The Odisha Energy Department has unveiled the ‘Odisha Pumped Storage Projects (PSP) Policy’, identifying 45 potential sites for implementation. These locations are designated as state-identified sites, with the policy aimed at promoting PSP development and enabling better integration of renewable energy into the grid.

The state government is expected to issue operational guidelines within the next 15 days.

Project Allocation Routes:

Projects may be awarded to Central or State Public Sector Undertakings (CPSUs/SPSUs) based on technical and financial capability, or through competitive bidding—either by revenue share per unit of energy dispatched or via a tariff-based competitive bidding (TBCB) mechanism.

Where TBCB is not applicable, bids may be invited based on viability gap funding (VGF) or other criteria. While PSPs are eligible for financial support from central or state sources, those built for captive use or third-party sale will not qualify for state-provided VGF.

Off-Stream PSPs and Private Participation:

Private developers may identify their own sites for off-stream PSPs not listed by the state. Applications for these will open one month after operational guidelines are published. In case of multiple applications for the same site, selection will be made via competitive bidding, based on revenue share from energy output.

A base revenue share of Rs 0.10/kWh, with 10 per cent escalation every five years, will apply. CPSUs and SPSUs may also participate under the same provisions.

Applications must be accompanied by a pre-feasibility report and a non-refundable registration fee of Rs 10,000/MW. Approved developers must submit a performance guarantee of Rs 200,000/MW with an initial two-year validity.

Power Sale and Tariffs:

For state-identified projects where GRIDCO agrees to procure full capacity, tariffs will be determined by the Odisha Electricity Regulatory Commission (OERC), unless the project is awarded through TBCB. In nomination-based or competitively bid (non-TBCB) projects, the state retains right of first refusal for up to 80 per cent of capacity. In self-identified projects, this stands at 50 per cent.

During monsoon months (June to September), GRIDCO will be offered 80 per cent of output at the secondary energy rate as per CERC/OERC tariffs. Unutilised contracted capacity must be made available to other buyers—except in the case of captive PSPs.

Incentives and Concessions:

PSPs will be exempt from electricity duty and cross-subsidy surcharge on input power, regardless of source location. As PSPs are non-consumptive users of water, no cess will be levied on initial filling or annual refilling, although water charges will apply.

Developers may be eligible for budgetary infrastructure support from the Ministry of Power. The state may also introduce cost-reduction measures to encourage PSPs as part of the energy transition.

Projects will follow a build-own-operate-transfer model with a 40-year concession period, extendable by up to 30 years subject to government approval. Upon expiry, assets must be handed over to the state.