Odisha Policy Opens Door to Repurposing Exhausted Mines for PSPs

The Odisha government, after identifying 45 sites for developing the Pumped Storage Project (PSP) in Odisha earlier this year, has now come up with a policy framework to monitor and regulate PSPs in the state. The policy aims to attract investment from both public and private developers, aligning with the PSP Policy 2025 and Renewable Energy Policy 2022.

Odisha government's energy department's latest "Operational Guidelines to Odisha PSP Policy" has identified several potential sites to develop off-the-river closed-loop PSPs in the state. However, with many sites yet to be identified or surveyed by the state or central agencies and the growing role of long-duration storage in the energy transition, private developers approached the state for allocation of PSP sites. To bridge this gap, Odisha has now decided to allocate some of these sites to developers while also keeping the state’s interest in view.  These latest guidelines apply to all developers, including CPSUs, SPSUs, private developers, and joint ventures of CPSUs/SPSUs, along with government departments and the nodal agency involved in PSP development.

Utilization of Exhausted Mines to Develop PSPs

The policy noted, "Discarded mines, including coal mines in different parts of Odisha, could be used as hydro storage and thereby become natural enablers for the development of hydro pumped storage projects (PSPs). Efforts would be made to identify and develop exhausted mines/coal mines as prospective PSP sites in consultation with the Ministry of Coal, the Ministry of Mines, and respective state governments."

Key Responsibility

Odisha’s latest policy allows private developers to identify projects to develop off-stream PSPs in the state. Here are some key responsibilities for different agencies:

• Developers would be responsible for identifying sites that are not already registered as state-identified projects by the nodal agency.
• The nodal agency would notify the date of opening of the window for receiving applications for registration of self-identified off-stream PSPs from all developers, one month after the publication of these operational guidelines. Such a window would be opened for three weeks. The nodal agency may, with the government's approval, extend the timeline for submission of applications at the request of developers.
• The nodal agency, in collaboration with state PSUs (SPSUs), has identified 45 potential sites for Pumped Storage Projects (PSPs). In addition, the nodal agency, SPSUs, CPSUs, and other state government entities will continue to identify further feasible locations, undertaking pre-feasibility assessments for notification as state-identified projects by the Energy Department, Government of Odisha.

Moreover, the state-identified projects may be allocated on a nomination basis or through a Memorandum of Understanding (MoU) to Central Public Sector Undertakings (CPSUs), State Public Sector Undertakings (SPSUs), or joint ventures (within CPSUs and SPSUs), subject to a thorough evaluation of their technical and financial capabilities.

Mode of Operation

The policy also clarified that all Pumped Storage Projects (PSPs) would be developed under the Build-Own-Operate-Transfer (BOOT) model. The initial concession period shall be 40 years, which may be extended by up to 30 additional years, subject to prevailing rules and regulations and approval from the state government. After the concession period is completed, the project assets would be transferred to the state government or any designated State Public Sector Undertaking (SPSU) free from any encumbrances.

Captive Projects: For PSPs developed for captive consumption, the transfer would not apply as long as the project maintains its Captive Generating Plant (CGP) status.

Financial Assessment: The policy expects developers to have a minimum net worth of 20% of the estimated project cost. Developers are also expected to submit audited accounts for the past five years. Moreover, it invited proposals from state PSUs (SPSUs), Central PSUs (CPSUs), joint ventures (JVs), and private developers to develop projects.