New draft guidelines put India at the forefront of pumped storage development

Pumped storage hydropower accounts for almost 90 percent of the planet’s installed global energy storage capacity. As more wind and solar power come onto electricity grids worldwide, we need more energy storage technologies like pumped hydro to ensure continued electricity supply when the sun doesn’t shine, or the wind doesn’t blow without falling back on fossil fuels. At IHA, we call this the ignored crisis within the energy crisis.

Realising the potential of India’s pumped hydropower storage

India has assessed that it needs at least 18.8 GW of pumped storage hydropower capacity to support the planned integration of wind and solar into India’s grid by 2032 and potentially more if other energy storage systems are not financially viable. The Indian Government has also recently revised its figure for pumped storage hydropower potential from 96 GW to 106 GW.

Developing a market to increase project viability in hydropower-pumped storage

India’s new Draft Guidelines to Promote Development of Pump Storage Projects set out the financial mechanisms and policies to help make this happen by placing a financial value on the reliability and flexibility of this technology (rather than just its electricity generation) and thus remunerating project developers and operators appropriately. 

Additionally, the Guidelines set out potential tax and land exemptions that may also help improve pumped hydro projects’ financial viability.

Government policies India’s proposed market reforms for the Guidelines are an excellent example of how to value the economic benefit of pumped hydro and the policies to grow it better.

There is also a focus on innovation. The guidelines explore using exhausted mines as potential pumped storage sites and how India’s green sovereign bonds could be issued to develop pumped storage projects. 

In addition to the Draft Guidelines, India also published an Energy Storage Obligation in July 2022, which creates a demand for the technology by indicating the target percentage that distribution companies will need to procure from wind and solar through pumped storage and battery storage from 2023–2030. In 2021, they waived interstate transmission charges for wind and solar generation for pumped hydro. They provided budgetary support for enabling infrastructure, such as roads and bridges, for hydropower and pumped storage projects.

The International Hydropower Association (IHA) applauds the development of these draft guidelines and congratulates the Indian Ministry of Power for its vision and leadership in the pumped storage space. We encourage countries worldwide to look at these innovatively proposed guidelines as a model to enable the necessary growth of pumped storage hydropower.

A forum for speeding growth

The International Forum on Pumped Storage Hydropower was established by IHA in November 2020, bringing together 13 governments, including India, and more than 70 organisations worldwide. The objective was to develop recommendations on accelerating pumped hydro development and acknowledge its role in the transition to clean energy.

One of the Forum’s outcomes was a document titled “Pump It Up: Recommendations for Urgent Investment in Pumped Storage Hydropower to Back the Clean Energy Transition,” which highlighted the importance of compensating providers of grid, storage, and flexibility services for all their offerings. I raised this matter with Hon. R. K. Singh, India’s Minister of Power, during a meeting in Delhi in October.

A global pumped storage renaissance

India is one of many countries making swift progress in enabling the development of pumped storage. In New South Wales, Australia, a $44.8 million funding package was announced in September 2022 to unlock the development of five new pumped storage projects with a combined capacity of nearly 1.75 GW. This funding will go towards pre-investment activities, including feasibility studies and developing a business case for projects.

A month later, Queensland Premier Annastacia Palaszczuk announced an ambitious plan to develop the world’s largest pumped storage project to provide 5 GW of installed capacity and 24-hour energy storage to the state grid.

It is clear from these cases in Australia and India’s draft guidelines that there are ways to get pumped storage hydropower development over the line. They all follow the same three steps:

· Identify your long-duration energy storage needs.

· Identify your potential sites. 

· Create market conditions or financial mechanisms to make the projects viable.

As well as in Asia and the Pacific, there are exciting announcements and developments on pumped storage in China and the US. The world needs more energy storage; the good news is that we need more potential. A global atlas developed by Professor Andrew Blakers at the Australian National University has identified more than 600,000 potential locations for pumped storage worldwide.

The only form of acceptable hydropower is sustainable hydropower.

Even in those countries where we see exciting progress, there is a necessary fourth step. We need more pumped storage hydropower to reach vital net zero targets, but this should not be done at the expense of communities, the environment, or biodiversity.

IHA has championed the development of the Hydropower Sustainability Standard, an independent certification system that can help improve and monitor the sustainability of hydropower projects.

All pumped storage sites should be developed and operated with a commitment to sustainability, and this standard is a vital tool to make this happen. We plan to work with India and other countries to promote embedding the standard into the regulations.

For more details, visit www.hydropower.org.