After years of being talked up with little on-the-ground progress, pumped storage is finally on a roll in India. Noting the urgent need for more system flexibility in view of growing renewable capacity addition and high cost of battery storage, the Ministry of Power has issued draft guidelines for development of pumped storage projects (PSP). Projects shall be allocated on a preferential basis to PSUs and through competitive bidding process to private companies. Proposed incentives include exemption from any obligation to contribute to Local Area Development Fund or supply free power or pay any upfront success fee to state governments, 25-year waiver from inter-state transmission charge for projects commissioned before 30 June 2025, public funding for enabling infrastructure, and inclusion in the recently introduced high price day ahead market (HP-DAM). Further, off-the-river PSPs or those using existing reservoirs shall be exempted from requirement to obtain environmental clearance.
To improve financial viability of PSPs, the MOP has recommended regulations for creation of ancillary services markets including spinning reserves, reactive power, black start, peaking supply, tertiary and ramping support, faster start-up and shutdown besides notification of peak and off-peak tariffs for providing appropriate pricing signals to potential consumers.
The procurement front is also brimming. Karnataka has just concluded auction for a 1,000 MW/ 8,000 MWh pumped storage tender, a first of its kind by a state. Bidders were asked to quote a fixed annual fee payable over 40 years. JSW (300 MW) and Greenko (700 MW) quoted the lowest price at INR 1.22 million/ MW/ month, 14% lower than in NTPC’s 500 MW/ 3,000 MWh auction in December 2022. Levellised cost of storage is estimated at INR 5.00/ kWh, less than half for battery storage. West Bengal has developed a site for a 900 MW/ 4,500 MWh project at Purulia and is now inviting developers to build the project with no offtake guarantee.
India currently has 3.3 GW PSP installed capacity, which operates mostly in a power generation mode. Total PSP potential is estimated variously at 103 GW/ 618 GWh for on-river projects. As per CEA, 31 GW capacity is in various stages of development. The Draft National Electricity Plan expects 18.8 GW installed PSP capacity alongside 51.5 GW battery storage by FY 2032. However, the MOP is recommending faster development if battery storage systems are not deemed affordable. More than 70% of new PSP development is taking place in five states – Andhra Pradesh, Rajasthan, Karnataka, Maharashtra and Tamil Nadu.
Figure: Select states with pumped storage projects, MW
Source: CEA hydroelectric potential reassessment reports
Greenko, an early mover with total under development capacity of 2.4 GW/ 22.1 GWh, is a big beneficiary. But long gestation period combined with high development, environmental and construction risk means that competition is likely to be limited mainly to Indian corporate groups like JSW, Adani and Shirdi Sai.
PSPs could be the optimal solution for India particularly over next 5-7 years while battery technology matures and becomes affordable. Domestically available technology with no reliance on international supply chains is a particularly attractive feature in current times. The key will be to manage long gestation period by developing sites proactively and managing environmental risk carefully.
The post Pumped storage in limelight appeared first on BRIDGE TO INDIA.