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Abstract: India is facing acute energy shortage that is likely to affect its economic development. There are severe supply side constraints in term of coal and gas shortages that are likely to continue in the near future. Hence, in its current focus to solving the energy shortage problem and sustaining the development trajectory, the country should aim at a balance between supply side and demand side measures. Energy Efficiency in end use is increasingly gaining importance as one of the most cost effective options for achieving short to medium term energy savings. India has initiated the National Mission for Enhanced Energy Efficiency under National Action Plan for Climate Change which addresses various aspects of energy efficiency such as technology, financing, fiscal incentive and also creation of energy efficiency as a market instrument. However, even though energy efficiency has substantial scope in the Indian subcontinent, the market for energy efficiency has been limited. This paper discusses the concept of mega Demand Side Management projects as a DSM Power Plant. A DSM Power Plant acts as an umbrella with multiple energy efficiency schemes under its ambit aimed at transforming energy efficiency into a business by providing a push to the scale of operation as well as financial sustenance to energy efficiency projects. This paper expounds on the various aspects of DSM Power Plant in terms of its policy and institutional mechanism for the large scale implementation of energy efficiency in India. This paper provides an illustration of the concept of DSM Power Plant model through a case study in one of the states (Rajasthan) of India. Further, a comparative analysis of the cost of generation from DSM Power Plant and a representative conventional power plant (CPP) in Rajasthan has been undertaken and the DSM Power Plant comes out to be a more cost effective option. The concept of DSM Power Plant will not only address the issue of energy shortages but will also help the financially thwarted utilities to reduce their revenue deficit in the near future. [Copyright &y& Elsevier]