Race on: Renewable energy firms vie for top sites to build pumped storage plants

PSH plants work on the concept of water flowing between reservoirs at different altitudes. The plants also work like giant batteries, which help even out the inconsistencies of electricity supply inherent in solar or wind power.

However, locations with the right elements required for setting up PSH plants are scarce. “These projects have specific requirements including the necessity to build upper and lower reservoirs in close proximity," said Jatin Arya, director and ratings head, CareEdge Ratings. “Thus, a site having the requisite altitude benefits, along with availability of contiguous land, is needed for optimal functionality."

According to company disclosures, JSW Energy has already cornered about 6 GW of pumped storage sites so far, while Adani Green has secured about 5 GW, and Greenko is estimated to have captured about 7.6 GW of storage sites.

Sagar Adani, executive director of Adani Green Energy, said at a recent media interaction that the company's focus is to lock up locations for PSH plants, akin to what it did for solar plants. “It’s a resource game. If a location is gone, it is gone for the next 100 years," Adani said.

JSW Energy, Adani Green, Greenko, and Tata Power did not respond to queries at the time of publishing.

The Central Electricity Authority (CEA) estimates that there is a potential of setting up about 103 gigawatts (GW) of on-river pumped storage. Off-river pumped storage potential is also available, with suitable sites under evaluation across the country. On-river PSHs or open-loop PSHs have one or both the reservoirs connected to the natural water body (river). In contrast, off-river PSHs, or closed-loop PSHs, are located away from the river and have minimum impact on nearby ecology.

Andhra Pradesh and Maharashtra have the highest concentration of such sites.

Who's investing in PSH?

Mint had reported earlier that Adani Green is investing ₹25,000-27,500 crore (about $3 billion) to set up PSH plants in Maharashtra, Andhra Pradesh, Tamil Nadu and Telangana. 

A report in The Economic Times quoted Tata Power CEO Praveer Sinha as saying that the company was looking to set up 2.8 GW of of PSH capacity in Maharashtra by FY29 with an investment of ₹15,000 crore. Sinha said Tata Power has its own reservoirs, and wouldn’t have to look outside for them.

Currently, nine pumped storage projects with a total installed capacity of about 4.7 GW are operational in the country. Five more projects with combined capacity of 4.1 GW are under construction. 

Additionally, 39 projects with a total capacity of about 56 GW have been allotted by states to players like Adani Green, Tata Power, Greenko, JSW Energy and other state-owned power companies.

Analysts say these projects have relatively longer gestation periods and considerable capacity may go live only by 2028.

Why PSH is important

Significantly, according to the International Hydropower Association, PSH accounts for more than 94 per cent of installed global energy storage capacity worldwide, well ahead of lithium-ion and other battery types. 

As per India's National Energy Plan, the country will require about 74 GW of energy storage capacity by 2032. Of this, 27 GW is expected to come from PSH plants and 47 GW from battery energy storage systems (BESS).

According to Arya of CareEdge Ratings, achieving a target of 27 GW by 2032 will necessitate an investment of ₹1.6 trillion and debt of ₹1.2 trillion on the storage component alone. 

What exactly is pumped storage hydropower?

PSH is a form of hydroelectric energy that is generated when water flows through a turbine from a reservoir at higher altitude to another reservoir at a lower altitude. Unlike traditional hydroelectric plants that are built on rivers and use the natural flow of water, PSH plants reuse the same water multiple times as it moves back and forth between the two reservoirs.

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And so, like a giant water battery, PSHs can store energy in the form of water that can be used later. But unlike batteries, PSH plants can store energy at a much larger scale.

This helps plug the demand gap when renewable energy supply dips, for instance, after sunset. When there is surplus power, it is used to pump water from the lower reservoir to the higher one. The system is more sustainable than conventional hydropower stations as the water is reused.

Key is in the site

Unlike a coal-fired power plant or a BESS plant, a PSH plant cannot be set up on any piece of land. A site where the elevation difference between the two reservoirs, called head, is sufficiently large, is preferable.

“There are only a few sites that provide the right combination of existing favourable topography, adequate head and the right geological stability to optimize the construction and operating costs," said Hitesh Singh, head of strategy, Afcons Infrastructure, an engineering firm with the required expertise to build PSH plants. "Such sites will be very lucrative for companies looking to invest in pumped storage."

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The key considerations when selecting a site include the geological and topographical profile of the site, Singh explained. For instance, all things being equal, a site in Maharashtra, where basalt rock is more common, would be preferable for a hydropower plant than a site in Uttarakhand, where the geology consists of relatively younger rocks from the Himalayas.

Adani Green’s Sagar Adani compares sites for pumped storage plants to a natural resource.

“For example, like in oil and gas, the value of an oil and gas company is fundamentally based on the reserves of oil they have," he said. "Similarly, the value of any renewable company is only, only, and only, based on the locked-in reserves that they have in their control," he said.

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While Adani Green is working on BESS as well, the executive said that there is limited competitive advantage that the company can gain with batteries.

“If you have 100 acres of land, anyone can put it in battery storage. But a large competitive advantage comes for us with regards to pumped hydro storage. Those are geographical locations which get locked-in. If you have access to a location, only you have access to that location," he said.