Govt guidelines clarify aspect of developing pumped storage projects

The Ministry of Power has issued guidelines to govern and promote the development of pumped storage projects (PSP) throughout the country. These guidelines clarify the methods for project site allocation through competitive bidding and rule out any upfront premium for project allocation in order to make it financially viable. Tax breaks and participation in power markets are also planned by the ministry to make these projects financially viable and appealing to developers and investors alike. Various factors related to the energy transition are expected to drive the development of PSPs in India. PSPs are critical for increasing the use of variable renewable energy sources in the energy mix, providing critical backup during periods of high demand, and ensuring grid stability. According to the Central Electricity Authority (CEA), India will need 26.7 GW of PSP and 47.2 GW of battery energy storage systems by 2032 to integrate renewable energy capacity. State governments may allocate project sites to developers in a variety of ways, including through nominations to Central Public Sector Undertakings (CPSUs) and State Public Sector Undertakings (SPSUs). According to the guidelines, governments may also use competitive bidding, tariff-based competitive bidding, or self-identified off-stream pumped storage projects. Furthermore, developers must begin construction work within two years of the project's allotment date, or the project site will be cancelled by the concerned state. However, a relaxation of one year may be granted to those projects where the delay in the start of construction is attributable to pending environment clearance and forest clearance. States must ensure that no upfront premium is charged for project allocation in order to ensure the viability of PSPs. The appropriate regulator must ensure that grid-supporting services such as spinning reserves, reactive support, black start, peaking supply, tertiary and ramping support, faster start-up, and shutdown are appropriately monetized. To provide appropriate pricing signals to peak and base load-generating plants, the regulator must notify peak and off-peak tariffs for generation. PSPs and other storage projects will be permitted to participate in all power exchange market segments, including the high-price segment of the Day Ahead Market (HP-DAM). This ensures that they can benefit from the price difference between peak and off-peak tariffs. The ministry has determined that abandoned mines, including coal mines, in various parts of the country could be used as hydro storage, becoming natural enablers for the development of PSPs. In consultation with other government stakeholders, it has begun efforts to identify and develop exhausted coal mines as potential PSP sites. PSPs play an important role in India's transition to a more sustainable energy system. PSPs can offload excess energy during off-peak hours, increasing the load factor of other systems and providing additional capacity during peak hours, because wind and solar energy can be generated when energy demand is low. PSPs also provide critical backup during periods of high demand while keeping the grid stable. Also Read Tamil Nadu CM to introduce third master plan for Chennai by 2025 Godrej Properties shares increases by 8%