Five thermal power projects are proposed to be set up in Srikakulam district. Among the five projects, the proposal of three are in preliminary stage, while the construction of Nagarjuna Construction Company (Sompeta) and East Coast Energy project with 2640 MW capacity each had started . East Coast Energy Private Ltd’s thermal power plant proposed at Kakarapalli in Srikakulam district is to be developed in two phases with a total generation capacity of 2640 MW. Each phase is planned with capacity of 1320 MW having two units of 660 MW. It should have started power generation by March 2015 . The project has received approval for clean development mechanism (CDM) from the National CDM Authority of the Ministry of Environment and Forests; the company affirms they are the first independent power producer in South India to do so.
The thermal power sector in Andhra Pradesh and elsewhere has been encountering huge problems related to fuel supply, land acquisition, financing, policy hurdles at the State and Central levels and environmental clearance.
There are about 63 power plants planned to come up in coastal Andhra. This has triggered intense protests and many questions . Srikakulam cannot sustain or support five thermal power plants of the proposed magnitude in a radius of less than 200 km. There are certain guidelines for location of the thermal projects. However, defying all norms industrialists prefer to locate them along the coast. This is because of import of coal from countries like Indonesia will be cheaper in this route. This is quality coal and the ash content ranges from 10 to 12 per cent as compared to indigenous coal’s 30 per cent. However guidelines prohibit location of plants near breeding, nesting and fish nurseries because it will disturb the breeding and nesting of marine and freshwater fishes .
The Business Line of The Hindu says: "Another issue plaguing the sector but that was not being taken into account by the planners was the decommissioning of projects that have outlived their shelf life of 25-30 years. Though these projects continue to generate power even today, the issue is at what cost?". This is in fact one of the main arguments in favor of new "critical technology" thermal power plants; their alleged capacity of cutting CO2 emissions is the main reason for them to benefit from the CDMs.
But environmental issues are quite severe. The Naupada swamps in this part of the state have been acknowledged as a fragile wetland area. The company, however, has been granted the necessary environmental clearances by the government. Environmentalists allege that the permissions have been bought .
According to the Argumentative Indian, one of the members of the board of directors of the promoting companies is Mr. A. Balraj, who is a retired IAS officer and the chairman of the Expert Appraisal Committee (EAC) which recommended the environmental clearance for the thermal power plant in Kakarapalli .
The project faced a lot of opposition from the local people and environmental activists. They fear that environmental pollution would leave the area uninhabitable . The proposed project faced strong opposition from the people, mostly fishermen, living along the coast. They expressed serious concern over the health hazards. They also afraid that the effluents from project will affect the fish catch in the sea and ultimately their livelihood .
The Srikakulam district administration called two meetings of all stakeholders to get their views. People expressed their strong opposition from the fishermen community, as also some NGOs and environmental activists . The agitation against the project had led to delays in its execution .
In February 2011, work has been suspended after a police firing, as locals opposed the construction of the plant in Santabommali mandal. However, the company got the nod from the Union government in April 2 to recommence work. At least two people were killed and several injured . Even after that, the police reportedly opened fire on the protesting mobs .
UPDATE IN 2017 (with references).
The deceased were from Vaddithadra village, dominated by the fisherman community. The protestors had been on strike for 195 days refusing to let work resume on the plant. They insisted that the power plant would destroy all the ponds and swamp water bodies in the area thereby stripping the locals of their livelihood . After construction work being suspended for more than 2 years following the police violence, the company resumed work in October 2013. From October 2013 to March 2015, they constructed compound wall and chimneys. However, in April 2015 work stopped again due to financial crunch. This financial constraint was despite being provided Rs. 3,000 crore finance by Power Finance Corporation and 18 other institutions. 
After the state of Telangana was set up in 2014, the new state government of Andhra Pradesh changed its policy on thermal power plants. In April 2017, the state energy minister, Kimida Kala Venkata Rao stated that Thermal Power Plants (TPP) are not viable in the state now as it has sufficient power due to an increase in generation by 25 percent. Speaking to The Hans India, the minister informed that keeping this augmented generation in view, the government has put on hold all the proposed TPPs.  About the Kakarapalli plant, he said, “At present, the state government has no agreement with the East Coast Energy Private Limited. . In June 2015 East Coast Energy informed the MoEF that the company was still seeking additional land for the project. . In August 2017 it was reported that the proposal for setting up of thermal power plant had fizzled out due to financial crunch and changed government policy, when the district collector Kalva Dhanunjaya Reddy announced that, ‘East Coast Energy Private Limited has stopped works of Kakarapalli power plant’. 
Similar to the case of Sompeta (in AP), this is a victory for saving this ecologically sensitive and historically significant wetland. It is ecologically sensitive as there are at least 40 middle-sized ponds and a vast area used as salt farms, which is a source of survival for about 30,000 people depend on it for survival, and the historical significance of this land stems from the fact that this was the epicentre of the salt satyagraha led by Mahatma Gandhi for the southern and eastern provinces. .