Contexts: Ministry of Power has released draft guidelines for Tariff based competitive bidding for procurement of storage capacity/stored energy from pumped storage plants. The draft proposes a single stage two-part bidding process, consisting of technical and financial bidding stages for procuring storage capacity from pumped storage projects.
Two modes of Procuring Pumped Storage Projects (PSPs)
According to the draft, government proposes two modes of procuring storage capacity from pumped storage projects. They are:
- PSPs located on pre-specified sites by government: In this mode, procurer can choose to locate the PSP project at a site pre-specified in the bidding document. In case the site belongs to government or a government entity, the development shall be on a Build Own Operate Transfer (BOOT) basis for 25-40 years.
- PSPs located on a self-identified site by the bidder: Supply will be from PSP developed on a site self-identified by the bidder or from an existing commissioned PSP. In this case, the development may be on a Finance Own Operate (FOO) basis for a period of 15-25 years.
Pumped Storage Project
- Pumped storage plants use the principle of gravity to generate electricity using water that has been previously pumped from a lower source to an upper reservoir.
- Operation of pumped storage power plants requires two reservoirs viz. upper and lower reservoir. Water in upper reservoir is used for generating power during peak demand hours. The water in the lower reservoir is pumped back to the upper reservoir during the off-peak hours and the cycle continues.
- Pumped storage plants are of two types: ‘open loop’, which has an associated natural-water source (like a river) for one or both the reservoirs; and ‘closed loop’ (or off-river PSH), which does not have a connected natural-water source and the same water is cycled between the two reservoirs for pumping and generation.
- Energy storage capacity of a pumped hydro facility depends on size of its two reservoirs and the head between reservoirs, while the amount of power generated is linked to the size of turbine.
Need for Pumped Storage Hydropower Project
- Renewable energy sources like solar & wind energy are intermittent and variable in nature due to factors like time, climate, season and location. They are not available 24X7.
- This leads to challenges of grid-stability and temporal considerations in power availability. This requires immediate ramp-up & back down of generation for grid balancing & stability of grid frequency.
- Energy storage systems address this issue by storing excess energy and supplying it later when there is demand leading to improved grid stability, peak shifting and enhancing renewable energy integration.
- Pump Storage Technology is the only long term technically proven, cost-effective, highly efficient & operationally flexible way of energy storage on a large scale & available at short notice.
- Currently, it is the largest energy storage system making it most effective for Renewable Energy Integration.
- Benefits of Pumped Storage Projects are:
- Peak shaving: PSPs absorb off peak energy in the system.
- Load balancing (Peak/off-peak balancing support): Provides peaking power.
- Helps in system stability.
- Increases capacity utilisation of thermal plants.
- Spinning reserve at almost no cost to the system
- Black start capability
- Fast ramp up & ramp down of generation
- Large energy storage capacity
- Long life of operation.
- Energy conversion rates for pump-storage projects often exceeds 80%
- Only PSP can meet most of the grid scale energy storage needs and no other storage system can and therefore almost 95% of the storage projects are Pump hydro