1. PUMPED STORAGE HYDROPOWER
Guidelines issued by Ministry of Power, Government of India
Abhishek Mallick
Executive Engineer (E&M)
POWER PROJECTS DIVISION, SCCL

2. ● PSH acts as an energy store, If there is a surplus of power in the grid,
the pumped storage power station switches to pumping mode – an
electric motor drives the pump turbines, which pumps water from a
lower reservoir to a higher storage basin.
● If the demand for electricity in the grid rises, water is released from
the upper basin via a pressure pipeline to the bottom. The water causes
the pump turbines to rotate, now operating in turbine mode and used to
drive the generators. Within seconds, electricity is generated and fed
into the grid.
ABOUT PSP TECHNOLOGY:

4. ● ON-STREAM: Both reservoirs are located on any river
/stream
● OFF-STREAM OPEN LOOP - Only one of the reservoirs is
located on any river/ stream.
● OFF-STREAM CLOSED LOOP - None of the reservoirs is
located on any river/ stream
4
TYPES OF PSP:

5. OPEN-LOOP & CLOSED-LOOP PSH

6. ● Pumped storage
Hydropower + Solar
Power/ Wind Power
● Once the solar power is
more than the needed,
excess is used to pump
water from lower
reservoir to upper
reservoir.
● If there is no solar power
generation, the water
flows from upper basin
to the lower and drives a
turbine to produce
power.
HYBRID PSP CONCEPT:

7. HIGHLIGHTS OF PSP
 PSP are also known as ‘Water Battery/ Green Battery’
 Long service life of 40-50 years
 Offers critical back up during peak hours (Flexible/Reliable)
 No residual environment impacts
 High economical value: Pumped storage plants works at an efficiency level
upto 82 percent
 PSP are designed for 06 hours of operations
 CEA estimate Potential: 103 GW- ON River, OFF River- Being estimated
 As per report by CEA 26.7 GW PSP are required by 2032

8. PRO CONS
Flexible and Reliable Long Planning and construction time
Long Service Life Specific geographical condition for
upper reservoir and lower reservoir
Relatively high efficiency upto 85% Large amount of initial investment
Most viable option Long Pay back period
Reduces energy wastage
PRO & CONS:

9. 9
GUIDELINES ISSUED BY M.O.P
Dt. 10.04.2023

10. ENABLERS FOR PSP
 Environmental Clearances- PSP on existing reservoirs and on off-the-river
sites may be treated as a separate category for processing of applications
(Appraised under B2 category of MOEF &CC for grant of EC) . As per MOEF&CC
draft notification dated 11.10.22 the following criteria will be treated as B2 for
grant of EC:
1. Projects which do not attract Forest Clearance/ Wildlife Clearance
2. Projects where no new reservoirs are created
3. Projects where existing reservoirs are not expanded or structurally
modified
 Cost of Pumping Power- Three factors:
1. Cost of Input Power (Viability depends on availability of affordable input
power)
2. Conversion Losses
3. Cost of Storage

11. Value of Peak Power- PSP is capable of offering several services such as:
•Spinning Reserves- Generation capacity that is on-line but unloaded and
that can respond within 10 minutes to compensate for generation or
transmission outages, Reactive Support
•Reactive Support- used to provide the voltage levels necessary for active
power to do useful work
•Black start- the ability of generation to restart parts of the power system
to recover from a blackout
•Frequency response, faster start up’s and shutdowns which are essential
for grid stability

12. MEASURES TAKEN BY GOI FOR PROMOTION OF PSP
• States to allot PSP to PSU (Annex-I)
• Energy Storage Obligation (Annex-II)
• Waiver of ISTS Charges for PSP (Annex-III)- (Extendable to PSP where
construction work is awarded by 30.06.2025
• Budgetary Support (Annex-IV)
• Timelines for formulation and concurrence of DPR’s for PSP reduced from
900 days to 720 days and CEA shall further reduce timeline for Off-stream
closed loop PSP and PSP on existing hydro projects (Where one reservoir is
available)
• Since No tariff/ financial evaluation by CEA for tariff based Competitive
bidding, concurrence reduced from 150 days to 75 days. For other mode of
award concurrence reduced from 150 days to 125 days.
• Central Government will notify a benchmark tariff of storage for investment
decisions

13. BENEFITS TO BE EXTENDED BY STATE
• No upfront fee shall be charged by state government
• State Government shall consider reimbursement of SGST on PSP project
components.
• States may exempt Stamp duty and Registration fee for land to be
acquired by off-the-river PSP
• Government land may be provided at a concessional rate to the developers
on annual lease rent basis.
• To avoid double taxation, Electricity Duty and Cross subsidy charges shall
not be applicable for Pumping power and may be levied on final
consumption of electricity
• No requirement of Local Area Development fund

14. ALLOTMENT OF PSP PROJECTS
State Government may allot project sites to developers in the following
manner:
1. On Nomination Basis to CPSU/SPSU:
-States may award projects directly to PSU on nomination basis
- Award of EPC shall be through Competitive Bidding
2. Allotment through Competitive Bidding:
- May be allotted to Private developers by two stage competitive bidding
Stage 1: Pre-qualification based on financial strength, experience, turnover,
ability to meet performance guarantees
Stage 2: Bids to be called on quantifiable parameters such as concession period
of project or any other parameter as specified by Central/State Govt.
For above two modes:
• Home state shall have right of first refusal upto 80% of Project Capacity and
developer is free to sell power in any mode
• Tariff shall be fixed by appropriate commission u/s 62 of elec act 2003,

15. 3. Allotment through Tariff Based Competitive Bidding:
May be awarded to a developer in TBCB mode:
 Survey & Investigation and Prep of DPR may be given to SPV under State/Central PSU
 SPV responsible for Pre-construction activities such as Project Report, Land
Acquisition, Environment & Forest Clearance etc.
 DPR may be subsequently bid out for construction and SPV transferred to the
successful bidder on the basis of :
 COMPOSITE TARIFF (including Cost of Input Power)- Input power arranged by
developer
 TARIFF FOR STORAGE ON MWh BASIS: Input Power Arranged by the procurer of the
storage Capacity
 Appropriate commission shall adopt the tariff u/s 63 of Electricity Act, 2003
4. Self Identified Off-Stream Pumped Storage Projects:
 Developers may also identify potential off stream sites where PSP can be constructed
 Allotment from state government not required
 All statutory clearances need to be obtained from central/state agencies before
construction
 All concessions would be provided

16. MARKET REFORMS/ CONSIDERATIONS:
 Timeline: Start of Construction within 02 years from the date of allotment,
relaxation of 01 year where delay is due to FC & EC.
 Appropriate commission shall ensure monetization of services offered by PSP
such as Spinning reserves, ramping support, black start etc
 Appropriate commission shall notify Peak and Off-Peak tariffs for generation
to provide appropriate pricing signal to peak and base load generating plants
 PSP allowed to participate in all market segments of Power exchange including
High price segment of Day Ahead Market (HP-DAM)

17.  During monsoon- 80% Power to home state at secondary tariff fixed by
CERC. Remaining 20 % can be sold
 In case contracted capacity is not fully utilized by agency, developer is free
to transfer usage of capacity to other interested consumers. Gains to be
shared with original beneficiary in ratio of 50:50
 Financial institutions like PFC, REC and IREDA shall treat PSP at par with
other renewable energy projects while extending loans of 20-25 years . Debt
equity ratio can be upto 80:20
 Green Finance: PSP may be supported through concessional climate
finance. Sovereign green bonds issues for mobilizing resources for green
infrastructure as a part of the government’s overall market borrowings may
be deployed

18. Annexure-II
MOP Letter 22.07.2022
(RPO & ENERGY STORAGE OBLIGATION Trajectory 2029-30):
 Large Hydro Projects (LHP’s) including PSP>25 MW as a part of RE.
 LHP’s commissioned after 08.03.2019 will be considered for RPO through a
separate obligation i.e Hydro Power Purchase Obligation (HPO).
 RPO shall be calculated in energy terms as a percentage of total consumption
of electricity.
 Wind RPO shall be met only by energy produced from Wind Power Plants
commissioned after 31st Mar 2022.
 Renewable Energy Certificate mechanism corresponding to Hydro Power to
be developed by CERC to facilitate compliance of HPO would have a capping
price of Rs 5.50/Unit from 08.03.20190 to 31.03.2021 and with an annual
escalation @ 5% thereafter.

19. RENEWABLE PURCHASE OBLIGATION
TRAJECTORY 2029-30
YEAR WIND RPO HPO OTHER RPO TOTAL RPO
2022-23 0.81% 0.35% 23.44% 24.6%
2023-24 1.6% 0.66% 24.81% 27.07%
2024-25 2.46% 1.08% 26.37% 29.91%
2025-26 3.36% 1.48% 28.17% 33.01%
2026-27 4.29% 1.8% 29.86% 35.95%
2027-28 5.23% 2.16% 31.43% 38.82%
2028-29 6.16% 2.51% 32.69% 41.36%
2029-30 6.94% 2.82% 33.57% 43.33%

20. ENERGY STORAGE OBLIGATION
 Shall be calculated in energy terms as a
percentage of total consumption of
electricity- Subject to fulfillment of
condition that at least 85% of electricity
stored is procured from RE Source
 POSOCO will maintain data related to
compliance of RPO obligations
FY
Storage
(On Energy
basis)
2023-24 1%
2024-25 1.50%
2025-26 2%
2026-27 2.50%
2027-28 3%
2028-29 3.50%
2029-30 4%

21. Annexure-III
MOP Letter 23.11.2023 (WAIVER OF ISTS):
 For Solar, Wind, Hydro PSP and BESS Projects commissioned upto 30.06.2025, the
waiver of ISTS charges shall be applicable
• At least 51% of electricity requirement for pumping water at PSP/ Batter charging at
BESS is from Solar/Wind
• Electricity Generated/ Supplied by PSP & BESS
• For Green Hydrogen Plants commissioned upto 30.06.2025- Hydrogen produced using
electricity from SOLAR/WIND/PSP/ BESS
• ISTS (Inter state transmission system)
• Waiver shall be applicable for a period of 25 years for solar, wind and hydro PSP or for a
period of 12 Years for BESS
• Waiver is for ISTS charges and not for losses.
Projects Commissioned before 30.06.2025 No ISTS Charges Applicable
01.07.2025 30.06.2026 25 %
01.07.2026 30.06.2027 50 %
01.07.2027 30.06.2028 75 %
01.07.2028 Onwards 100 %

22. Annexure-IV
MOP letter 28.09.2021
Budgetary Support towards Cost of Enabling Infrastructure i/e Roads,
Bridges
 Shall be provided for project starting construction after 08.03.2019
 Budgetary support would be provided after appraisal/ approval of each
project by PIB/CCEA (Cabinet Committee on economic affairs) through
MOP
 Limit is 1.5 Cr/MW upto 200 MW and 1.0 Cr/MW for projects above 200 MW
 Will be provided as reimbursement after achieving milestones
 In-Principle approval of MOP is required for budgetary support
 Procedure- After DPR concurrence by State Govt/CEA (Annex-I) to be
submitted to CEA

23. Eligibility:
 Cap>25MW concurred either by CEA or State Government wherein
LOA is issued after 08.03.2019
 All roads and bridges required to connect major components like
DAM, Power House, Adits (Tunnel), Surge Shafts, Pressure shafts,
TRT (tunnel for return water to tank) etc of the project to state/
national highway including strengthening / widening shall be
considered for budgetary support
 For Construction of Road/Bridges (Land Acquisition Cost/ All
statutory taxes, levies, duties, cess shall be included in budgetary
support)