BHUBANESWAR: In a major push to green energy generation, the state government is set to come out with operational guidelines for implementation of the Pump Storage Project (PSP) Policy-2025 by the end of this month.
The PSP policy approved by the Odisha Cabinet last week stated that 45 projects identified by the state government will be allocated either through nomination basis, MoU route, competitive bidding or tariff-based competitive bidding (TBCB).
On nomination basis, a PSP project will be allocated to central or state public sector undertakings or a joint venture company after due consideration of technical and financial capabilities to execute the projects.
The state-run bulk power supplier GRIDCO has the first right to decide whether to procure the entire saleable power of the project at the time of allocation. The power tariff of the MoU project will be decided either by OERC or CERC.
For projects allotted through competitive bidding (other than TBCB), the state will have the right of first refusal up to 80 per cent of the project capacity while in case of self-identified projects, it reserves the right of first refusal up to 20 per cent. After GRIDCO’s refusal, the developers will be free to sell the power to any third party.
In case of multiple bidders interested for a particular project, bids will be invited on the basis of revenue share on sent-out energy (kWh), where the minimum revenue share is set at 10 paisa per unit with an escalation of 10 per cent once in every five years.
The state government reserves the right to revise the minimum quantum of the revenue share as well as the annual escalation rate for competitive bidding.
The new policy promised that PSPs will be exempted from payment of electricity duty (ED) and cross-subsidy surcharge on input energy. Since water used in PSPs is for non-consumptive purpose, no water cess will be levied on PSPs. There shall also be no obligation of any free power or contribution towards Local Area Development Fund (LADF).
“Power from PSP is costly due to involvement of input energy and cost of development of projects. To reduce the cost and improve acceptance, the state government may come up with a viability gap fund (VGF) scheme which will be applicable to such projects or such energy which is procured for use by GRIDCO for DISCOMs,” the policy said.