India must secure patient capital to unlock small hydro potential: MNRE

India's small hydropower sector requires patient capital and long-term financing commitments to overcome execution challenges, the Ministry of New and Renewable Energy (MNRE) has stated. According to S K Sarangi, Secretary at MNRE, the sector is being undermined by protracted delays in securing necessary regulatory approvals.

Forest clearances, environmental permits, and right-of-way approvals remain significant bottlenecks affecting project timelines and implementation schedules. These bureaucratic hurdles have created uncertainty for developers and investors, discouraging capital deployment in a segment that holds considerable potential for India's renewable energy goals.

Small hydropower projects, typically ranging from 1-25 megawatts, are seen as crucial for meeting India's distributed renewable energy targets while supporting rural electrification. However, the extended approval cycles have made conventional financing models less viable, necessitating investors willing to commit capital over extended periods despite regulatory uncertainties.

The MNRE's push for patient capital suggests a need for specialized financing instruments and risk-sharing mechanisms that can absorb delays inherent to the approval process. The ministry is exploring ways to streamline regulatory approvals while simultaneously attracting long-term institutional investors capable of supporting projects through extended development phases.