to consumers.
- Single Window Clearance: To streamline the approval process, the government has established a single-window clearance system for small hydel projects, reducing bureaucratic hurdles.
- State-Specific Policies: Many states have their own policies and incentives tailored to promote small hydel projects, which may include additional financial support, land acquisition assistance, and streamlined regulatory processes.
Conclusion
- The Indian government provides a comprehensive framework of incentives for investors in small hydel projects, aimed at promoting renewable energy and enhancing energy security.
- These incentives not only make investments more attractive but also contribute to the overall growth of the renewable energy sector in India. :User What are the environmental benefits of small hydel projects?
You: Small hydel projects offer several environmental benefits that contribute to sustainable energy development. Here are some key advantages:
- Reduced Greenhouse Gas Emissions: Small hydel projects generate electricity without burning fossil fuels, leading to significantly lower greenhouse gas emissions compared to conventional power plants.
- Minimal Land Disruption: Unlike large hydropower projects, small hydel projects typically require less land and have a smaller ecological footprint, which helps preserve local ecosystems and biodiversity.
- Sustainable Water Management: These projects often utilize existing water resources without significantly altering river flows, promoting sustainable water management practices and maintaining the natural hydrological cycle.
- Habitat Preservation: By avoiding large-scale dam constructions, small hydel projects5 help preserve aquatic habitats and minimize the impact on fish populations and other wildlife.
- Promotion of Local Ecosystems: Small hydel projects can enhance local ecosystems by providing a stable water source, which can benefit agriculture and local flora and fauna.
- Community Resilience: By providing a reliable source of renewable energy, small hydel projects can enhance the resilience of local communities to climate change and energy shortages.
- Reduced Soil Erosion: By maintaining natural river flows and reducing the need for extensive land clearing, small hydel projects can help mitigate soil erosion and protect water quality.
- Support for Local Economies: These projects can create jobs and stimulate local economies while promoting the use of clean energy, contributing to sustainable development.
Conclusion: –
- 1. The environmental benefits of small hydel projects make them an attractive option for renewable energy generation, supporting both ecological health and community well-being.
- 2. Their sustainable approach aligns with global efforts to combat climate change and promote clean energy solutions.
There are following rates for projects: –
a) For projects up to 2MW capacity: Nil.
b) For projects above 2MW up to 5 MW capacity: Upfront premium will be charged @Rs. 1,00,000/- per MW in two stages i.e. @Rs. 50,000/- per MW at the time of allotment of the project to be deposited within one month from the date of issuance of Consent letter and @Rs. 50,000/- per MW at the time of signing of IA.
c) If after enhancement of capacity, the capacity of the projects remains up to 5 MW the project developer shall have to pay upfront premium @Rs. 1,00,000/- per MW on whole capacity as enhancement charges.
Milestones: – Following milestones shall be achieved by the Micro Hydel Developer falling which consequential action as mentioned against each milestone will be taken by Himurja.
| Sr. No. | Milestones | Time Period | Extension/ consequential action |
| 1. | Submission of project report on the basis of available discharge data of lean season. | Within six months from the date of issue of consent letter. TEC will be accorded by Directorate of energy. | The prescribed period is extendable by maximum of four months subject to payment of extension fee of @Rs.10/- per Kw per month. In case the Micro Hydel Developer fails to submit the project report within extension period the allotment of the project shall stand. cancelled. |
| 2. | Signing of Implementation Agreement with Himurja. | Within one month of obtaining TEC. | The prescribed period is extendable by maximum of six months subject to payment of extension fee of @Rs.10/- per Kw per month. In case the Micro Hydel Developer fails to sign the IA within extended period the project shall stand. cancelled. |
| 3. | Obtaining statuary clearances/NOCs | Within one year of signing of IA. | The prescribed period is extendable by maximum of six months subject to payment of extension fee of @Rs.10/- per Kw per month. In case the Micro Hydel Developer fails to obtain the clearances `within extended period the project shall stand cancelled. Extension charges will not be applicable for grant of extension where delay is not attributable to the developer on account of the following clearances: – i) Forest clearance including Forest rights process at Panchayat level. ii) Lease of Govt. land. Subject to the condition that applicant has processed and submitted the proposals to concerned Deputy Commissioners with the stipulated period and it is observed that delay is on the part of Govt Deptt. The IPP shall submit the proposal to the concerned Deputy Commissioner for obtaining approvals/NOCs from different departments including Gram Panchayat. Deputy Commissioner shall forward the same to concerned departments within 7days. Deputy Commissioner shall convene a meeting of all concerned departments on the basis of reports and shall ensure issuance of required approvals/NOCs within 30 days period in the form of single window clearances. |
Quick Information: –
1) Small Hydro Electric Projects up to 2 MW capacity are exclusively reserved for Himachalis
2) If the Independent Power Producer is interested to apply for more than one Project, separate application along with requisite application fee & EMD is to be submitted.
3) The Government of Himachal Pradesh reserves the right to reject any or all the applications without assigning any reasons.
4) The IPPs are advised to visit the Project sites before putting in the application(s) for identified as well as self-identified projects to ensure that the site does not clash with already allotted/identified or under investigation schemes of Himurja/Directorate of Energy/HPSEB Ltd./ any other Government Agency.
5) It will be the responsibility of the applicant to check with the record of the concerned agency before putting in an application. In case of subsequent discovery of any overlap or duplication, the application will be rejected, and the application fee will not be refunded.