Odisha is expected to attract fresh investments worth Rs 25,000-30,000 crore in the power sector over the next six to twelve months following a major policy change related to thermal power projects. The state government has decided to align its policy with the Central Government’s framework by reducing the mandatory allocation of power supplied at concessional rates from newly commissioned thermal power plants.

Under the revised policy, developers will now be required to supply only 5 percent of a plant’s capacity at variable charges for state consumption. Earlier, power producers had to allocate 12-14 percent of their capacity at concessional rates. Industry experts believe the previous requirement had reduced project profitability and discouraged investment in the state.

According to Inder Keshari, Director General of the Association of Power Producers, Odisha possesses all the necessary factors to become a major power generation hub. The state has abundant coal reserves, access to ports, a growing economy, and a skilled workforce. However, the higher mandatory allocation of power at variable cost had affected the financial viability of thermal power projects.

Industry representatives pointed out that while several states adopted the Central Electricity Authority’s recommendation of a 5 percent allocation framework, Odisha continued with the older policy introduced in 2008-09. As a result, many developers preferred investing in neighbouring states such as Chhattisgarh.

Over the past decade, Chhattisgarh attracted more than Rs 1.5 lakh crore in thermal power investments and added over 16 GW of generation capacity. In comparison, Odisha witnessed less than 4 GW of new capacity additions and investments below Rs 40,000 crore.

With the revised policy now in place, investor interest is reportedly increasing. Companies such as Jindal Power, Vedanta, and Adani Group are evaluating potential opportunities in Odisha. Industry stakeholders believe the new framework will significantly improve investor confidence and encourage large-scale capacity additions.

Keshari also highlighted the rising cost of thermal power projects. The cost of setting up thermal generation capacity has increased from around Rs 5 crore per MW in the past to nearly Rs 15 crore per MW today. Fixed costs have also risen from approximately Re 1 per unit to nearly Rs 4 per unit. Consequently, the tariff impact of concessional power obligations on other consumers has increased from around 14 paise per unit to nearly 55 paise per unit, affecting project economics.

Addressing concerns about possible revenue losses for the state, Keshari said such fears are largely unfounded. He noted that increased investments would generate substantial economic benefits. A typical 1,600 MW thermal power project can contribute around Rs 2,000 crore in state GST during construction and approximately Rs 100 crore annually during operations, while also creating significant employment opportunities.

The policy revision comes at a time when India is witnessing record power demand exceeding 270 GW due to extreme heat conditions and rising cooling requirements. Industry experts believe Odisha’s new policy will help attract investments, strengthen power infrastructure, and support future energy demand growth.

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