Odisha Unveils Policy to Attract Investment in Pumped Storage

25 Sep 2025 CW Team

The Energy Department’s latest Operational Guidelines to Odisha PSP Policy identify potential locations for off-the-river closed-loop PSPs. With many sites still unregistered or unsurveyed by state and central agencies, and with the growing importance of long-duration energy storage, private developers have approached the state for site allocations. The government has now decided to allocate some sites to developers while safeguarding state interests.

The guidelines apply to all developers, including Central Public Sector Undertakings (CPSUs), State Public Sector Undertakings (SPSUs), private developers, joint ventures of CPSUs/SPSUs, government departments, and the nodal agency involved in PSP development.

The policy highlights that “discarded mines, including coal mines in Odisha, could serve as hydro storage sites, acting as natural enablers for PSP development.” The state will collaborate with the Ministry of Coal, Ministry of Mines, and respective state governments to identify and develop exhausted mines as prospective PSP sites.

Under the new framework, private developers can propose off-stream PSP projects. Key responsibilities include:

Developers: Identify sites not already registered as state-identified projects by the nodal agency.
Nodal Agency: Notify the opening of the window for receiving applications for self-identified off-stream PSPs, one month after publication of the guidelines. The initial window will last three weeks, extendable with government approval.
State and Central PSUs: Continue to identify feasible sites and undertake pre-feasibility assessments for notification as state-identified projects.

State-identified projects may be allocated on a nomination basis or through a Memorandum of Understanding (MoU) to CPSUs, SPSUs, or joint ventures, following evaluation of technical and financial capabilities.

All PSPs will be developed under a Build-Own-Operate-Transfer (BOOT) model. The initial concession period is 40 years, extendable by up to 30 years with state government approval. Upon completion, project assets will transfer to the state or a designated SPSU free of encumbrances. For captive PSPs, the transfer does not apply as long as the project maintains Captive Generating Plant (CGP) status.

Financial requirements mandate that developers have a minimum net worth of 20 per cent of the estimated project cost and submit audited accounts for the past five years. Proposals are invited from SPSUs, CPSUs, joint ventures, and private developers to develop these projects.

The Odisha government, after identifying 45 potential sites for Pumped Storage Projects (PSPs) earlier this year, has introduced a policy framework to monitor and regulate PSPs in the state. The policy is designed to attract investment from public and private developers and aligns with the PSP Policy 2025 and the Renewable Energy Policy 2022.The Energy Department’s latest Operational Guidelines to Odisha PSP Policy identify potential locations for off-the-river closed-loop PSPs. With many sites still unregistered or unsurveyed by state and central agencies, and with the growing importance of long-duration energy storage, private developers have approached the state for site allocations. The government has now decided to allocate some sites to developers while safeguarding state interests.The guidelines apply to all developers, including Central Public Sector Undertakings (CPSUs), State Public Sector Undertakings (SPSUs), private developers, joint ventures of CPSUs/SPSUs, government departments, and the nodal agency involved in PSP development.The policy highlights that “discarded mines, including coal mines in Odisha, could serve as hydro storage sites, acting as natural enablers for PSP development.” The state will collaborate with the Ministry of Coal, Ministry of Mines, and respective state governments to identify and develop exhausted mines as prospective PSP sites.Under the new framework, private developers can propose off-stream PSP projects. Key responsibilities include:Developers: Identify sites not already registered as state-identified projects by the nodal agency.Nodal Agency: Notify the opening of the window for receiving applications for self-identified off-stream PSPs, one month after publication of the guidelines. The initial window will last three weeks, extendable with government approval.State and Central PSUs: Continue to identify feasible sites and undertake pre-feasibility assessments for notification as state-identified projects.State-identified projects may be allocated on a nomination basis or through a Memorandum of Understanding (MoU) to CPSUs, SPSUs, or joint ventures, following evaluation of technical and financial capabilities.All PSPs will be developed under a Build-Own-Operate-Transfer (BOOT) model. The initial concession period is 40 years, extendable by up to 30 years with state government approval. Upon completion, project assets will transfer to the state or a designated SPSU free of encumbrances. For captive PSPs, the transfer does not apply as long as the project maintains Captive Generating Plant (CGP) status.Financial requirements mandate that developers have a minimum net worth of 20 per cent of the estimated project cost and submit audited accounts for the past five years. Proposals are invited from SPSUs, CPSUs, joint ventures, and private developers to develop these projects.

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