Pumped Storage Projects

Presently, Pumped Storage Projects (PSP) and Battery Energy Storage Systems (BESS) are the major feasible options to store Renewable Energy. Recently, the Ministry of Power has issued draft guidelines to promote the development of Pump Storage Projects (PSP) in the country.

Under the draft guidelines, the ministry has asked the states to:

  • Consider exempting stamp duty and registration fees for the land for PSP projects.
  • Give government land at concessional rates for such projects.
  • Avoid double taxation, and provide relief in the State Goods and Services Tax (SGST).

Pumped Storage Projects (PSP):

  • Pumped storage projects (PSPs), often called ‘giant batteries,’ is a type of hydroelectric energy storage system. The internationally accepted technology is conventionally used to stabilise the grid and maintain peak power.
  • These projects store appreciable amounts of energy and release it when required. The present installed capacity of PSPs in the country is 4745 MW and another 1500 MW capacity is under active construction.
  • Some of the operational PSP plants exist in Telangana (Nagarjuna Sagar, Srisailam), Tamil Nadu (Kadamparai), Maharashtra (Bhira, Ghatgar), and Purulia in West Bengal.


  • The PSPs comprise two water reservoirs connected through a tunnel or underground pipe at different heights.
  • When there is more electricity production and less demand, these projects pump water from the downward reservoir to the upward reservoir.
  • When more energy is needed, water is pushed from the uphill to the downhill via a turbine to produce the required power instantly.
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  • PSPs are clean, megawatt-scale, domestically available, time-tested, and internationally accepted.
  • PSPs are clean, green, safe, and non-explosive as they do not produce any poisonous/ harmful by-products or pose disposal problems.


  • Several issues have halted the growth of PSPs in India including, higher upfront costs, the high tariff of power used to pump water uphill, and the long gestation period of such projects due to several approvals like environmental clearance and other formalities.


  • Currently, the price of batteries is rising and stands around Rs. 8-10 per unit (1 kilowatt-hour), and their price is dynamic depending on changing geopolitics and other reasons. Although the upfront cost of PSPs is higher, its operational cost per KwH is lower than that of battery storage systems.
  • PSPs lose around 20-30% of the energy in their storage process but have a longer duration supply than battery systems. While the lead acid batteries can work up to 2-6 hours, PSPs can supply energy ranging from six to 20 hours.
  • PSPs have a long gestation period, and their capacity is dependent on location, however, they have a longer life. BESS have a short gestation period, and are non-dependent on location (mobile) but limited by the availability of minerals and technology.

Way Forward:

  • To improve the uptake of PSPs in the grid, differential pricing should be explored (instead of a flat energy charge) that will increase PSP profitability, and generation-based incentives should be provided.  
  • The government could consider allowing Foreign Direct Investment (FDI) for PSPs as they are available for other renewable projects.

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