Introduction: MP Pumped Hydro Storage Policy 2025
The MP Pumped Hydro Storage Policy 2025 marks a decisive step by the Government of Madhya Pradesh to position the state as a national hub for grid-scale energy storage infrastructure. With renewable energy capacity rising rapidly, pumped hydro storage projects are now critical for balancing peak demand, stabilising the grid, and enabling round-the-clock clean power supply.
Under the Pumped Hydro Storage Scheme Madhya Pradesh, the state offers a structured framework covering off-stream pumped hydro projects, flexible tariff mechanisms, assured offtake through ROFR by MPPMCL, and a strong basket of financial incentives that significantly improve project bankability.
However, due to the technical nature, long gestation period, and multi-layered approvals, successful project execution requires specialised subsidy consultancy. This is where Finraja Consultancy Private Limited supports developers by structuring incentives, financial closures, and compliance under the policy.
Incentives for Pumped Hydro Storage Projects in MP
The Pumped Hydro Storage Project Incentives MP are defined under Clause 16 of the scheme and apply only to registered PHS projects under the MP Renewable Energy Policy.
Incentive Component | Benefit as per Policy | Financial Impact |
Electricity Duty Exemption | 100% exemption for 10 years from COD | Significant OPEX reduction |
Energy Development Cess | Nil for 10 years | Improves cash flow |
Stamp Duty Reimbursement | 65% (50% + 15% additional for energy storage) | CAPEX savings |
Wheeling Charge Waiver | 50% waiver for 5 years from COD | Lower transmission cost |
Registration & Facilitation Fees | 20% exemption | Reduced upfront expenses |
Carbon Credits | As per applicable guidelines | Additional revenue stream |
These incentives must be strategically mapped with project timelines and tariff selection to maximise returns. Improper structuring often leads to partial or delayed benefits.
Electricity Duty & Cess Benefits under Energy Storage Policy Madhya Pradesh
One of the strongest fiscal advantages under the Energy Storage Policy Madhya Pradesh is the complete waiver of electricity duty.
Electricity Duty Incentive
Particulars | Policy Provision |
Electricity Duty on Storage & Supply | Exempt for 10 years |
Energy Development Cess | Not applicable for 10 years |
Pumping Energy Taxation | Duty applicable only on final consumption |
Applicability Start | From Commercial Operation Date (COD) |
This provision ensures that pumping losses do not attract double taxation, which substantially improves project viability.
Stamp Duty & Land-Related Incentives for PHS Projects
Land acquisition is a major cost driver for pumped hydro projects. The policy directly addresses this.
Stamp Duty & Land Incentives
Incentive | Policy Benefit |
Stamp Duty on Private Land Purchase | 65% reimbursement |
Government Land (Modes I–IV) | Allotment as per guideline rate |
Discounted Government Land | Up to 65% concession under RE Policy |
Right to Use | Granted under policy framework |
Incorrect land classification or mode selection can lead to incentive disallowance. Professional structuring is essential.
Wheeling Charge Waiver & Transmission Benefits
Transmission costs can significantly impact long-term returns. The policy mitigates this through targeted relief.
Wheeling Charge Incentives
Particulars | Benefit |
Wheeling Charges | 50% waiver |
Waiver Period | 5 years from COD |
Power Supplied to MPPMCL | No wheeling charges for supplied quantum |
Regulatory Authority | MPERC (as notified) |
This makes PHS project financial incentives MP among the most competitive in India.
Tariff Models & Revenue Structuring for PHS Projects
The pumped hydro storage tariff model offers flexibility based on developer risk appetite.
Under the MP Pumped Hydro Storage Policy 2025, developers can choose from multiple tariff structures based on their risk appetite and revenue strategy. The Composite Tariff Model combines energy generation and storage services into a single tariff, offering predictable and stable cash flows. In contrast, the Tolling Tariff Model allows developers to earn fixed storage charges while the power procurer bears market and price risks, making it suitable for projects seeking steady returns with lower exposure.
The policy also allows merchant and hybrid tariff models, enabling developers to sell power through market-linked mechanisms for higher revenue potential. In addition, the Right of First Refusal (ROFR) by MPPMCL ensures assured power offtake for a substantial portion of project capacity. This provision enhances revenue certainty, improves project bankability, and supports smoother financial closure for pumped hydro storage projects in Madhya Pradesh.
ROFR by MPPMCL
The Pumped hydro storage ROFR MPPMCL clause strengthens lender confidence.
ROFR Incentive
ROFR Level | Power Procurement |
Partial ROFR | Minimum 50% capacity |
Full ROFR | Up to 100% capacity |
Procurement Mode | Competitive bidding |
Benefit | Revenue certainty |
This provision directly supports financial closure and debt servicing.
Investment Potential & Financial Assessment
Financial Impact
Parameter | Impact |
CAPEX Reduction | 12–18% via incentives |
OPEX Savings | 15–20% over 10 years |
Payback Period | Improved by 2–3 years |
IRR Enhancement | +2.5% to +4% |
The Pumped Hydro Storage investment in MP becomes highly attractive when incentives are correctly monetised.
Off-Stream Pumped Hydro Projects
The policy actively promotes off-stream pumped hydro project MP models to minimise environmental and resettlement risks.
Off-Stream Project Incentives
Feature | Benefit |
Environmental Clearance | Faster approvals |
Land Requirement | Lower acquisition |
Project Risk | Reduced social impact |
Policy Preference | Strongly supported |
Why Professional Subsidy Consultancy
Despite generous incentives, many developers fail to unlock full benefits due to:
- Incorrect mode selection
- Poor timeline alignment
- Incomplete documentation
- Tariff misstructuring
Role of Finraja Consultancy Private Limited
- Incentive mapping & monetisation
- Tariff & ROFR structuring
- Financial viability assessment
- Policy compliance & facilitation
- End-to-end subsidy advisory
Therefore, pumped hydro storage consultancy services are essential for large-scale success.
Conclusion
The MP Pumped Hydro Storage Policy 2025 offers one of India’s most comprehensive incentive frameworks for energy storage projects. However, policy benefits alone do not guarantee profitability. Strategic planning, financial structuring, and professional subsidy advisory are the true differentiators.
Finraja Consultancy Private Limited ensures that developers not only qualify for incentives but fully realise their financial value, from project conception to commissioning.
Call us now: +91 9373114747 or visit finraja.com/contact for quick assistance.
