RIL plans foray into pumped storage projects amid energy transition push

The company’s subsidiary Reliance New Energy is scouting for sites for the projects.
The company’s subsidiary Reliance New Energy is scouting for sites for the projects.

Summary

  • RIL's planned entry into PSPs may elevate competition in the segment, which has seen keen interest from several renewable energy companies and business houses

NEW DELHI : Mukesh Ambani-led Reliance Industries Ltd (RIL) is looking to enter pumped storage projects (PSP) for hydro power as it focuses closely on clean energy, two people aware of the plans said.

The company's subsidiary Reliance New Energy is scouting for sites for the projects, the people cited above said on condition of anonymity.

PSPs use cheap green power during off-peak hours to lift water to a height and release it into a lower reservoir to turn turbines that generate electricity when the demand for electricity goes up.

"RIL is looking for PSP sites and would bid for these projects in a big way," one of the two people mentioned above said.

RIL's planned entry into PSPs may elevate competition in the segment, which has seen keen interest from several renewable energy companies and business houses. In September 2023, Mint reported that NHPC, Tata Power, Adani Green Energy, Greenko and JSW Energy were among companies that have proposed to build PSPs totalling 39GW in the country, potentially attracting investments of as much as 3.12 trillion.

Queries emailed to RIL remained unanswered till press time.

Reliance's PSP ambitions closely align with its existing plans for solar module manufacturing, green hydrogen production and battery energy storage. It is also constructing the Dhirubhai Ambani Green Energy Giga Complex over 5,000 acres in Jamnagar, Gujarat with five giga factories for photovoltaic panels, fuel cell systems, green hydrogen, energy storage and power electronics, which it expects to complete in the second half of this fiscal year. With PSPs, RIL would take another step towards adding to the power generation capacity under its energy portfolio. RIL, under its decarbonization programme, is already setting up solar capacity.

In its annual report for FY23, RIL said it has made investments and acquisitions worth 6,700 crore in the new energy segment. The company aims to invest a total of 75,000 crore in the new energy ecosystem.

Last month, Business Standard reported that the Union environment ministry has given the environment-related go-ahead to PSPs with a capacity of 11.98 GW.

Pumped storage projects are gaining momentum, with the government's ambitious net zero target and the commitment to install 500 GW of renewable energy capacity by 2030. Supply from renewable sources varies according to time, climate, season and location, which leads to issues with grid balancing, as solar power is available only during the daytime and wind power is available during windy days.

Energy storage systems (ESS) such as battery energy storage systems (BESS) and PSP come into play in such cases as they can be used for storing energy from green sources and supplying at other times of the day. To achieve energy transition and shift from fossil fuel to renewable energy, green energy needs to become despatchable, and available round the clock. Between BESS and PSP, the latter is said to be more viable in the near term given its cost-effectiveness. 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.

According to CareEdge, the levelized cost from pumped storage projects (PSP) is around 4.7 per unit compared to that from battery energy storage system (BESS) at around 6.6 per unit, making the former more attractive.

Last April, power ministry issued guidelines on concessional climate finance and uniform environment clearances for pumped storage projects. 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, 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, as per the norms. The debt-equity ratio of the projects can be up to 80:20 in consultation with the financial institutions.

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