Small Hydel Policy 2024

On December 16, 2024, Tamil Nadu took a major step towards its renewable energy aspirations by introducing the Small Hydel Policy 2024, a first-of-its-kind initiative for the state. This policy represents a bold move to incorporate private sector participation in hydropower generation, marking a new chapter in Tamil Nadu’s energy strategy.

The primary aim of the policy is to attract private investment by offering incentives and a supportive framework for small hydropower projects. These projects, with capacities ranging from 100 KW to 10 MW (and individual units capped at 5 MW), promise to add a new dimension to Tamil Nadu’s energy mix.

To oversee the implementation of this ambitious policy, the Tamil Nadu Green Energy Corporation (TNGEC) has been appointed as the nodal agency. Developers are required to secure approval from power distribution companies to ensure seamless integration of the generated power into the state grid.

What excites me most about this policy is its flexibility for developers. Hydropower projects can be established for:

• Captive use (self-consumption)
• Third-party sales within Tamil Nadu
• Supplying power to meet the Renewable Power Purchase Obligations (RPOs) of distribution companies

Essential Attributes

The policy is active for five years, with a review scheduled at the end of this period. Projects launched during this window will enjoy benefits for up to 40 years, with a possible extension of 10 more years. Developers will pay an annual fee of ?25,000 per MW of installed capacity and must also contribute 10% of the power generated to the state free of charge.

One of the highlights is the identification of opportunities in Tamil Nadu’s western and southern hill districts, rich in water resources ideal for small hydropower generation. Beyond large-scale waterbodies, the state intends to leverage canals, rivers, and streams for these projects, ensuring minimal environmental disruption.

Why This Policy Matters

The Small Hydel Policy aligns with Tamil Nadu’s larger vision of raising its renewable energy share from the current 22% to 50% by 2030, an ambitious goal that also contributes to the state’s net-zero carbon targets. With an installed hydropower capacity of 2,321.90 MW today, Tamil Nadu aims to increase this figure by 25%, driven by this policy.

Beyond environmental goals, this policy has far-reaching implications. It promises rural electrification, the creation of local jobs, and advancements in hydropower technologies. Strict restrictions ensure that developers cannot claim water rights exclusively for power generation, striking a balance between energy production and water resource management.

To me, this policy is more than just a strategy it’s a commitment to sustainable growth. By embracing private collaboration and promoting renewable energy infrastructure, Tamil Nadu is setting a benchmark for a cleaner, greener future. I’m eager to see how this unfolds and contributes to reshaping the state’s energy landscape.

 

Article by:

Aadharsh R

Process Executive

eClouds Energy LLP

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