Madhya Pradesh Issues Pumped Storage Projects Implementation Guidelines
Madhya Pradesh has introduced a policy framework for pumped hydro storage projects, detailing development modes, land allotment, financial incentives, and project timelines to drive investment and ensure efficient implementation. The policy will be valid for 10 years.
March 10, 2025. By Mrinmoy Dey
This will be executed alongside the state’s Renewable Energy Policy 2022 and will remain in effect for 10 years.
The Office of Commissioner will serve as the nodal agency for PSP projects, overseeing site allocation to central and state PSUs, government authorities, the state project development authority, and private developers.
The guidelines specify four modes for the development of Pumped Storage projects.
Mode I: Direct allotment of PSP sites to Central Public Sector Undertakings (CPSUs), State PSUs, or government authorities
Nodal Agency may allot an on-stream or off-stream Pumped Hydro Storage (PHS) site on nomination basis. Due consideration will be given to the experience and financial strength of the CPSUs, State PSUs, Government Authority by the Nodal Agency before allotment of site.
MPPMCL will have the Right of First Refusal of up to 100 percent of capacity of the projects developed under this Mode.
Mode II: Project developed for third-party power supply, power exchange, or captive consumption
The PHS project developer would be chosen through transparent competitive bidding route for the purpose of Captive Consumption or for sale of power to third parties or Open Access consumers, or for sale in Exchange.
PHS site would be allotted through a competitive bidding process. MPPMCL will have no Right of First Refusal on the capacity of the project developed under this Mode.
Mode III: Projects for DISCOM and Public Organisations’ use
The PHS project developer would be chosen through a transparent competitive bidding route by the State Project Development Authority to meet the energy storage requirement of MPPMCL and other public organizations.
The bidding could be both for a PHS site under the Tolling Tariff Model or for the PHS site together with a solar project in a solar park developed by the SPDA under the Composite Tariff Model.
Mode IV: Allotment of Self-Identified off-stream Pumped Storage Project
Developers may self-identify potential off-stream sites where PHS project can be constructed. The site should not be identified for development of a Mode I or Mode II or Mode III PSP. PHS Project Developer shall have to obtain all statutory clearances from State and Central agencies before starting construction.
Nodal Agency will open an online window for receiving applications for allotment of PHS site under this Mode.
Land Allotment
To support PSP development, the state has introduced provisions for land allocation. Government land for projects under Mode I, II, and IV will be provided at 100 percent guideline rate. Projects under Mode III will receive a 65 percent concession on government land rates.
The guidelines further mentioned that forest land must be acquired through standard diversion procedures. Private land acquisition will be the developer's responsibility, based on mutual negotiations.
Financial Incentives
Madhya Pradesh is offering multiple financial benefits to PSP developers, aligning with the state’s renewable energy policy.
PSP projects will be exempt from electricity duty and energy development cess for 10 years. Developers will receive a 65 percent reimbursement on stamp duty for private land purchases.
The guidelines mentioned that the developer will receive a 50 percent waiver on wheeling charges for five years and full waiver for projects supplying power to MPPMCL.
There will be a 20 percent reduction in project registration-cum-facilitation fees for PSP projects.
Developers can avail carbon credit incentives as per regulatory provisions.
Viability Gap Funding (VGF) support will be available for projects under Mode III, where power is procured by MPPMCL.
Project Timelines
To ensure timely completion, the state has set clear milestone-based timelines. For projects under Mode I, II, and III, DPR and environmental clearance must be completed within 3 years of project registration. Land acquisition and financial closure must happen within 4 years and within 5.5 year, 50 percent of civil work must be completed. The projects must be commissioned within 7 years.
For projects and Mode IV, initial allotment will be done upon site identification. Intermediate registration must be completed within 1.5 years. Environmental clearance and DPR approval must be finalised within 3 years. Land acquisition and financial closure must happen within 4 years. The projects must be completed within 4 years of project registration.
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