By Sakshi Bansal
Located in the heart of India, Madhya Pradesh is reshaping its energy landscape by investing in solar parks, wind farms and pumped storage projects to reduce its reliance on thermal power. According to the Central Electricity Authority, the total installed power capacity in Madhya Pradesh is 28,141.99 MW, with thermal power contributing 16,294.59 MW, 57 per cent of the total power mix. As of February 28, 2025, the state’s renewable energy capacity stands at 10,366.76 MW, as per the Ministry of New and Renewable Energy (MNRE).
Among renewables, solar power accounts for the highest installed capacity at 5,012.88 MW, followed by wind energy at 2,844.29 MW. The remaining is contributed by biopower (150.88 MW), large hydro (2,235 MW) and small hydro (123.71 MW). The state’s solar capacity is further segmented into 4,397.74 MW of ground-mounted solar, 513.1 MW of rooftop solar, 102.04 MW of off-grid/Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM) components. The biopower segments comprises 92.5 MW of biomass power/bagasse cogeneration, 14.85 MW of non-bagasse biomass cogeneration, 15.4 MW of waste-to-energy (WtE) and 28.13 MW of off-grid WtE components.
Meanwhile, the state’s overall power sector performance in recent years has been a mixed bag. In 2022-23 and 2023-24, the state reported a rise in peak power shortages from 109 MW to 435 MW, respectively. Over the years, the difference between energy required and energy supplied has also reduced significantly, from 358 (MUs in 2022-23 to 151 MUs in 2023-24. This improvement reflects the state’s enhanced capacity to meet its growing energy demands.
On the distribution front, two out of three discoms in Madhya Pradesh have made notable progress. The overall average aggregate technical and commercial losses decreased from 21.36 per cent in 2021-22 to 20.55 per cent in 2022-23 while the state’s collection efficiency improved from 98.7 per cent to 100 per cent. A key initiative in this area is the adoption of smart metering technology. As of January 6, 2025, only 1,581,563 out of the 13,444,401 sanctioned smart meters had been installed, according to the National Smart Grid Mission.
Renewable Watch takes a look at recent policy announcements, key developments and the future outlook for
Madhya Pradesh…
Policy developments
In February 2025, several policy announcements were made. The government launched the Madhya Pradesh Renewable Energy Policy 2025, aiming to source 50 per cent of annual power consumption from renewable energy by 2030. The policy, valid for five years, applies to all renewable energy projects of at least 500 kW, excluding decentralised systems. The state has set renewable energy targets of 20 per cent, 30 per cent and 50 per cent for financial years 2024, 2027 and 2030 respectively. Other key targets include developing 10,000 MW of renewable energy parks and hybrid parks under the Indian government/state government schemes by FY 2027, and establishing 4,000 MW of renewable energy projects for power export outside the state by FY 2024, expanding to 10,000 MW by FY 2027. The investment targets for renewable energy generation include Rs 150 billion and Rs 500 billion by 2024 and 2027 respectively. The investment targets for renewable equipment manufacturing are Rs 40 billion and Rs 100 billion by 2024 and 2027 respectively. The policy also focuses on creating green cities and zones, where cities meeting 30 per cent of their energy demand from renewables will be designated as green cities. Multistage development plans include solar-powered street lights, substations and vendors under Stage I; rooftop solar for residential buildings exceeding 6 kW load, public transport and commercial institutions in Stage II; and community-based renewable farming and biogas manufacturing in Stage III.
Additionally, the state government has introduced a comprehensive policy framework to facilitate the development of pumped storage projects (PSPs) in the state. This policy outlines various development modes, land allotment procedures, financial incentives and project timelines to encourage investment and ensure efficient implementation. The policy will be effective for 10 years and will operate alongside the state’s Renewable Energy Policy, 2022. The guidelines outline four distinct modes for the development of PSPs. Mode I involves the direct allocation of PSP sites to central PSUs, state PSUs, or government authorities, ensuring strategic public sector involvement. Mode II focuses on projects developed for third-party power supply, power exchange, or captive consumption, with developers selected through a competitive bidding process. Mode III pertains to projects designed to meet the energy storage needs of discoms and public organisations, with developers selected through a transparent bidding mechanism. Mode IV allows for the allocation of off-stream PSP sites identified by developers, provided these locations are not already designated under other modes, with all necessary approvals required before construction.
Apart from this, the state is accelerating its transition to electric vehicles (EVs). In line with this, the state government introduced the draft EV Policy, 2025, which propose subsidies ranging from Rs 5,000 to Rs 1 million for various EV categories, including electric cars, two-wheelers, three-wheelers, cycles and commercial vehicles. This five-year policy encompasses both battery-powered and fuel-cell EVs. It includes provisions for key components such as charging/swapping infrastructure, electric motors and other supporting systems. The policy aims to develop five model EV cities (Bhopal, Indore, Jabalpur, Gwalior and Ujjain) by implementing public transport electrification plans and pilot projects. Since passenger vehicles are excluded from the centre’s PM E-Drive scheme, the state government has introduced measures to bridge this gap with its own support.
Recent developments
Madhya Pradesh is one of the top locations in the country for installing solar power plants, as it receives high levels of solar radiation. The state has an ambitious goal of meeting 50 per cent of its power needs from solar energy by 2030. In December, two major solar projects were inaugurated in the state – 550 MW plant in Agar-Malwa and a 431 MW project in Neemuch. Notably, the solar power generated in Agar will be supplied to the Indian Railways, supporting sustainable train operations across seven states.
In a bid to reduce the burden on state discoms, the state has actively adopted and promoted the PM-KUSUM scheme. To this end, the state government has allocated Rs 530 billion in subsidies for farmers, covering electricity costs and honorariums. Additionally, efforts are under way to expand rooftop solar adoption in the residential sector. Recently, at the 4th edition of RE-INVEST 2024 in Gandhinagar, Gujarat, Mohan Yadav, chief minister of the state, highlighted that the state is working in mission mode to achieve its target of installing rooftop solar on all government buildings by 2025. Strengthening its renewable energy push, the state has identified 15,000 hectares of land across Agar, Dhar, Ashoknagar, Bhind, Shivpuri and Sagar districts for the development of 7,500 MW of solar power capacity.
Additionally, the state government is establishing a 227.54 acre dedicated manufacturing zone in Narmadapuram to support the production of power and renewable energy equipment. Developed at a cost of Rs 4.64 billion, this initiative aims to attract energy-related industries while creating new employment opportunities in the state. To incentivise businesses, the government is offering attractive benefits on land, electricity and water rates. Under the scheme, land will be allotted at a nominal fee of Re 1, with an annual lease rent of just Re 1 per square metre. Additionally, industries will receive a Rs 4.36 per unit discount on electricity rates for the first five years, along with several other concessions to drive investment and industrial growth in the region.
Madhya Pradesh has attracted substantial investment proposals in the renewable energy sector, driven by its Technology-Agnostic Renewable Energy Policy. As the first state in India to implement such a policy, Madhya Pradesh offers investors flexible and favourable opportunities for accelerating solar and wind energy growth.
In addition to its solar initiatives, Madhya Pradesh aims to install 3,000 MW of wind energy across Ujjain, Agar, Dhar, Mandsaur and Ratlam, further strengthening its renewable energy portfolio. The state is also advancing efforts in compressed biogas (CBG) production. Notably, the state is considering repurposing unusable land, such as the ravines of Chambal, for CBG production.
Other key initiatives in the state in the past few months include the signing of MoUs. In February 2025, KPI Green Energy Limited and the New and Renewable Energy Department, Government of Madhya Pradesh, signed an MoU to develop 1.8 GW of renewable energy projects, including solar, wind, hybrid, battery energy storage systems and biomass-based projects, across the state. In the same month, NTPC Limited, along with its subsidiary NTPC Green Energy Limited (NGEL), signed multiple MoUs with the Madhya Pradesh government to develop renewable energy projects, including solar, and wind projects and PSPs. The first MoU, signed between NGEL and Madhya Pradesh Power Generating Company Limited, aims to set up renewable energy projects up to 20 GW in the state, with an estimated investment of Rs 1,200 billion. In another MoU, NTPC Limited and the Madhya Pradesh government have committed to developing other sustainable non-fossil-fuel power plants, with a projected investment of Rs 800 billion. Additionally, an agreement was finalised between the Madhya Pradesh government and NTPC for an 800 MW PSP, requiring an estimated investment of Rs 40 billion.
Furthermore, the state is witnessing the development of several solar manufacturing facilities by private players. GREW Solar has announced plans to set up a backward-integrated solar module manufacturing facility in Narmadapuram near Bhopal, at an investment of Rs 30 billion. It will have an annual production capacity of 3 GW for ingots, wafers, cells and modules. Additionally, Insolation Energy Limited has received 45 acres of land from the Madhya Pradesh government to establish a solar manufacturing facility. The proposed unit will feature a production capacity of 3 GW of solar cells, 4 GW of solar modules and 24,000 metric tonnes of aluminium frames. Rays Green Energy Manufacturing, too, has announced plans to establish a 3 GW solar module and 1.5 GW solar cell facility in the state.
The way forward
With its expansive terrain and favourable climate conditions, Madhya Pradesh is emerging as a front runner state in India’s renewable energy landscape. Its strategic location and resource abundance offer immense opportunities for clean energy expansion, with several high-potential renewable energy sites. According to the MNRE, the state has an estimated 62 GW of solar energy potential, 11 GW of wind energy potential, 4 GW of biomass and 820 MW of small-hydro potential.
The state government has taken proactive measures to establish itself as a leader in the solar sector. A major milestone in this journey was the Rewa Ultra Mega Solar Park, which set record low tariffs, making solar power more cost-effective than thermal energy and also selling power to Delhi Metro through an open access route. Building on this success, the upcoming Morena Solar Park will integrate energy storage solutions to ensure a stable power supply even during non-solar hours. The state government has also been a pioneer in commercial and industrial rooftop solar projects, achieving record low tariffs in this segment. In addition, it has also successfully experimented with large-scale floating solar projects at Omkareshwar.
Further strengthening its solar energy initiatives, the state plans to distribute 100,000 solar pumps, enabling farmers to achieve energy self-sufficiency in irrigation while reducing reliance on conventional power sources. These efforts aim to enhance clean energy accessibility for rural communities.
However, despite remarkable progress in solar energy, the state still has significant ground to cover in diversifying its renewable energy mix. Growth in small hydro, wind and biomass energy has remained stagnant, with MNRE data showing no capacity additions in small hydro and wind since 2023, following minor expansions in 2021 and 2018 respectively. Similarly, biopower capacity has seen only marginal increases over the years. As a result, solar power remains the primary driver of the state’s renewable energy expansion. Going forward, the state needs to replicate the business models and tendering frameworks used to promote solar deployment for other renewable energy segments for a more diversified clean energy mix.
