Pumped Storage Hydropower

1. At a Glance

• Pumped Storage Projects (PSPs) are often called a "water battery". They store surplus electricity by pumping water to an upper reservoir, where it is held as potential energy. When demand rises, the water is released through turbines to generate power. [1]
• They are the main long-duration storage option for India's renewable energy transition. BESS (battery storage) complements them by covering short-duration needs. [1]
• Why it matters for UPSC: it connects energy security, the 500 GW non-fossil target by 2030, grid stability and the ecological trade-offs of river-based hydro (GS-III). [1]

2. Why in the News

• 19 Oct 2026: PIB published an explainer on PSPs. It reported 7.43 GW of operational PSP capacity as of Aug 2026 and projected storage needs up to 2031–32. [1]
• 2025–26: All eight units of the 1,680 MW Pinnapuram PSP (Andhra Pradesh) were commissioned. The Tehri PSP (Uttarakhand) also came online during this period. [3][4]
• 4 Jun 2025: COD (commercial operation) began for the first 250 MW unit of Tehri PSP, which PIB calls India's first variable-speed PSP. [3]
• 6 Feb 2025: The Ministry of Power (MoP) notified TBCB guidelines (tariff-based competitive bidding) for procuring storage capacity or stored energy from PSPs. [5]

3. Background & Evolution

• Rationale: solar and wind output varies with sunlight, weather and daily demand. Storage absorbs surplus generation and supplies power at peak times or when renewable output is low. [1]
• Milestones:
• Mar 2023: Installed PSP capacity was 4,745.6 MW, with 1,500 MW under active construction. [6]
• 10 Apr 2023: MoP issued the Guidelines to Promote Development of Pump Storage Projects. [7]
• 14 Aug 2023: MoEF&CC issued specific Terms of Reference (ToR) for off-stream PSPs. [5]
• Dec 2023: The government said there was no plan for Viability Gap Funding (VGF) for PSPs because their levelised cost of storage is already viable. [8]
• 6 Feb 2025: TBCB guidelines for PSP storage procurement. [5]
• Jun 2025: First unit of Tehri variable-speed PSP reached COD. [3]
• Nov 2025: In a Consultative Committee meeting, the Power Minister (Manohar Lal) cited about 224 GW of national PSP potential and stressed the role of state governments. [4]
• Aug 2026: Operational capacity reached 7.43 GW. [1]

4. Core Static Facts

Item	Fact
Nodal ministry	Ministry of Power [7]
Technical appraisal	Central Electricity Authority (CEA). DPR concurrence time cut from 90 to 50 days for all PSP types [5]
Exemption	Off-stream closed-loop PSPs need no CEA concurrence, whatever their capital cost [5]
Environmental ToR	Baseline data required for 1 season (closed-loop) and 2 seasons (open-loop) [5]
Storage need by 2031–32 (CEA)	73.93 GW in total = 26.69 GW PSP + 47.24 GW BESS [1]
Operational PSP capacity	7.43 GW (Aug 2026) [1]
Potential	About 224 GW (Nov 2025) [4]
Non-fossil capacity	>300 GW (Jul 2026). 55.29 GW added in FY 2025–26. Target 500 GW by 2030 [1]
2023 Guidelines include	Several ways of allotting sites; exemption from free-power and Local Area Development Fund obligations; a simpler Environmental Clearance (EC) process; use of exhausted coal mines as sites [5][7]

Classification (by how the reservoirs relate to natural watercourses) [1]

Type	Upper / lower reservoir location
On-stream	Both reservoirs on a river, stream or nallah
Off-stream open-loop	One reservoir on a river or stream; the other is not on a perennial watercourse
Off-stream closed-loop	Neither reservoir is on a river, perennial stream or perennial nallah

5. Multi-Dimensional Analysis

Economic

• The government's position is that the levelised cost of storage is viable without VGF. [8]
• TBCB guidelines create a market for buying storage capacity. [5]
• Waiving free-power and LADF obligations improves project financial viability. [7]

Environmental

• The policy push is towards off-stream sites because they have a smaller impact on aquatic ecology. [1]
• Lighter baseline-data requirements for closed-loop projects reflect their lower river impact. [5]
• Reusing exhausted coal mines turns degraded land to productive use. [7]

Scientific / Technological

• Variable-speed units (Tehri) allow pumping power to be adjusted flexibly, which helps balance the grid. [3]
• Integrated Renewable Energy Storage Projects (IRESP): Pinnapuram in Kurnool combines 4,000 MW solar, 1,000 MW wind and 1,680 MW PSP. PIB calls it the world's first project of this kind. [9]

Strategic / Energy Security

• PSPs shift renewable energy across time and provide peaking support, which reduces dependence on fossil fuels for meeting peak demand. [1]
• BESS depends on imported battery cells. PSPs use domestic water and civil works, and have a long operating life. [1]

Administrative / Federal

• Water and land are state subjects, so sites depend on the states. The Minister has stressed that state governments must take a proactive role. [4][7]
• Faster CEA timelines and exemptions are aimed at clearance bottlenecks. [5]

6. Recent Developments (last 12–18 months)

• Feb 2025: TBCB guidelines for PSP storage notified. [5]
• Apr 2025: Union Minister Pralhad Joshi visited the Pinnapuram IRESP. [9]
• Jun 2025: COD of Tehri PSP Unit 1 (250 MW). Tehri is the largest PSP built by any CPSE (central public sector enterprise). [3]
• Nov 2025: Consultative Committee meeting on PSPs; about 224 GW potential cited. [4]
• 2025–26: Pinnapuram (1,680 MW) fully commissioned; Tehri PSP units commissioned. [4]
• Aug–Oct 2026: Operational capacity reached 7.43 GW; PIB explainer released. [1]
• Transmission charges: PIB releases report two different positions on ISTS (inter-state transmission system) charges for PSPs:
• a phased 25% step-down in the waiver from 01.07.2025 to 01.07.2028
• a CERC notification of 26.06.2025 giving a 100% ISTS waiver for 25 years from COD to projects awarded by 30.06.2028

Check the current CERC regulation before citing either. [5][10]

7. Prelims Hooks

• PSP = "water battery": it stores energy as gravitational potential energy. [1]
• CEA projection for 2031–32: 73.93 GW storage, of which 26.69 GW is PSP and 47.24 GW is BESS. [1]
• India's operational PSP capacity was 7.43 GW as of Aug 2026. [1]
• MoP PSP Guidelines were issued on 10 April 2023. [7]
• TBCB guidelines for PSP storage were notified on 06.02.2025. [5]
• CEA DPR concurrence for PSPs now takes 50 days (earlier 90). [5]
• Off-stream closed-loop PSPs are exempt from CEA concurrence. [5]
• MoEF&CC ToR for off-stream PSPs is dated 14.08.2023: 1 season of baseline data for closed-loop, 2 seasons for open-loop. [5]
• Tehri PSP (THDC, Uttarakhand, 1,000 MW) is India's first variable-speed PSP. [3]
• Pinnapuram (Kurnool, AP) is called the world's first IRESP, with 1,680 MW of PSP. [9]
• No VGF for PSPs (unlike BESS). [8]
• India's PSP potential is about 224 GW. [4]
• India has >300 GW of non-fossil capacity (Jul 2026) and a target of 500 GW by 2030. [1]

8. Can India Build 26.69 GW of Pumped Storage by 2032?

• The current speed is far too slow for the target
• Installed PSP capacity was 4,745.6 MW in March 2023 [6] and 7.43 GW in August 2026 [1].
• So India added only about 2.7 GW in about three and a half years. That is less than 1 GW a year.

• To reach the CEA target of 26.69 GW by 2031–32 [1], India must add about 19 GW in about five and a half years. That means roughly 3.5 GW every year, about four times today's speed.

• Even the full pipeline is not quite enough

• In July 2026, 11 PSPs (15,870 MW) were under construction. Another 6 PSPs (8,140 MW) had CEA approval but had not started building [11].
• 7.43 GW operational + 15.87 GW under construction = about 23.3 GW. That is still about 3.4 GW short of 26.69 GW.

• So the target needs every project now under construction to finish on time, plus some of the approved projects to start soon.

• Hydro projects take a long time, and some stall

• The government has said PSP growth was slow because of a long gestation period (the years between approval and first power), dependence on suitable sites, and the need for Environmental Clearance [6].
• Real projects do stall. In December 2023 the government told Parliament that construction at the Koyna Left Bank PSP (Maharashtra) had stopped [12].

• Under-construction projects have target dates running up to 2029 [11]. A delay of even two years would push them past 2031–32.

• The fair counter-point: the reforms are getting projects started

• Capacity under construction grew from 8 projects (8.5 GW) in June 2025 [5] to 11 projects (15.87 GW) in July 2026 [11]. It almost doubled in one year.
• So the 2023 Guidelines and the faster CEA approvals seem to be working at the starting stage. The open question is whether projects finish on time, not whether they start.

9. Should PSPs Get a Subsidy? The Government and Parliament Disagree

• The government's case: no subsidy is needed
• In December 2023 the government said PSPs need no VGF (Viability Gap Funding, a government grant that covers part of a project's cost so it becomes profitable). It said their levelised cost of storage (the average cost of storing one unit of power over the plant's whole life) is already viable [8].
• This is a strong argument. Public money is limited, and a grant given to a project that would be built anyway is wasted.

• The government also already supports PSPs in other ways: waivers of free-power and LADF duties [7], and transmission-charge waivers [5][10].

• Parliament's committees see cost as the main barrier

• The Standing Committee on Energy (December 2025) said high cost is the main reason storage is growing slowly [14].
• It noted India had only about 5.5 GW of storage against 243 GW of renewable capacity. It also said about 61 GW of storage would be needed by 2030 [14].

• The Committee on Public Undertakings, in its report on NHPC (August 2026), recommended a structured VGF framework for new hydropower projects [13].

• How to weigh the two sides

• The government is right that a PSP can earn money over its long life. That is why it is "viable" on paper.
• But the speed problem is real: under 1 GW a year has been added since 2023 [1][6]. If projects were truly attractive without help, private builders would be moving faster.
• A balanced answer: VGF need not go to every PSP. It could be limited to projects that are approved but stuck, such as the 8,140 MW not yet started [11].

10. Why States May Not Rush to Host PSPs

• States give the land and water but lose their usual benefit
• Normally, a state that hosts a hydro project gets a share of free power, and local people benefit from a Local Area Development Fund (LADF).
• The 2023 Guidelines exempt PSPs from both duties [7].

• This makes projects cheaper for builders. But it removes the main reason a state has to give up its valleys and hills.

• This works against the Centre's own appeal to states

• Water and land are state subjects, so sites depend on the states [4][7].

• The Power Minister has asked states to take a proactive role [4]. But the same policy has removed the money that would make states want to.

• Getting land is a known bottleneck

• The COPU report on NHPC recommended a consent threshold of 70–75% for large hydropower projects of national importance [13]. A consent threshold means the project can go ahead once that share of affected landowners agree.
• A committee would not ask for this unless waiting for every landowner's consent was holding projects up.

11. Why 'Off-Stream' Does Not Mean 'No Impact'

• Closed-loop really is gentler on rivers
• Closed-loop systems use less water and do not disturb natural river flows. A European review of pumped hydro reached this conclusion [15].

• This supports India's push towards off-stream sites [1].

• But the ground under the reservoir matters

• The World Bank warns that reservoirs on karst (limestone rock full of cracks and caves) or other porous ground can lose a lot of water through seepage [16].
• Exhausted coal-mine pits are now allowed as PSP sites [7]. Mined ground is often broken and cracked, so the same seepage risk may apply there.

• Lost water must be pumped up again. That cuts the plant's efficiency and can affect the groundwater around it.

• Lighter rules mean less data

• Closed-loop PSPs need only one season of baseline data, compared with two for open-loop [5]. Baseline data is the study of the local environment before construction.
• One season cannot show how a site behaves in both the monsoon and the dry months.
• Europe faces the opposite problem: impact assessments are slow and are not always matched to how risky a project is [15]. India has chosen speed. The risk is that it misses problems that only show up in one season.

12. The Same Topic, Different Numbers

• PSP potential: 224 GW or 280 GW?
• The Power Minister cited about 224 GW of PSP potential in November 2025 [4].
• The COPU report on NHPC cites about 280 GW of potential, against about 7 GW installed as of April 2026 [13].

• In an answer, write "over 200 GW" or name the source for the figure you use.

• Storage needed: 61 GW by 2030 or 73.93 GW by 2031–32?

• The Standing Committee on Energy gave about 61 GW by 2030 [14]. The CEA gave 73.93 GW by 2031–32 [1].

• These are different years and possibly different assumptions, so they are not in conflict. But do not mix them up in Prelims.

• Whichever number you use, the main point stays the same

• India uses only about 3% of its PSP potential (7.43 GW out of 224–280 GW) [1][4][13]. The limit is how fast projects get built, not how many sites exist.

13. What Each Actor Should Do Next

• Ministry of Power and CEA should publish a progress tracker for each project
• Today's figures come as one total in Parliament replies [5][11].

• A public tracker for each project, showing target date, actual progress and reason for delay, would catch stalls like Koyna Left Bank [12] early.

• Ministry of Power should send targeted VGF to stuck projects

• Follow the COPU recommendation for a structured VGF framework [13], but use it only for approved projects that have not started [11]. That avoids paying for projects that would be built anyway.

• The Centre and states should share benefits with host states in a new way

• Free power has been waived [7]. A replacement, such as a share of storage revenue for the host state, would give states a reason to offer sites.

• For land, the 70–75% consent threshold suggested by COPU [13] offers a faster route than waiting for every landowner.

• MoEF&CC should require seepage studies for mine-void and porous sites

• Keep the faster one-season baseline for closed-loop projects [5]. But add a groundwater and seepage study where the ground is karst or mined, following the World Bank's warning [16].

• This matches the European idea of proportionate review: lighter checks for low-risk sites, deeper checks for risky ones [15].

• CERC should clarify the ISTS waiver in one clear rule

• Official sources describe two different waiver regimes [5][10]. Investors cannot price a 40-year project when the transmission charge rule is unclear.

14. Anchors for Answers

• Data: 11 PSPs (15,870 MW) under construction and 6 PSPs (8,140 MW) approved but not started, July 2026 [11]
• Data: India added under 1 GW of PSP a year (4,745.6 MW in Mar 2023 → 7.43 GW in Aug 2026), but needs about 3.5 GW a year to reach 26.69 GW by 2031–32 [1][6]
• Data: About 5.5 GW of storage against 243 GW of renewable capacity [14]
• Report/Committee: Standing Committee on Energy, Performance Evaluation of Solar Power Projects (Dec 2025): high cost is the main reason storage is slow [14]
• Report/Committee: Committee on Public Undertakings report on NHPC (Aug 2026): structured VGF for new hydro; 70–75% land-consent threshold [13]
• Comparison: EU (OECD-reviewed): closed-loop pumped hydro uses less water, but slow impact assessments that are not matched to project risk hold projects back [15]
• Scheme: VGF for BESS but not for PSPs. The government says PSP storage cost is already viable [8]

15. Mains Relevance

• GS-III: Infrastructure (Energy); Conservation and environmental impact assessment; Science and technology.
• GS-I: Distribution of resources (site geography: hills, river valleys, mine voids).
• Question stems: 1. "Long-duration storage is the missing link in India's renewable energy transition." Examine the role of Pumped Storage Projects alongside BESS. (15 marks) 2. Distinguish between on-stream and off-stream closed-loop pumped storage schemes. Why is policy moving towards the latter? (10 marks) 3. Critically evaluate the regulatory and fiscal measures taken since 2023 to accelerate PSP development in India. (15 marks)

16. Related Topics to Study Next

• Battery Energy Storage Systems and VGF: the complementary short-duration storage option. [1][8]
• 500 GW non-fossil target / Panchamrit: the demand driver for storage. [1]
• Green Energy Corridors and ISTS waiver: transmission economics for storage. [5]
• Environmental Impact Assessment and hydro projects in the Himalaya: the ecological trade-offs of on-stream PSPs.
• Repurposing coal mines / just transition: PSPs can be sited in mine voids. [7]
• Grid frequency and ancillary services: the grid-balancing role of PSPs. [1]
• Hybrid / round-the-clock (RTC) renewable tenders: IRESP-type projects. [9]

17. NCERT Concepts to Revise

• Pumped storage hydropower (Geography): The note's core subject: how pumping water uphill stores surplus solar and wind power for peak demand.
• Viability gap funding (Economy): Government says PSPs need no VGF while a parliamentary committee recommends one; the note debates this.
• Energy transition (Economy): PSPs are presented as the long-duration storage needed for India's shift to renewables and the 500 GW target.
• Environmental impact assessment (Economy): Environmental clearance, terms of reference and baseline-data seasons shape how fast PSPs get approved.
• Karst topography (Geography): Reservoirs on cracked limestone ground can leak water, so site geology affects pumped storage efficiency.
• Hydroelectric power (Geography): PSPs are a form of hydro, with similar river, displacement and ecological trade-offs.

18. Common Errors / Trap Areas

• Nodal ministry: PSPs come under the Ministry of Power (with CEA), not MNRE. [7]
• Classification: "open-loop" means one reservoir is on a watercourse. "Closed-loop" means neither is. Do not mix this up with on-stream (both on a river). [1]
• CEA's 26.69 GW figure is the 2031–32 PSP storage target, not the current capacity (7.43 GW). The 73.93 GW figure is total storage. [1]
• VGF: VGF exists for BESS, but there is none for PSPs. [8]
• ISTS waiver: do not assume one fixed waiver. Sources describe two different regimes (25% step-down vs 100% for 25 years). [5][10]
• "First" claims: Tehri is the first variable-speed PSP, not India's first PSP. Pinnapuram's "first" is as an integrated RE-storage project. [3][9]