Kerala is aiming for INR100 billion project to tide over its power deficit in the state and increase output from 2,657 megawatt (MW) to over 5,000 MW in the next five years. The state has a deficit of about 600 megawatt (MW) and relies heavily on the central grid to meet its needs. During peak hours, Kerala faces a 30 minutes mandatory load shedding. Hence, the government is trying to bridge the gap by increasing its production.

The state is in the process of setting up a 2400 MW coal based thermal power project in Kasargod. It has invited bids from project management consultants, set up a special purpose vehicle and earmarked 2000 acres for this project.

Kerala is facing a decline in hydropower production following weak monsoon in the last few years in the catchment area. So while hydel energy remains the main source of power generation in Kerala, the state is also looking at other options to produce power.

During peak hours, it costs as high as INR7.5 to generate one unit of hydro power. Lower output and the poor financial condition of the state electricity boards has forced the state to invest in a thermal plant. Kerala State Industrial Development Corporation Limited has been appointed the nodal agency to manage this project.