Govt guidelines clarify aspect of developing pumped storage projects

14 Apr 2023 CW Team

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%

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%

Infrastructure Transport

17 Sep 2025

Alignment Uncertainty Delays Kochi Bypass and NH 66 Projects

Plans to ease traffic in Kochi with the Edappally–Aroor elevated highway on NH 66 and the long-awaited Kochi bypass have faced fresh delays due to uncertainty over the alignment of NH 966B from Nettoor to Willingdon Island.Nettoor is poised to become a key junction, linking the Angamaly–Kundannoor bypass (NH 544), NH 966B, the proposed NH 66 elevated corridor, and the Theni–Kochi highway. However, disagreements on how these highways will intersect are slowing progress.Union Road Transport and Highways Minister Nitin Gadkari recently informed Parliament that the National Highways Authorit..

Infrastructure Energy

17 Sep 2025

New Wanpoh Substation Project Extended to June 2027

Power Grid Corporation of India (PGCIL) has been granted an 18-month extension for completing the New Wanpoh substation augmentation project in Jammu & Kashmir.The Central Transmission Utility of India (CTUIL) revised the project’s completion date to 30 June 2027, from the earlier 31 December 2025. The project involves augmenting PGCIL’s 400/220kV New Wanpoh substation with a new 400/220kV, 315 MVA interconnecting transformer (3×105 MVA) and two transformer bays—one each at 400kV and 220kV. The project, estimated at Rs 610 million, was awarded under the regulated tariff mechanism (R..

Infrastructure Transport

17 Sep 2025

Gurgaon-Pataudi-Rewari Highway Set for Completion by December 2025

The National Highways Authority of India (NHAI) has set a new target to complete the four-lane Gurgaon-Pataudi-Rewari highway by December 2025, following a two-year delay.Originally planned in 2018 to upgrade the two-lane state highway into a national highway, the project is estimated to cost Rs 9 billion. Construction, which began in 2021, was initially scheduled for completion in November 2023. According to NHAI, around 70 per cent of the work is already complete, with two major structures still pending: a railway overbridge at Pahari village and a two-lane unidirectional flyover on Dwarka E..