BACKGROUND

India is on the path towards a clen energy transition, guided by Nationally Determined Contribution (NDC) targets, to reduce emission intensity of its Gross Domestic Product (GDP) by 45% by 2030, get to 50% of installed capacity of non-fossil fuel sources by 2030 and achieve net zero carbon emission by 2030. Given the ongoing energy transition in the country, the development of Pumped Storage Projects (PSPs) is of paramount importance for providing greater inertia and balancing the power to the grid as battery storage solutions are still being scaled up and are required for short duration storage needs in grid management, PSPs are a natural enabler for integrating greater amounts of wind and solar power. With its ability to store a large amount of energy, frequent starts/stops, and faster ramp-ups/ramp-downs, PSPs are ideally suited to address the dynamic supply and demand. PSPs can also be used for peaking operation and improve the reliability of the power system.

In order to meet India’s commitment of achieving non-fossil energy-based capacity to 500 GW by 2030, various policy measures to promote growth and investments have been initiated by the Government of India and State Governments. From CEA formulating DPR to MoP releasing final guidelines to MoEFCC clarifying issues related to Environmental Clearances required for developing PSPs. The Government have set its goals and aim very clearly to create required framework needed to promote the development of new PSPs across the country.

Pumped Hydro Storage is a mature and proven technology with operational experience in the country. India has a potential of 181.5 GW of PSP capacity, both on-river & off-river. CEA envisaged a requirement of 26.7 GW of PHPs till 2032. However, numerous companies are coming up with new projects and MoEFCC is flooded with Terms of Reference (ToR) proposals of 87 projects with a total capacity of 1.04 GW as per CEA data on PHPs. This has further gained significant traction and 38 projects with 50.67 GW capacity have been allocated by states for commissioning by 2032 which are under different stages of development.

Pumped Hydro Storage (PHS) is crucial for India's energy future as it addresses key challenges like renewable energy integration, grid stability, peak demand management, and energy security. By providing a cost-effective and reliable storage solution, PHS supports India’s transition to a cleaner, more sustainable energy system while contributing to its economic growth and environmental goals. The Pumped Storage Projects capacity additions are being supported by policy initiatives like the issuance of draft PSP guidelines, declaration of PSPs as renewable sources, waiver of interstate transmission charges, notification of energy storage obligation, and proposed viability gap funding support. However, challenges such as complicated and prolonged approval procedures need to be addressed to tap the potential within this critical segment.

The need for Pumped Hydro Storage (PHS) in India is increasingly critical due to several factors related to the country's energy transition, grid management, and sustainability goals and the primary reasons why PHS is essential for India.