India’s hydropower segment has witnessed a strong revival in capacity additions and generation over the past year, driven by the commissioning of key projects and accelerated development of pumped storage projects (PSPs). As of August 2025, the country’s installed capacity stood at over 55 GW, including both large- and small-hydro plants. The addition of nearly 3,200 MW since 2024 marks a significant uptick after years of subdued growth. Rising generation levels and the growing role of PSPs highlight hydropower’s critical contribution to grid stability, renewable integration and India’s broader clean energy transition. With a large number of projects under implementation and substantial capacity in the pipeline, the hydropower sector is expected to experience significant growth in the near to medium term.
Segment size and growth
As of August 2025, the country’s installed hydropower capacity stood at 50,108.16 MW for large hydro and 5,108.71 MW for small hydro. During 2024-25, 799.99 MW of hydropower capacity (large hydro) was added, a sharp increase from the 60 MW added in 2023-24. Key projects commissioned in 2024-25 were NHPC Limited’s Parbati II hydroelectric project (HEP) Units 1, 2 and 3 (3×200 MW); Beas Valley Power Corporation Limited’s Uhl III HEP Units 1, 2 and 3 (3×33.33 MW); the Kerala State Electricity Board’s (KSEB) Pallivasal Extension HEP Units 1 and 2 (2×30 MW); and KSEB’s Thottiyar HEP Unit 1 (10 MW) and Unit 2 (30 MW).
During 2025-26, a total of 2,380 MW of large-hydro power capacity has been added as of August 2025. This includes NHPC’s Parbati II HEP Unit 4 (200 MW), THDC’s Tehri PSP Units 1 and 2 (2×250 MW), JSW Energy’s Kutehr HEP Units 1, 2 and 3 (3×80 MW), Greenko’s Pinnapuram HEP Units 1-5 (5×240 MW), and Greenko’s Pinnapuram Units 7 and 8 (2×120).
Large-hydro generation during April-August 2025 reached 84,848.09 MUs, reflecting a 14.51 per cent increase over the same period in the previous year. Meanwhile, small-hydro generation rose by 17.02 per cent to 5,883.59 MUs. During 2024-25, hydropower (large and small) accounted for 40 per cent of total renewable energy generation and 8.76 per cent of overall power generation.
PSP segment
Given their long-duration storage capabilities, PSPs are expected to play a pivotal role in sustainably integrating intermittent renewable sources while maintaining grid stability. This technology will be particularly crucial in meeting the rising demand for round-the-clock renewable energy from utilities and industrial consumers.
As of August 2025, 10 PSPs with a combined capacity of 6,685.6 MW are operational, 11 (12,110 MW) are under construction, four (5,080 MW) have received approval from the Central Electricity Authority (CEA) and two (2,140 MW) are under examination. India has nine on-river PSPs with a combined capacity of 5,245.6 MW, spread across Telangana, Maharashtra, Gujarat, Tamil Nadu, Uttarakhand and West Bengal, and one 1,400 MW off-river PSP in Andhra Pradesh. However, only eight plants with a total capacity of 5,245.6 MW operate in pumped mode, while 1,440 MW of capacity across two sites in Gujarat remains non-operational in pumped mode. Additionally, 4,350 MW of on-river and 7,760 MW of off-river PSPs are under construction, while another 1,000 MW of on-river and 4,080 MW of off-river PSPs have been approved by the CEA. Survey and investigation activities are under way for 47 PSPs with a total capacity of 66,490 MW.
Recent policy initiatives
There has been a policy thrust at the national and state levels to promote the construction of PSPs and meet the country’s energy storage requirements. In August 2025, the Ministry of Power (MoP) issued a notification revising the concurrence requirement for hydro generating stations under the Electricity Act, 2003. As per the notification, schemes involving an estimated capex exceeding Rs 30 billion will require the CEA’s approval. Off-stream closed-loop pumped storage schemes are exempted from this requirement, regardless of their capex. Developers of such projects, however, may seek technical guidance from the authority. The notification also mandates that developers setting up hydro schemes comply with the provisions of the National Dam Safety Act, 2021.
In June 2025, the MoP issued a clarification on the waiver of interstate transmission system (ISTS) charge for hydro PSPs. As per the latest provisions, a 100 per cent ISTS charges waiver will apply to hydro PSPs awarded on or before June 30, 2028. However, hydro PSPs awarded after June 30, 2028 will not be eligible for the waiver.
In May 2025, the Ministry of New and Renewable Energy issued revised guidelines for small-hydro power schemes. The revised guidelines apply to all small-hydro projects sanctioned under previous schemes and aim to address ongoing sectoral challenges faced by stakeholders. For the release of the remaining central financial assistance (CFA), projects must now achieve at least 80 per cent of the projected generation for any one corresponding month as per the detailed project report (DPR). If not, the second CFA instalment will be proportionally reduced. If a project achieves 73 per cent of the projected generation for three consecutive months or cumulative annual generation for one year as envisaged in the DPR, the second CFA instalment will be calculated on a pro-rata basis, with the methodology being provided in the policy document.
In February 2025, the MoP released new tariff-based competitive bidding guidelines for procuring storage capacity and stored energy from PSPs. Applicable to both developers and procurers (end and intermediary), the guidelines cover new, under-construction and existing PSPs. Procurement follows a single-stage, two-part bidding process under two modes – Mode 1 for sites identified by the procurer (with government-owned sites developed on a build-own-operate-transfer basis), and Mode 2 for sites proposed by the developer or from ongoing projects, developed on a build-own-operate basis. Developers are responsible for obtaining statutory clearances, and power purchase agreements (PPAs) must be signed within six months of the letter of award. The framework also outlines responsibilities for transmission, tariff adoption and post-PPA project operation, ensuring transparency and accountability throughout the procurement process.
Another key measure to support the segment was the budgetary support scheme aimed at creating “enabling infrastructure for HEPs” with a total outlay of Rs 124.61 billion. The scheme, implemented from 2024-25 to 2031-32, is applicable to PSPs and HEPs above 25 MW, with a cumulative generation capacity of 31,350 MW and a letter of award received before June 30, 2028. PSPs with an aggregate capacity of 15,000 MW will be supported under the scheme.
Cross-border projects
Apart from domestic projects, Indian hydro players are actively investing in cross-border projects. NHPC Limited is involved in three major HEPs – West Seti (750 MW), Seti River-6 (SR6) (450 MW) and Phukot Karnali (480 MW). NHPC is also in advanced discussions with the Bhutan government for the potential development of a hydropower project on the Puna Tsang Chu river.
SJVN Limited has been actively expanding its hydropower portfolio in Nepal. The company is currently engaged in three major projects – the 900 MW Arun-3 HEP, which is under construction; the 669 MW Lower Arun HEP, which is in the pre-construction phase; and the 490 MW Arun-4 HEP, which is at the survey and investigation stage. Meanwhile, in June 2024, the Adani Group expanded its footprint in Bhutan by signing an MoU with Druk Green Power Corporation Limited to develop a 570 MW hydropower project in Chukha province. Additionally, Adani is exploring the development of a 700 MW project at Chamkharchhu, with all necessary approvals already in place, allowing for immediate commencement of work. Tata Power has also entered the Bhutanese hydropower sector through a partnership with Druk Green Power. This collaboration aims to develop 5,000 MW of clean energy capacity, including 4,500 MW from hydropower sources. The projects to be developed in phases include the 1,125 MW Dorjilung HEP, the 740 MW Gongri reservoir project, the 1,800 MW Jeri PSP and the 364 MW Chamkharchhu IV project.
The way forward
As India accelerates its energy transition, hydropower is emerging as a critical resource for enhancing grid flexibility and reliability. Supported by favourable policies and active project development, the segment is positioned for substantial growth. India’s current installed hydropower capacity stands at 55 GW, accounting for about 11 per cent of the total energy mix. PSPs are expected to drive the next phase of growth, given their technological maturity, long-duration storage capability and rising interest from both public and private players. Off-river PSPs, in particular, are gaining traction due to their relatively shorter gestation periods and lower implementation risks.
According to the CEA’s National Electricity Plan 2023, the installed hydropower capacity is projected to reach 88 GW by 2031-32, including 26 GW from PSPs, requiring an estimated investment of Rs 3.2 trillion. As of September 2025, 25,333.5 MW of large hydropower projects (including PSPs) are under construction, with 11,182 MW in the central sector, 6,241.5 MW in the state sector and 7,910 MW in the private sector. About 1,735 MW of new capacity is expected to be commissioned in 2025-26.
To realise this potential, it is crucial to address persistent challenges such as long construction timelines, delays in environmental clearances and land acquisition hurdles. In addition, policy measures such as a dedicated remuneration mechanism for hydropower (particularly PSPs), access to affordable financing and the modernisation of ageing assets will be key to sustaining growth in the segment.
Akanksha Chandrakar
