New Delhi: The Ministry of Power has introduced a key regulatory change mandating that all hydropower projects with capital expenditure exceeding ₹3,000 crore will now require prior concurrence from the Central Electricity Authority (CEA). This move is aimed at enhancing technical scrutiny and regulatory oversight of large-scale hydroelectric developments.
The updated rule was notified via Gazette Notification dated August 1, 2025, and supersedes the earlier framework issued on April 18, 2006.
428 MW and Above Projects Affected
With average project development costs estimated at approximately ₹7 crore per MW, this capex threshold translates to projects of about 428 MW capacity or higher now falling under the mandatory review by the CEA.
The notification states–
“Schemes for setting up of hydro generating stations, involving an estimated capital expenditure exceeding rupees three thousand crores shall require the concurrence of the Central Electricity Authority.”
Exemption for Closed-Loop Pumped Storage Projects
In a significant relief to developers, the Ministry has exempted closed-loop pumped storage projects (PSPs) from this approval mandate. These are systems that do not interact directly with natural water bodies (offstream), making them environmentally safer and operationally more predictable.
The Gazette notes–
“Provided that offstream closed-loop pumped storage schemes, irrespective of the quantum of capital expenditure, shall be exempted from the requirement of concurrence by the Authority.”
However, developers of such projects may still approach the CEA for technical guidance, though it will be non-binding.
Dam Safety Compliance Remains Mandatory
The new guidelines reinforce the importance of dam safety, making adherence to the National Dam Safety Act, 2021, compulsory for all developers, regardless of whether their project requires CEA approval.
“The developer… shall ensure adherence to the provisions of the National Dam Safety Act, 2021,” the notification adds.
Legal Backing and Applicability
The revised mandate has been issued under the authority of Section 8(1) of the Electricity Act, 2003, which empowers the central government to regulate hydroelectric generation projects in the interest of national electricity planning and safety.
The 2006 notification will continue to apply only for actions already initiated under it. All new projects falling within the new scope must comply with the August 2025 guidelines.
