MP Cabinet Approves Greenshoe Option For Coal-Based Power Expansion Eyes Energy Security, Cost Efficiency

(MENAFN- IANS) Bhopal, Aug 26 (IANS) In a strategic move to bolster energy capacity and ensure long-term power security, the Madhya Pradesh government has adopted the“greenshoe option” for its coal-based power projects.

The state cabinet formally approved the initiative on Tuesday, signalling a significant shift in how future capacity additions will be managed within the thermal power sector.

To utilise the maximum capacity of its thermal power projects -- government or private -- is going to adopt the greenshoe option -- typically used in financial markets to allow for additional allotment beyond the original offering -- is being repurposed here to enable flexible expansion of coal-fired generation capacity.

Under this model, the state can procure additional power beyond the initially sanctioned capacity, based on demand and pricing conditions, without initiating a fresh tender process, the state's Urban Development Minister Kailsah Vijayvargiya said here on Tuesday.

This mechanism is expected to streamline procurement, reduce delays, and optimise costs.

According to recent regulatory filings, the Madhya Pradesh Power Management Company Limited (MPPMCL) has already applied similar models for renewable energy procurement, including wind and solar projects.

The cabinet's nod to extend this flexibility to coal-based generation marks a notable policy evolution, especially as the state balances its growing energy needs with affordability and reliability.

The move comes on the heels of the Union government's approval for coal allocation to Madhya Pradesh for new thermal power plants with a combined installed capacity of 4,100 MW. These plants are expected to attract investments worth Rs 25,000 crore and significantly enhance the state's energy infrastructure.

Officials say the greenshoe option will allow the state to respond dynamically to peak demand scenarios, seasonal fluctuations, and industrial growth, while maintaining fiscal discipline.

It also aligns with Madhya Pradesh's broader energy strategy, which includes a mix of renewables, hydro, and thermal sources to ensure grid stability and economic viability.

While environmental concerns around coal persist, the government maintains that the new plants will incorporate cleaner technologies and adhere to updated emission norms.

The greenshoe mechanism, in this context, is seen as a tool for controlled, need-based expansion rather than unchecked growth.

As Madhya Pradesh positions itself as a power-surplus state, this cabinet decision reflects a pragmatic blend of policy innovation and infrastructure planning -- aimed at powering development while keeping procurement agile and accountable.

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