pumped storage projects in India

India’s Ministry of Power convened a meeting of the Consultative Committee focused on Pumped Storage Projects in Kurnool district, Andhra Pradesh.

The meeting was chaired by the Minister of Power, Mr Manohar Lal and attended by Mr Shripad Yesso Naik, Minister of State for Power, Members of the Consultative Committee for the Ministry of Power from Lok Sabha and Rajya Sabha, senior officials from the Ministry of Power, Central Electricity Authority (CEA) and CPSUs.

Pumped Storage Projects (PSP) are large-scale hydroelectric energy storage systems that use two water reservoirs at different elevations to store and generate electricity as needed, acting as a type of “water battery” for the power grid. During surplus electricity (when demand is low), water is pumped to the upper reservoir; when demand increases, the stored water is released and flows downhill through turbines to generate electricity.

Addressing the members, Mr Manohar Lal, Minister of Power, emphasised that Pumped Storage Projects can play a critical role by storing surplus green power and meeting electricity demand during non-solar hours.

Regarding evaporation losses from PSP reservoirs, the Minister suggested deploying floating solar power projects as a viable solution.

He further underscored the pivotal role of State Governments in facilitating PSP development through timely site allocation, water allocation, and expeditious clearances.

He urged the Members of the Committee to engage with State Governments to consider withdrawing charges such as the Green Energy cess, water tax, and reservoir lease fees to accelerate the development of PSPs.

The Members of the Committee were informed that a nationwide potential of approximately 224 GW for Pumped Storage Projects has been identified. Of this, ten PSPs with a total capacity of around 7 GW have been commissioned, another ten PSPs of about 12 GW capacity are under construction, and fifty-six PSPs with a capacity of about 78 GW are at various stages of planning and development.

The Members were apprised of the key policy initiatives undertaken by the Government of India to accelerate the development of Pumped Storage Projects.

These include the issuance of Guidelines for PSP development outlining modalities for site allotment, exemption from free power and Local Area Development Fund obligations, etc., and a complete waiver of Inter-State Transmission (ISTS) charges for 25 years for projects awarded on or before 30.06.2028.

The Government has also extended budgetary support for enabling infrastructure, notified Renewable Consumption Obligations for energy storage systems, and issued Tariff-Based Competitive Bidding (TBCB) guidelines for procurement of storage capacity/stored energy from PSPs.

Further, off-stream closed-loop PSPs have been exempted from the requirement of CEA concurrence. Additionally, the capital expenditure threshold for CEA concurrence for hydro and PSP projects has been revised to ₹3,000 crore, as against the earlier limit of ₹2,500 crore for competitively bid projects and ₹1,000 crore for MoU-route projects.

The Members of the Consultative Committee for the Ministry of Power commended the Ministry for the comprehensive policy push for PSPs.

They noted that recent steps, such as easing the technical appraisal requirements for off-stream closed-loop PSPs, strengthening viability through budgetary support for enabling infrastructure and the waiver of ISTS charges, have significantly improved confidence among developers and States.

The Members of the Committee provided valuable suggestions further to accelerate the development of PSPs across the country. The Committee also discussed the environmental implications of PSPs and renewable energy sources such as wind and solar. They underscored the advantages of PSPs, highlighting their relatively lower environmental impact.

Mr Shripad Yesso Naik, Minister of State for Power, also addressed the Committee and informed that the successful commissioning during 2025-26 of all eight units of the 1680 MW Pinnapuram PSP alongside the 500 MW Tehri PSP marks a significant national achievement reflecting strong coordination between the Centre, States, CPSUs and the private sector.