However, for the projects above 5 MW, the fixed upfront premium is Rs.2 million per MW, which is in addition to free power bidding.

The average cost of a project is Rs.70 million per MW.

Himachal Pradesh has abundant water resources, with five major rivers flowing down the slopes of the Himalayas. Its power generation potential is 20,416 MW, about 25 percent of India's total hydropower potential. Of these, only 6,419 MW has been developed.

Eleven projects with a combined generation capacity of 1,124 MW are under execution by the Himachal Pradesh State Electricity Board, whereas 15 projects with a generation capacity of 1,738 MW are under execution by private companies.

Himachal Pradesh had generated 6,229 million units of power in 2007-08, out of which 5,029 million units were sold outside the state.