PSP Benefits: Growing role of pumped storage in managing renewable capacity

Growing role of pumped storage in managing renewable capacity

Pumped storage plants (PSPs) are the most common energy storage systems across the world. As per estimates, there are over 270 PSPs across the globe with a total installed capacity of 127 GW as of October 2015. However, the technology has failed to pick up pace in India. As of February 2017, the country has an installed pumped storage capacity of 4,785.60 MW, of which only about 2,600 MW is operational. The Central Electricity Regulatory Commission’s (CERC) recent staff paper on energy storage systems notes that though pumped storage is one of the mature technologies for bulk electricity storage, it is yet to gain a significant share in the country’s overall installed capacity of about 315 GW. However, given the increasing renewable energy generation in India and the subsequent need to store electricity and balance infirm generation, policymakers need to take steps to boost PSP installation.


A PSP converts electrical energy into gravitational potential energy by pumping water from a lower elevation reservoir to a higher elevation reservoir. This potential energy is subsequently converted back into electricity by running the water down through a turbine during periods of high demand. It must be noted that low-cost off-peak power is used to run the pumps. The losses in the pumping process make PSPs a net energy consumer, but it earns revenue by selling more electricity during periods of peak demand, when the tariffs are the highest. The round-trip energy efficiency of a PSP typically ranges from 70 per cent to 80 per cent, and reaches up to 87 per cent in certain cases.


Pumped storage is the only electricity storage technology that has been traditionally adopted in India. It is currently the most cost-effective and environmentally acceptable means of storing large amounts of electrical energy. This is because of the unique features of PSPs such as their response to load variations within a short span of few seconds, which assists in flattening the load curve.

PSPs also have the option of pumping at less than full load, thereby increasing the flexibility to integrate renewable energy sources, especially wind and solar power. The power generated from the renewable energy sources can be tied up with PSPs by using it for pumping operations during off-peak hours and converting it into electricity during peak hours. In this way, PSPs can help balance generation among a group of different generators.

Overall, PSPs help make energy available to the grid to meet peaking supply demand, and ensure grid stability, system regulation and sustainable power supply.

Current PSP capacity

The first PSP in India was built at Nagarjunasagar in Andhra Pradesh in 1970. As of February 2017, the country has nine PSPs across six states – Gujarat (240 MW Kadana Stage I and II; and 1,200 MW Sardar Sarovar), Telangana (705 MW Nagarjuna Sagar and 900 MW Srisailam), Tamil Nadu (400 MW Kadamparai), Jharkhand (40 MW Panchet Hill), Maharashtra (150 MW Bhira and 250 MW Ghatgar) and West Bengal (900 MW Purulia).

Of these, only Purulia and Ghatgar are pure PSPs, while the others are mixed type, they function as PSPs as well as normal hydropower projects. Further, the Kadana, Nagarjunasagar, Panchet Hill and Sardar Sarovar projects are non-operational owing to issues such as the non-construction of the tail pool dam and vibration problems in equipment.

All these projects are owned by state generation utilities except the Bhira project, which is owned by Tata Power (private sector), and the Panchet Hill project, which is owned by the Damodar Valley Corporation (central sector).

Upcoming capacity

At present, India has a small PSP pipeline despite an estimated potential of 96,000 MW.

Two PSPs are currently under construction – the 1,000 Tehri PSP in Uttarakhand and the 80 MW Koyna PSP in Maharashtra. While the Tehri PSP comprising four units of 250 MW each is being implemented by THDC India Limited, the latter is being executed by Maharashtra State Power Generation Company Limited. Both projects are likely to be commissioned by 2019-20.

Further, the survey and investigation (S&I) of three PSPs is in progress. These projects are the 700 MW Malshej Ghat and the 400 MW Humbarli projects in Maharashtra, and the 1,000 MW Turga PSP in West Bengal. The detailed project reports (DPRs) of the first two plants has been prepared by THDC while that of the Turga PSP in West Bengal has been prepared by WAPCOS Limited. The Turga PSP’s DPR has already received approval from the Central Electricity Authority (CEA).

In addition, the DPR of the 500 MW Kundah PSP in Tamil Nadu is under preparation by the state power utility. Meanwhile, the S&I and DPR preparation for the 1,100 MW Mara PSP and the 2,250 Binauda PSP in Madhya Pradesh are yet to be initiated.

Policy framework and the way ahead

Most PSPs in India were built prior to the enactment of Electricity Act, 2003 as policies after the act did not lay much emphasis on PSP development. However, the latest amendments to the Tariff Policy and the CERC’s regulations in recent years have attempted to provide an impetus to PSP development in the country. In this context, an objective to promote PSP development was recently added in the Tariff Policy, which was revised in January 2016. The Clause 4.1(f) of the policy lays emphasis on the promotion of hydroelectric power generation including PSPs to provide adequate peaking reserves, reliable grid operations and integration of variable renewable energy sources. The policy further mandates that tariff determination for hydropower projects of over 100 MW capacity must be carried out by the appropriate commission on a cost plus basis.

In addition, the CERC’s Tariff Regulations for the period 2014-19 stipulate a 16.5 per cent return on equity (RoE) for PSPs, which is 1 per cent higher than that for run-of-the-river hydro stations and thermal stations. Further, if the project is commissioned within the time schedule as stated in the concurrence issued by the CEA, an additional 0.5 per cent RoE is provided, taking the total RoE to 17 per cent.

Further, in order to promote hydropower development, the government is planning to take a number of steps. The Ministry of Power is considering bringing hydropower projects under the ambit of renewable energy to ensure power despatch. These steps are in the right direction, but need to be supplemented by specific policy measures to boost PSP development and manage the growing renewable energy capacity.