This article is a commentary on the new Ultra Mega project initiative of the Government of India. It was published in the Economic Political Weekly, 13 January 2007. The successful bids for two ultra-mega power projects in Sasan and Mundra indicate that competitive bidding could be used to procure power at low rates and that the UMPPs may help reduce inefficiencies in coal operations. However, such projects should be undertaken with caution so as to minimize adverse social and environmental impacts and increasing dependence on coal.