Page 44 - Policy Economic Report - November 2025

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Lok Sabha and Rajya Sabha, senior officials from the Ministry of Power, Central Electricity Authority (CEA)
and CPSUs.

Addressing the members, Shri Manohar Lal, Union Minister of Power emphasized that PSPs can play a
critical role by storing surplus green power and meeting electricity demand during non-solar hours. On
the issue of evaporation losses from PSP reservoirs, the Minister suggested deploying floating solar power
projects as a viable solution. He further underscored the pivotal role of State Governments in facilitating
PSP development through timely site allocation, water allocation, and expeditious clearances. He urged
the Members of the Committee to engage with State Governments to consider withdrawal of charges
such as Green Energy cess, water tax, and reservoir lease fees, to accelerate the development of PSPs.

The Members of the Committee were informed that a nationwide PSP potential of approximately 224 GW
has been identified. Of this, ten PSPs with a total capacity of around 7 GW have been commissioned,
another ten PSPs of about 12 GW capacity are under construction and fifty-six PSPs with a capacity of
about 78 GW are at various stages of planning and development.

The Members were apprised of the key policy initiatives undertaken by the Government of India to
accelerate Pumped Storage Project (PSP) development. These include the issuance of Guidelines for PSP
development outlining modalities for site allotment, exemption from free power and Local Area
Development Fund obligations etc., and a full waiver of Inter-State Transmission (ISTS) charges for 25
years for projects awarded on or before 30.06.2028. The Government has also extended budgetary
support for enabling infrastructure, notified Renewable Consumption Obligations for energy storage
systems, and issued Tariff-Based Competitive Bidding (TBCB) guidelines for procurement of storage
capacity/stored energy from PSPs. Further, off-stream closed-loop PSPs have been exempted from the
requirement of CEA concurrence. Additionally, the capital expenditure threshold for CEA concurrence for
hydro and PSP projects has been revised to ?3,000 crore, as against the earlier limit of ?2,500 crore for
competitively bid projects and ?1,000 crore for MoU-route projects.

The Members of the Consultative Committee for Ministry of Power commended the Ministry of Power
for the comprehensive policy push being given to PSPs They noted that the recent steps, such as easing
the technical appraisal requirements for off stream closed loop PSPs, strengthening the viability through
budgetary support for enabling infrastructure and waiver of ISTS charges, have significantly improved
confidence among developers and States.

The Members of the Committee provided valuable suggestions to further accelerate the development of
PSPs across the country. The Committee also discussed the environmental implications of PSPs and
renewable energy sources such as wind and solar. They underscored the advantages of PSPs, highlighting
their relatively lower environmental impact.

Sh. Shripad Yesso Naik, Minister of State for Power also addressed the Committee, and informed that the
successful commissioning during 2025-26 of all eight units of the 1680 MW Pinnapuram PSP alongside the
500 MW Tehri PSP marks a major national achievement reflecting strong coordination between the
Centre, States, CPSUs and the private sector.

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