Narmada Hydroelectric Development Corporation will set up a 525 megawatt (MW) pumped storage project at Khandwa in Madhya Pradesh at an estimated cost of Rs 4,200 crore.
NHDC Ltd is a joint venture of NHPC Ltd and the government of Madhya Pradesh, the Union power ministry said in a statement on Friday.
"NHDC Ltd is going to construct a 525 MW Pumped Storage Project (PSP) near Indira Sagar Dam, Khandwa, Madhya Pradesh, using the existing reservoirs Indira Sagar and Omkareshwar of the Indira Sagar Project," it said.
The project is being undertaken, keeping in view the need for increasing peak hour demand of the state.
Through this PSP, the energy needs of the state can be met during peak energy hours (morning and evening). The project will generate 1,226.93 million units of energy during peak hours, the statement said.
The estimated cost of the project allotted to NHDC by the state government's Department of New & Renewable Energy is Rs 4,200 crore.
The power ministry further said there is a potential for 11.2 GW of pumped storage projects in Madhya Pradesh. At present, two power stations of NHDC Ltd, namely Indira Sagar Power Station (1000 MW) and Omkareshwar Power Station (520 MW), are in operation in the Khandwa district. Power produced by these stations are supplied to Madhya Pradesh.