India Hydropower Market Outlook to 2030

India Hydropower Market Overview

• The India hydropower market reached an installed capacity of 176 bn kWh contributing significantly to the countrys energy matrix. The market has been driven by the country's increasing demand for clean, renewable energy, as well as its vast water resources, particularly from rivers in the north and northeast regions. Additionally, the push for decarbonization and India's commitment to reducing carbon emissions by 1 billion tonnes by 2030 are major drivers for expanding hydropower infrastructure.
• Prominent players in the Indian hydropower sector include NHPC Limited, SJVN Limited, Tata Power, JSW Energy, and Reliance Power. NHPC is the largest hydropower producer with a total installed capacity of 7,071 MW. SJVN and Tata Power are also significant players, contributing 2,074 MW and 1,389 MW, respectively, through various projects. These companies dominate the market, benefiting from established infrastructure and government partnerships.
• In 2023, the government inaugurated the 2,880 MW Dibang Multipurpose Project in Arunachal Pradesh, the largest hydropower project ever to be developed in India. This initiative is expected to strengthen the country's renewable energy portfolio and enhance water management in the region. Additionally, in August 2023, Tata Power completed the 225 MW Sorang Hydroelectric Project in Himachal Pradesh, contributing significantly to regional electricity supply.
• Himachal Pradesh, Uttarakhand, and Arunachal Pradesh are contributing the highest share of in hydropower generation. The dominance of these regions is due to the presence of fast-flowing rivers like the Ganges and Brahmaputra, which provide significant water resources for hydropower projects.
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India Hydropower Market Segmentation

• By Capacity: The market is segmented into small hydro (up to 25 MW), medium hydro (25-100 MW), and large hydro (above 100 MW). In 2023, large hydropower projects dominated the market. Large hydro projects, such as the Bhakra Nangal Dam and the recently completed Tehri Dam Expansion, are crucial due to their scale and ability to provide significant power output. These large-scale projects also contribute to flood control and irrigation, making them central to India's hydropower infrastructure.

• By Application: The market is segmented into energy generation, flood control, irrigation, and water supply. In 2023, energy generation held a dominant market share. Hydropower's consistent contribution to base-load electricity generation and grid stability positions it as a vital component in India's energy transition. The Teesta-V Hydroelectric Project in Sikkim is an example of a project mainly focused on power generation, contributing 510 MW to the national grid and ensuring energy security.

• By Region: The market is Segmented into North, South, East, and West. In 2023, Northern region accounted for the highest market share. This is primarily due to the concentration of major rivers like the Yamuna, Sutlej, and Ganga, which offer abundant water resources for hydropower. States like Himachal Pradesh and Uttarakhand lead the region in hydropower development, with projects such as the Bhakra Dam and Tehri Dam contributing substantially to both regional and national grids.

India Hydropower Market Competitive Landscape

NHPC Limited (2023 Developments): In July 2023, NHPC Limited announced the commissioning of its 2,000 MW Subansiri Lower Hydroelectric Project on the Assam-Arunachal Pradesh border. This project is a significant step towards enhancing the hydropower capacity in the northeast. NHPC has also entered into agreements with Bhutan to develop joint ventures in the region, targeting an additional 500 MW capacity.

SJVN Limited (2024 Developments): SJVN Limited, in August 2024, commenced the construction of the 66 MW Dhaulasidh Hydro Electric Project in Himachal Pradesh. The project, costing 687 crore, will help SJVN expand its hydropower footprint in northern India. SJVN is also investing 300 crore in green energy storage solutions to ensure efficient utilization of hydropower.

India Hydropower Market Analysis

Growth Drivers

• Increased Government Investments in Hydropower Projects: The Indian government has significantly ramped up investments in hydropower development, contributing to sector growth. In 2024, the Ministry of Power allocated 15,000 crore for new hydropower projects and infrastructure improvements, such as the expansion of the Dibang Multipurpose Project in Arunachal Pradesh. This project is expected to add 2,880 MW of capacity, driving market growth by catering to increasing electricity demand in the region.
• Grid Modernization and Hydropower Integration: The ongoing grid modernization projects aim to integrate renewable sources like hydropower into the national grid more efficiently. In 2023, the government approved a 10,000 crore investment for modernizing the countrys energy infrastructure, particularly in regions like North India. This has enabled more hydropower plants to connect to the grid, ensuring stable energy output and addressing intermittent power supply issues.
• Renewable Energy Status for Large Hydropower Projects: The 2021 policy change, which granted large hydropower projects renewable energy status, has continued to drive growth in 2024. This designation has attracted public and private sector investments. The government reported a 40% increase in hydropower project approvals in 2024, particularly in the northeastern states, where abundant water resources provide ideal conditions for hydropower expansion.

Challenges

1. Environmental and Social Opposition: Hydropower projects have faced increasing opposition due to their environmental and social impact. In 2024, over 35% of proposed hydropower projects were delayed due to environmental concerns, including deforestation and disruption of local ecosystems. The Dibang Project, for instance, faced protests in Arunachal Pradesh as it required the submergence of 5,000 hectares of forest, impacting local biodiversity.
2. High Initial Capital Costs: The high upfront capital investment for hydropower projects remains a significant challenge in 2024. The average cost of developing a medium-scale hydropower project ranges from 6,000 to 7,000 crore, making it difficult for smaller players to enter the market. The Sorang Hydroelectric Project in Himachal Pradesh, which cost approximately 2,000 crore, highlights how capital-intensive even smaller projects can be, impacting the pace of new development.

Government Initiatives

• National Hydropower Development Plan 2023: The Indian government, in 2023, launched the Hydropower Development Plan 2023, aiming to add 30,000 MW of hydropower capacity by 2030. The government also plans to expedite clearance processes for new projects and has allocated 15,000 crore for grid modernization to integrate renewable energy, including hydropower, into the national grid more efficiently.
• Hydropower Purchase Obligation (HPO) Regulations: The government introduced HPO regulations in 2022, mandating that distribution companies (DISCOMs) source a percentage of their electricity from hydropower. In 2024, this obligation was increased to 11.5%, up from 8% in 2022, compelling DISCOMs to invest in hydropower to meet regulatory requirements. This has accelerated project development in regions like Himachal Pradesh and Arunachal Pradesh.

India Hydropower Market Future Outlook

The India Hydropower Market is projected to grow steadily, driven by government initiatives such as the National Hydropower Policy and increased focus on renewable energy. With significant untapped potential in the Himalayan region, the market will benefit from investments in small and large hydro projects, contributing to Indias clean energy goals and reducing reliance on fossil fuels.

Future Trends (Market Outlook 2028)

Growth in Small Hydropower Projects: By 2028, small hydropower projects are expected to see significant growth, particularly in rural areas where decentralized energy systems are necessary. The government plans to develop 5,000 MW of small hydropower projects by 2028, with projects like the Loktak Downstream Hydroelectric Project in Manipur leading this trend.

Increased Use of Digital and Smart Grid Technologies: By 2028, Indias hydropower market will increasingly integrate smart grid technologies to enhance efficiency and reduce transmission losses. Digitalization of hydropower plants, such as the Ranganadi Hydroelectric Plant in Arunachal Pradesh, will enable real-time monitoring and optimization of water flow, resulting in a projected 10% increase in operational efficiency across plants nationwide.