No plan to offer viability gap funding for pumped storage projects: RK Singh

Pumped storage projects, or PSPs, are hydroelectric power generation systems that use two water reservoirs at different elevations. They act like giant batteries for electricity storage, which is important to get round-the-clock power since solar and wind energy are intermittent. During periods of low electricity demand, excess electricity from the grid is used to pump water from the lower reservoir to the upper reservoir. When the electricity demand increases, the stored water is released back to the lower reservoir, passing through turbines to generate electricity.

On April 10, the Ministry of Power notified the 'Guidelines to promote development of Pumped Storage Projects (PSP)' in the country. Moneycontrol was the first to report on January 30 that off-river or off-stream pumped storage projects will be exempted from environmental impact assessments (EIA) which was later stated in the final guidelines.

PSPs currently under construction in India.

The Union minister also clarified in a written response to the Lok Sabha on December 21 that currently there is no proposal for allocation of PSPs to the private sector on nomination basis.

At present, four PSPs with aggregate installed capacity of 2,780 MW
are under construction in the country. The PSP capacity that is already installed in India is 4,745 MW. Besides, 24 projects (2,6630 MW) have been allotted by states which are under different stages of development. As per the government’s own estimates, the country has a potential of at least 103 GW of pumped hydro capacity.

Pumped storage tariffs 

According to the latest estimates by NTPC, the tariff purely for power storage through a PSP ranges between Rs 3.5 per unit and Rs 4 per unit, depending on the type of project and its location.

“However, once we include the purchase price adder, the total price of PSP storage would range between Rs 7.25 and Rs 8.25 per unit,” an NTPC official said.

Despite the high rates, which are still lower compared to battery energy storage systems (BESS), PSPs are being favoured by the Indian government primarily because they do not require the mining of critical minerals such as cobalt and lithium, the majority of which are currently being imported from China. PSPs require a high capital expenditure, but in the long run, they are cost and space-effective. Also, the life of PSPs is much higher and can run till 20-25 years or even more, compared to BESS which have a life of 4-6 years only.

Accordingly, a number of Central Public Sector Undertakings as well private companies have decided to build PSPs. NTPC Ltd, India’s largest electricity producer, has identified at least nine states where it plans to build pumped hydro storage units with a total installed capacity of 14,000 MW (14 GW). India's hydropower giant, NHPC Ltd is exploring pumped storage projects totalling a capacity of 22,000 MW (22 GW). Tata Power will commission two projects of 2,800 megawatts (MW) by 2027 and 2028 and has identified three new potential sites with 9000 MW capacity.