Kerala is endowed with vast small hydro potential to the tune of about 700 MW. Government of Kerala has issued several guidelines from time to time for the development of small hydro development since 1992. The measues have encourage private investment to harness green energy from natural resources. The Kerala Electricity Regulatory Commission (KSERC) has issued guidelines for purchase of electricity from renewable energy sources including SHPs, making it mandatory for the distribution licensees to source a certain percentage of their power purchases from renewable energy sources. This policy is issued against these developments and backdrop. This policy is directed towards a greater thrust on overall development and promotion of small hydro projects.