Companies
Tata, Adani, JSW among firms seeking to build ₹3.1 tn of pumped storage
Summary
Several energy companies have plans to set up PSPs in India, adding to the country’s installed PSP capacity of 4.7GW.NEW DELHI : NHPC Ltd, Tata Power Ltd, Adani Green Energy Ltd and JSW Energy Ltd are among companies that have proposed to build pumped storage projects (PSPs) totalling 39GW in the country, an official aware of the development said, potentially attracting investments of as much as ₹3.12 trillion.
In PSPs, excess energy is used to pump water to an upper reservoir when power demand is low. When demand rises, water is released, turning a turbine which generates electricity. PSPs and battery storage projects are often used alongside solar or wind power projects to ensure stable power supply. “So far, the Central Electricity Authority (CEA) has received proposals for 39,000 megawatts (MW) capacity; it keeps adding every day. The applicants have submitted the PFR (pre-feasibility report)," the official said on condition of anonymity.
Typically, PSPs require an investment of ₹7-8 crore per MW, requiring aggregate investments in the range of ₹2.73-3.12 trillion.
Queries sent to spokespeople for CEA, NHPC, Tata Power, Adani Green and JSW Energy remained unanswered till press time.
Several energy companies have plans to set up PSPs in India, adding to the country’s installed PSP capacity of 4.7GW. Mint earlier reported that NHPC was planning PSPs totalling 20,000-22,000MW. In June, it signed an initial agreement with an Odisha state utility to build 2,000 MW of pumped storage and 1,000MW renewable energy projects in the state. It has also signed an agreement with Maharashtra to set up PSPs totalling 7,350MW.
In August, Tata Power signed a memorandum of understanding (MoU) to develop two PSPs with a combined capacity of 2,800MW with an estimated investment of around ₹13,000 crore.
Adani Green Energy also has taken up projects in Maharashtra and Andhra Pradesh. On 19 July, Hindustan Times reported that the Centre had given an in-principle nod to 2,450MW Koyna-Nivakane PSP in Satara to be developed by Adani Green. JSW Energy, through its wholly owned subsidiary, JSW Neo Energy Ltd, has signed an MoU with the Maharashtra government for up to a 960 MW PSP capacity in the state.
The focus on pumped storage comes after the power ministry in April issued guidelines on concessional climate finance and uniform environment clearances for PSPs to add around 5GW. According to the Centre, states must ensure that no upfront premium is charged for project allocation.
Besides, in a bid to ensure financing for these capital-intensive projects, the Centre said financial institutions such as Power Finance Corp., Rural Electrification Corp. and Indian Renewable Energy Development Agency will treat PSPs on par with other renewable energy projects for extending long-term loans of 20-25 years. The debt-equity ratio of the projects can be up to 80:20 in consultation with the financial institutions, according to the guidelines.
As India adds more renewable energy capacity, it also needs to ensure grid stability, and pumped storage is a key solution for grid reliability. It helps set up affordable, large storage capacities for electricity distribution. PSPs are expected to remain more cost-competitive than battery energy storage systems. In terms of longevity, with an estimated lifespan of 40 years, PSPs fare better than battery storage, which has a lifespan of about 10 years, according to industry experts.
