Adani Power PSA Brings $3B Investment To Bahagalpur Plant
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Adani Power Ltd. (APL), India’s largest private sector thermal power generator, today said it has signed a 25-year Power Supply Agreement (PSA) with Bihar State Power Generation Company Ltd. (BSPGCL) for the supply of 2,400 MW of power from a greenfield ultra supercritical plant to be set up at Pirpainti in Bhagalpur district of Bihar.
Ultra super-critical plants run at very high temperatures and pressures. This means they are more efficient than older thermal power plants, using less coal per unit of electricity. That helps reduce emissions and cost per unit.
A 25-year PSA is very long, so both sides commit for a long time. For Bihar, this means a more stable power supply; for Adani, assured demand and revenue over the long haul.
This is further to the LoA awarded by BSPGCL to APL, on behalf of North Bihar Power Distribution Company Ltd. (NBPDCL) and South Bihar Power Distribution Company Ltd. (SBPDCL) in August. Adani Power won the project by offering the lowest supply rate at Rs 6.075 per kWh. The company plans to invest approximately $3 billion to build the new plant (800 MW X 3) and its supporting infrastructure under the Design, Build, Finance, Own, and Operate (DBFOO) model. The lowest supply rate means competitive bidding was used, and Adani’s offer beat others in cost per unit of power. This helps keep costs lower for consumers/distribution companies.
DBFOO is a model where the private company designs, builds, finances, owns, and operates the plant. It shifts much of the risk to the private sector, but also gives control and potentially greater efficiency to Adani.
$3 billion investment is large. For comparison, many similar plants in India have costs of that scale, depending on technology, land, coal handling, etc. The coal linkage for the power plant has been allocated under the SHAKTI Policy of the Government of India. The project will generate direct and indirect employment of ~10,000 – 12,000 during the construction phase and ~3,000 once in operation.
The SHAKTI Policy (Scheme for Harnessing and Allocating Koyala Transparently in India) was revised recently in 2025 to simplify coal linkages. It now has two “Windows”: Window I gives coal at the notified domestic price, Window II gives coal through auction/premium. Fresh thermal plants (greenfield) are eligible under these windows. Allocation under SHAKTI helps reduce uncertainty about coal supply. Having a coal linkage means Adani can plan for coal supply costs and avoid major delays. Employment numbers are large. Construction phase jobs often include local labour, contractors, transport, etc. Operation phase jobs are fewer but more stable, including staffing, maintenance, and operations.
The company aims to fully commission the plant in 60 months. 60 months = 5 years. For a large thermal power project with three 800 MW units, that is an ambitious but not unusual timeline if approvals, land, coal, water access, environmental clearances, etc., are obtained. Key risks might include environmental clearances, delay in coal or land acquisition, change in regulations, or cost escalations. Ensuring timely commissioning will require good project management. Bihar has been facing power shortage issues in many parts, especially in rural and semi-urban areas. Projects like this aim to reduce load-shedding and improve the reliability of electricity.
Ultra super-critical technology improves thermal efficiency, often by about 3-5% over super-critical units, which can reduce coal usage and greenhouse gas emissions. China and many other countries have shifted to ultra-supercritical or even more advanced designs in new thermal plants, partly to meet climate goals. India is doing the same under its commitments. The SHAKTI policy’s revised method gives transparency and competition to coal allocations, which helps avoid delays and cost overruns. Investment of this magnitude tends to lead to infrastructure in the surrounding areas – roads, water supply, housing for workers, etc. That has spillover benefits for the local economy.
Power supply at ₹6.075 per kWh will have to factor in the cost of coal, transportation, fuel linkages, operation, and financing. If coal costs rise sharply, tariff pressure can build. The plant location at Pirpainti, Bhagalpu, has to ensure connectivity (transmission lines) to North and South Bihar distribution networks (NBPDCL, SBPDCL). Ensuring environmental compliance, pollution controls (flue gas desulfurization, etc.) will be needed to meet Indian environmental norms and possibly national/international expectations.