The Union Cabinet’s approval of the ‘Small Hydro Power (SHP) Development Scheme’ brings an opportunity for the northeast region to leverage the scheme for augmenting clean electricity production without causing much damage to its fragile ecology. Hydropower plants with a capacity of generating 25 MW or below are classified as SHP by the Ministry of New and Renewable Energy. In Northeastern States and in districts with international borders, central financial assistance to the tune of Rs. 3.6 crore per MW or 30% of the project cost, whichever is lower, with an upper limit of Rs. 30 crore per project, will be available. This funding support will increase the commercial viability of the SHP projects. The Union Cabinet has decided that the scheme will also incentivise the states to prepare the detailed project report for about 200 projects to create a pipeline of small hydro projects in the future. An amount of Rs. 30 crore has been kept to support state and central government agencies to prepare such DPR. The Northeastern States building institutional capacity to write quality DPR is essential to ensure proper utilisation of the available fund. A key advantage of the proposed SHP projects is the minimal requirement of long transmission lines, as these will largely come up in rural and remote locations and be decentralised in nature. This is also expected to reduce the transmission losses. Prolonged delays in large hydropower projects initiated in the region, due to genuine concern expressed by projected affected people as well as people living in downstream areas about the cumulative impact of environmental damage, displacement of people, loss of forest cover, or complexities in land acquisition, make SHPs a pragmatic and sustainable option. As project lifespans typically range from 40 to over 60 years, SHPs can be a climate-resilient solution for meeting energy needs, especially for remote and border areas of the region where biodiversity is rich and needs to be conserved for sustainable living. The region has enormous potential for generating hydropower, but initiatives to harness it have remained focused on mega hydropower projects, most of them located in Arunachal Pradesh. The policy decision of declaring large hydropower projects (capacity above 25 MW) as renewable energy sources played a crucial role in states in the region laying more emphasis on large hydropower projects while prioritising renewable energy. As mega hydropower projects require massive tree felling, it raised a debate in public discourse about whether such renewable energy projects can actually be called green, environment-friendly projects in the true sense. For, the removal of a huge number of trees for the diversion of forests to construct dams, powerhouses, and transmission lines leads to irreversible ecological losses. The provision of compensatory afforestation to offset the environmental damage and loss of tree cover at project sites suffers from implementation hurdles and anomalies in fund utilisation. Long delays in mega hydropower projects also lead to cost overruns, posing challenges of profitability without higher tariffs charged from consumers. Besides, the entire region has been placed in the highest earthquake zone of VI. The current installed capacity of SHP in the country is 5,158 MW, which is about one per cent of the total installed capacity, while total renewable energy, including large hydropower projects, is about 50% of total installed capacity. The figures speak volumes about the scope of increasing SHP share in the renewable energy sector. The SHP potential of the region is estimated to be around 3200 MW, with Arunachal Pradesh accounting for the highest share of 2064 MW, but the installed capacity of the region is little over 10% of the potential. The states in the region can tap the new scheme with a total outlay of Rs.2584 crore for the installation of SHP projects of an approximate capacity of 1500 MW to significantly increase the installed capacity of SHP. As the central financial assistance under the scheme is available under the scheme to central and state government agencies, joint ventures with private power developers can help prepare comprehensive DPRs and also build capacity for expeditious execution of the projects. Availability of electricity at an affordable tariff is crucial for industrial growth, digitalisation of economic activities, and improving the quality of education and healthcare delivery, and a lack of it limits the imagination of the people for sustainable use of resources locally available for transformation of their livelihoods from subsistence to commercial scale. While large hydropower projects trigger apprehension of displacement, environmental damage and livelihood loss due to displacement, SHP projects create opportunities for the communities to manage the projects of smaller scale, say 1 MW or 2 MW, and help identify the suitable water source based on their traditional knowledge of sustainable use of natural resources in their areas. The region also has substantial potential for developing solar energy, which remains untapped. It is time the region prioritised SHP and solar projects for environment-friendly electricity generation.