MC Explains: Why are pumped hydro storage projects on the agenda of governments, companies?

Pumped storage projects, or PSPs, are hydroelectric power generation systems that use two water reservoirs at different elevations.

Pumped storage projects (PSPs) have found their way onto the agenda of the central and state governments, as these can potentially bridge the gap in peak demand and supply and offer stability to the power grid.

India estimates a potential of 103 gigawatts (GW) of PSP capacity, and the governments are gearing up to attract inventors to set up these projects.

The Central Electricity Authority (CEA) has shortened the detailed project report (DPR) approval time for PSPs from 90 days to 50 days. The governments of various states, such as Rajasthan, Maharashtra, and Uttar Pradesh, have signed memoranda of understanding (MoUs) with public sector undertakings (PSUs) and private companies for pumped hydro projects. Andhra Pradesh has reportedly invited bids to prepare a pre-feasibility report for PSP totalling 6.3 gigawatts (GW). Moneycontrol looks into the prospects of this power source as the Indian government aims for 500 GW of renewable energy (RE) by 2030 and net zero carbon emissions by 2070.

What are PSPs?

Pumped storage projects, or PSPs, are hydroelectric power generation systems that use two water reservoirs at different elevations. This energy can either be supplied directly to the grid or stored in batteries. 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.

Isn’t solar and wind power enough to meet peak demand?

Variable renewable sources like solar and wind cannot generate electricity 24x7. To meet demand continuously, Round The Clock (RTC) power is required. Hydro PSPs can supply electricity during the hours when solar and wind cannot. In such a scenario, a combination of wind, solar, and pumped hydro energy can be provided.

Why PSP?

Battery storage is increasing in demand. The International Energy Agency has predicted that India will have a 31.0 Gigawatt Hour (GWh) capability by 2026. However, space consumption, low battery recycling, and complicated mining procedures for virgin metals make it financially and environmentally expensive. Mining of minerals like cobalt also faces social issues. PSPs require a high capital expenditure, but in the long run, are cost and space effective.

The maintenance and other expenses for a span of 25 years are negligible, says an insider from the sector. Small hydropower projects decrease the amount of land required and forest clearings. Natural lakes can also be used for PSPs. The total land required has been estimated at about 258 hectares for Tata Power’s Kurukutti PSP. In comparison, the large hydroelectric project, Sardar Sarovar Reservoir, occupies an area of 37,000 hectares.

Who is interested?

Energy producers, from both the public and private sectors, are keen to add PSP capacity to strengthen their portfolios. Last year, Andhra Pradesh cleared PSPs proposed by Adani Green Energy with a total capacity of 3,700 MW.

Among others, Greenko Group has also undertaken PSP but hasn’t responded to Moneycontrol’s queries as of the time of publishing this article.

An official from ACME said the company has signed MoUs with states like Rajasthan and Uttar Pradesh to explore PSPs. However, the company is currently doing the feasibility studies for projects in these states.

Are there any shortcomings with PSPs?

The initial cost is expensive, with an approximate establishment cost of Rs 5,000 crore. Most PSP sites are located in jungle interiors and mountainous terrain. PSPs will take at least five to seven years to set up, owing to the long process of environmental clearance. Rigorous forest and environmental clearance procedures, despite speeding up the process, take years as they move from the district level to the state level. However, certain 'off-river' PSPs may be exempt from environmental impact assessment, according to the draft guidelines on PSPs. Environmental and social concerns arise when sites are located within tribal areas or forest reserves.

Nonetheless, PSPs offer a new alternative to RE business models. As the government aims to achieve its net-zero targets, PSUs and private companies can implement PSPs for long-term benefits.