Dipak Sen Choudhury outlines plans to build pumped storage plants as part of the energy mix.
By now the whole world of energy storage knows that the Indians are in one heck of a rush. To fulfil the commitments of ‘net zero carbon’ by 2070, made by the Prime Minister of India at COP26, it is essential that 50% of the country’s energy requirements in 2030 are met from non-fossil fuel sources only.
Critical to this aspiration is the availability of large-scale energy storage capacity in the country by the same time. Storage would be essential to store the intermittently available solar and wind outputs which could then be supplied to loads reliably and ensure grid stability, as the share of the variable renewable energy would sharply go up from the current levels.
At a very conservative level it has been estimated that the country, by the end of the current decade, would need a total storage capacity of at least 150–200GWh. It is in this context that the two options of storage – battery energy storage systems (BESS) and pumped storage plants (PSPs) have emerged as the potential solutions to the country’s clean energy aspirations.
BESS almost automatically implies lithium-based electrochemical storage systems, with other chemistries being in the also-ran category, at least for the time being. But the PSP solution comes out with some major strategic advantages.
BESS development totally depends on availability of advanced chemistry cells, with a few large-scale Indian entrepreneurial houses having announced their development plans which are all invariably based on imported technology, imported manufacturing equipment and imported electrode materials.
The cumulative planned capacity of these units, running at their rated capacity, is limited to some 50–60GWh, well short of India’s energy storage requirements from 2030 onwards. Even if this entire capacity were available by 2030, a major part of the output would be consumed by India’s growing e-vehicle population, particularly the two- and three-wheelers. Very little advanced cell capacity will remain for stationary applications.
Many points in favour
Against this background, PSP comes out with many points well in favour:
- ecologically friendly – very little residual environment impact post installation
- Atma-Nirbhar Bharat – which translates to ‘self-reliant India’ – is a buzzword phrase of the current Indian political leadership. No depending on foreign technology
- well-established, time-tested technology
- setting up possible, entirely indigenous technology, plant and equipment
- well suited for long duration (>6 hours) discharge to take care of peak demand
- provision of spinning reserve at minimal cost
- regulate frequency for sudden load changes
- very large capacity storage – MW scale and highly scalable.
With a minimum plant life of 40 years or more, PSPs store energy with an efficiency ranging from 70–80%, after accounting for losses in pumping water into reservoirs, which is quite a respectable storage efficiency. In recent years, therefore, off-river PSPs have been gaining popularity due to their significant benefits which include lower capital cost and more operational efficiency leading to lower storage costs. India is currently mostly exploring off-river storage systems aiming for execution with reduced costs and faster implementation.
Going by the emerging trends, India’s apex energy council, the Central Electricity authority (CEA), has projected a minimum storage capacity requirement of 74GW by 2032.
Going further, CEA has proposed that this may be divided into PSP and BESS with installed capacities of 26.7 and 47.2GW respectively. For PSP, this is a big ask. The minimum gestation time between conceptualisation to commissioning is a minimum of five years for any of the hydro projects.
Nevertheless, PSP is a known technology very well suited for long duration discharges, is entirely indigenously developed and hence substantial investment interest is evident amongst developers. This is both within the state utilities as well as among private entrepreneurs.
Additionally, the first cut estimates reported by various agencies indicate that for long-duration discharges of six hours and above, the tariff calculated for a 500MW discharge from a 3000MWh unit, based on a single daily cycle, stands at Rs. 4.80/kWh ($0.06/kWh)! This may be compared to a tariff cost of Rs.10.84 per kWh ($0.135/kWh) of energy delivered by a 500MW per 1000MWh BESS. The economics as well as the technology both work heavily towards PSP, at least for any long duration discharges.
Main challenge
The main challenge to PSP comes, when as technology it is benchmarked to BESS, from the point of capex as well as a not-so-insignificant revex for maintenance. In terms of capex, the best estimate range for a PSP is somewhere between Rs. 60–65 million ($0.75–0.80 million) per MW whereas for BESS this comes to between Rs. 20–25 million ($0.25–0.30 million) per MW.
So upfront capex for a PSP is close to three times that of BESS but the return comes quickly through less than half tariff cost in case of former. In case the PSP is run based on two cycles a day the tariff is halved and the difference with BESS tariff doubles, making the higher investment cost for PSP look even less a concern.
Economics
The going has been good with PSP in terms of experience and economics looks right. The government of India has come up with a slew of incentives which have received a highly favourable response from investors. These include fast-track clearances to submitted project proposals, expedited environment impact clearances for proposed projects, budgetary support for enabling infrastructure – roads, bridges construction at project sites, waiver of inter-state transmission charges and so on.
Further, in 2023 the Ministry of Power released guidelines that proposed market reforms to further incentivise ancillary services provided by PSPs, exempt them from free power obligations and streamline all statutory clearances required for such projects.
While the local state governments were directly authorised to hand over projects to government engineering entities, they were also allowed to award projects to the private sector through a competitive bidding process.
Today, there are many PSP projects under various stages of construction across the country. Started in 2023, the single largest pumped hydro storage project in India, at 1440MW, is set to be operational by 2025 in the state of Madhya Pradesh. The capacity of the project is further stated to be enhanced to 1920MW in the next phase and will be linked to the storage of about 7000MW of renewable energy installations.
At present, four projects with a cumulative rating of 2.8GW are under different stages of construction. A further 29.9GW of projects have been allotted to different states for implementation through state or private contractors. India seems well on her way to the stated target of 19GW of PSP availability around the turn of the decade.
