Ministry of Power (MoP) has issued the Draft Tariff based competitive bidding guidelines for procuring storage capacity/stored energy from Pumped Storage Hydro Electric Projects on 22nd August, 2024. MoP has invited comments on the draft TBCB guidelines within 15 days.

While significant capacity addition of Pumped Storage Projects (PSP) is proposed in the National Electricity Plan (27 GW /175 GWh) by FY 2032, an even bigger PSP capacity of nearly 143 GW across various states is at different stages of the MoEFCC Environmental Clearance (EC) process. Competitive bidding in Battery Energy Storage Systems (BESS) have already demonstrated falling tariffs (where the discovered price has reduced from Rs. 10.8 lakh/MW/year in 2021 to Rs. 3.8 lakh/MW/year in 2024). PSP and BESS have some complimentary strengths in energy/capacity storage and hence the introduction of Tariff Based Competitive Bidding (TBCB) guidelines by the Ministry of Power (MoP) for PSP is more than timely. We hope that the MoP incorporates comments from sector actors and finalises the TBCB guidelines at the earliest, so that the sector can benefit from the efficiency advantages of competitively bid PSPs.

The ISTS waiver for PSP projects shall be applicable in cases where construction work is awarded on or before 30th June, 2025. This is very likely to create a rush for PSP projects in the coming year. Thus it is very important on the part of SERCs to first critically examine the need for long hours of energy storage (>6/8 hours) as per the DISCOM’s RA and IRP studies. Only then does it make sense to specifically procure PSP capacity/energy. Once and if the specific need for PSP has been established, all procurement should only be done through competitive bidding and projects should not be given a go ahead under section 62 of the Act, especially given the well known issues of cost and time over-runs in large hydro projects.