In a significant step towards self-reliance in energy, the Uttar Pradesh government approved the purchase of 1,500 MW of power from a 1,600 MW thermal project through a 25-year bid under the DBFOO (Design, Build, Finance, Own, Operate) model.

Awarded to the lowest bidder at Rs 5.38 per unit, the deal is expected to save UPPCL around Rs 2,958 crore.

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The power supply is set to begin by 2030–31 at a competitive rate of Rs 6.10/unit, significantly cheaper than the current thermal sources charging Rs 6.60 to Rs 9/unit.

The DBFOO project was approved at a Cabinet meeting chaired by Chief Minister Yogi Adityanath here on Tuesday.

According to officials, this project is expected to begin supplying power by the financial year 2030–31. It offers electricity at a significantly lower cost than many of the state’s existing and upcoming thermal power projects.

While tariffs from plants like Jawaharpur, Obra, Ghatampur, and Panki range between Rs 6.60 and Rs 9 per unit, the new project under the DBFOO model will deliver power at just Rs 6.10 per unit. Notably, electricity is available from projects like Jawaharpur, Obra, Ghatampur, and Panki at the rate of Rs 6.6 to Rs 9 per unit.

Announcing the Cabinet’s decision, UP Energy Minister A K Sharma highlighted that this step aligns with the state’s efforts to meet growing energy demands and ensure an affordable power supply for both domestic and industrial consumers. He also noted that the procurement deal is more economical than similar agreements signed by other states and even cheaper than existing contracts with public sector power plants.

He said, “The selection process began with a Request for Qualification in July 2024, attracting interest from seven companies. Five of them submitted financial bids, and after negotiations, the lowest bid of Rs 5.38 per unit—comprising Rs 3.727 in fixed charges and Rs 1.656 in fuel charges—was accepted.”

As per studies by the Central Electricity Authority and the Uttar Pradesh Electricity Regulatory Commission, the state will require an additional 10,795 MW of thermal power by 2033–34. In response, the government has launched this bidding process and outlined a roadmap for generating 23,500 MW of renewable energy.

The new thermal project, which will be operational by 2030–31, will help meet base load demand and ensure a reliable and affordable power supply for Uttar Pradesh’s growing energy needs.

Under the DBFOO model, the private entity builds, finances, owns, and operates the plant, while the government provides coal linkage and purchases electricity as per the agreed tariff.