Odisha to Roll Out Pumped Storage Policy 2025, Eyes 45 Renewable Energy Projects

In a significant move to bolster clean energy infrastructure, the Odisha government is gearing up to roll out operational guidelines for the implementation of the Pumped Storage Project (PSP) Policy 2025 by the end of this month.

The policy, recently approved by the State Cabinet, is expected to unlock investment opportunities and enhance the state’s grid flexibility by tapping into long-duration energy storage solutions.

As per the new policy, the government has identified 45 potential PSP sites, which will be allocated through a combination of nomination, Memorandum of Understanding (MoU) route, competitive bidding, or tariff-based competitive bidding (TBCB). Public sector undertakings at the central or state level, or joint venture entities with proven technical and financial capacity, will be eligible for direct nomination.

Significantly, the state-run GRIDCO will retain the first right of refusal to purchase the entire saleable power from these projects at the time of allocation. In MoU-based projects, power tariffs will be regulated by either the Odisha Electricity Regulatory Commission (OERC) or the Central Electricity Regulatory Commission (CERC).

In a bid to attract private developers, the policy outlines clear procedures for self-identified projects. For such projects, the state reserves up to 20 percent right of first refusal, whereas for competitively bid projects, this extends to 80 percent of capacity. If GRIDCO opts out, developers will be free to sell electricity to third parties, including open access consumers.

In the event of multiple interested bidders for a single site, the selection will be based on the highest revenue share on sent-out energy (kWh), with a minimum base rate of 10 paise per unit and a 10 percent escalation every five years. The state retains the right to revise these parameters.

The policy offers several incentives to improve the financial viability of PSPs, including exemptions from electricity duty, cross-subsidy surcharge, and water cess, given that water usage in PSPs is non-consumptive. There will also be no requirement for free power or contributions to the Local Area Development Fund (LADF).

Recognising the higher cost of pumped hydro storage, the state is considering a Viability Gap Funding (VGF) scheme to support projects supplying power to GRIDCO for distribution through DISCOMs.

PSP policy will play a pivotal role in supporting Odisha’s renewable energy transition and could set a benchmark for other Indian states exploring grid-scale storage solutions.