India’s target of achieving 500 GW of non-fossil fuel capacity by 2030 and net zero emissions by 2070 has brought renewed focus on hydropower. As the power system integrates larger shares of variable renewable energy, hydropower is emerging as a key enabler of grid reliability and flexibility. As of June 2026, the country had an installed large hydropower capacity of about 52 GW, accounting for nearly 10 per cent of the total installed power capacity. During 2025-26, 3,687 MW of hydropower capacity was added, marking the highest annual capacity addition in the past few years.
The sector is witnessing renewed momentum, driven by supportive government policies, increasing private sector participation and the growing need for energy storage. In particular, pumped storage projects (PSPs) are emerging as the next phase of hydropower development due to their ability to improve grid flexibility and facilitate greater renewable energy integration. According to estimates, India’s energy storage requirement is projected to increase to 62 GW by 2029-30, 161 GW by 2034-35 and 476 GW by 2046-47. PSPs offer a cost-effective and reliable solution to meet this growing storage requirement while ensuring grid stability. Recognising this, the Central Electricity Authority has prepared a roadmap for developing 100 GW of pumped storage capacity by 2035-36.
Despite the positive outlook, the sector continues to face several challenges. Conventional hydropower projects are characterised by long gestation periods, high capital costs, complex geological conditions and delays in land acquisition and statutory clearances. In addition, timely financing, viable revenue models and coordinated planning will be critical to attracting sustained investment. Going forward, faster project execution, modernisation of existing hydropower assets and accelerated development of PSPs will be essential to unlock the full potential of hydropower and support India’s clean energy transition.
This month, Power Line’s Infocus section on hydropower examines the key trends and developments in the segment, the major issues and challenges, and the way forward.