Hydro Pumped Storage Projects exempted from seeking CEA's approval in major boost for power producers

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The Centre is simplifying the process to build pumped hydro storage projects (PSP) to fast-track power storage in India, in an effort to ensure renewable energy is integrated into the national grid.

The Ministry of Power, through a notification published on August 20, exempted off-stream closed-loop pumped storage projects from seeking mandatory approval of the Central Electricity Authority (CEA).

The decision is expected to boost companies such as Tata Power, Adani Green Energy, Greenko Group, JSW Energy and Torrent Power which have plans for pumped storage projects. The exemption of CEA approval for off-stream closed-loop projects removes a regulatory hurdle for the companies and comes at a time when the government aims to triple approvals for pumped hydro storage projects this fiscal.

However, any hydro project scheme with a capital expenditure of over Rs 3,000 crore will require concurrence from the CEA, so as to ensure that large projects undergo proper scrutiny before implementation. The CEA is a statutory body of the Power Ministry that advises Centre on policy matters and develops plans for the electricity sector.

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Pumped storage projects in India are classified into open-loop (on-river) and closed-loop (off-river or standalone) systems. Open-loop systems utilize a natural water source like a river for one or both reservoirs, while closed-loop systems cycle the same water between two reservoirs without a natural water connection.

The exemption to off-stream closed-loop pumped storage projects from mandatory CEA approval is due the lower environmental and operational risks associated with such projects.

As wind and solar power face issues of inconsistent electricity supply, the government is focusing on PSPs as a long-term solution, since the use of battery energy storage systems (BESS) for more than even four hours remain unaffordable.

PSPs have a longer life of 70-80 years compared to the 10-20 years in BESS.

India has six operational PSPs totalling 3.5 GW and the government intends to increase it to 50 GW of commissioned capacity by 2032. Two each of these are in Maharashtra and Telangana, and one each in Tamil Nadu and West Bengal.