By Abhishek Swarnkar, Senior Expert – PSP and Hydro, Masdar
India stands at a pivotal juncture in its energy transition. The nation’s goal of 500 GW of non-fossil capacity by 2030, coupled with a net zero target by 2070, has shifted the challenge from simply building renewable capacity to ensuring reliable, flexible and despatchable power. Solar and wind, while cost-effective and rapidly deployable, are inherently variable, and the grid’s flexibility is insufficient to absorb the growing renewable supply.
The urgency of long-duration storage
States with high renewable penetration face the paradox of annual surpluses alongside evening shortages, underscoring the need for multi-hour shifting capability. Operational data highlights the urgency of large-scale long-duration energy storage. Between March 2025 and August 2025, Rajasthan curtailed nearly 4 GW of solar and wind, with peaks exceeding 50 per cent, while Karnataka reports an annual surplus yet persistent evening deficits. Nationally, solar curtailment reached about 12 per cent in October 2025, with some days nearing 40 per cent. These are not generation shortfalls but reflect flexibility gaps from congestion, limited storage and weak demand-response.
Evening peaks remain 73 per cent coal-dependent despite rising renewables. Midday oversupply and evening undersupply confirm that variable renewables alone cannot guarantee reliability, and growing evening demand widens the gap, making multi-hour storage indispensable.
As per ICRA, India’s renewable share is expected to exceed 35 per cent of the total generation by 2030, supported by roughly 200 GW of new renewable additions. This will push the grid into a regime where variability exceeds the balancing capability of conventional assets. Thermal plants already operate outside optimal ranges, causing efficiency losses, accelerated wear and higher emissions, conditions neither sustainable nor economical.
Technical and strategic role
Pumped storage hydropower (PSH) is uniquely positioned to address this structural mismatch. Modern off-river and closed-loop configurations provide 6-12 hours of despatchable storage, with round-trip efficiencies of 75-85 per cent, decades-long operational life and essential grid services, including inertia, fast ramping, black-start and system-forming capabilities.
PSH also strengthens domestic manufacturing, supporting Atmanirbhar Bharat objectives. Turbines, mechanical equipment and civil works are largely indigenous, insulating India from lithium and rare-earth supply volatility. Long-lived PSH assets reduce replacement risk, create engineering and construction demand and enhance system resilience.
The integration of PSH with renewables demonstrates operational and techno-commercial viability. Greenko’s Pinnapuram, Adani’s Chitravathi and THDC’s Tehri are indicators of both private and public commitment. Globally, mature examples such as Bath County (around 3 GW, the US) and Okutataragi (around 2 GW, Japan) illustrate revenue stacking, ancillary services and long-duration flexibility. Off-river and closed-loop designs also reduce hydrological impact, minimise land-use conflicts and shorten project gestation.
Required storage levels
India’s renewable expansion cannot be reliably integrated without large-scale storage. The Central Electricity Authority (CEA) and the International Energy Agency analyses indicate that at least 200-250 GWh of despatchable storage will be needed by 2030 for 500 GW of non-fossil electricity. The government aims to add up to 13 GW of PSHs annually, over four times the current pace, to reach 50 GW by 2032. PSH offers the scale, reliability and techno-commercial viability to provide multi-hour flexibility and system-strength services that batteries alone cannot deliver cost-effectively over decades.
Techno-commercial case
The CEA’s push has accelerated PSH development, with identified potential exceeding 224 GW. Lifecycle analyses confirm PSH’s cost competitiveness: the levellised cost of storage is estimated at Rs 4.5-Rs 5.5 per kWh, versus six to eight-hour lithium-ion systems exceeding Rs 6.5-Rs 7 per kWh after replacement cycles and degradation. Over 40-50 years, PSH provides economical diurnal, weekly and seasonal flexibility, outperforming batteries in longevity and system value.
Beyond arbitrage, PSH avoids overbuilding renewables and transmission, improving asset utilisation and reducing system costs. It enables renewable energy firming, ramping reserves, frequency response, congestion relief, voltage support and seasonal balancing. Commercial frameworks must convert these benefits into predictable revenue streams for investors.
Sizing and deployment
Translating potential into operational capacity requires clear planning guidance. Curtailment avoidance and system balancing should be viewed as straightforward “Power X Time” calculations. Two rules-of-thumb are instructive:
- Power ratio rule: PSH power capacity should be 10-20 per cent of the installed variable renewable energy.
- Energy depth rule: Target six to eight hours of discharge for daily firming and peak coverage.
For instance, integrating 100 GW of solar and wind would require 10-20 GW of PSH power and 60-160 GWh of energy storage. To absorb 2 GW of curtailed energy over four hours, a PSP (or combination) of 2 GW with around 8 GWh usable storage is needed. Targets can be refined based on regional load, transmission and demand-response capabilities.
Pre-development and site readiness
PSHs are highly site-dependent, with feasibility, gestation and cost depends on hydrology, geology, land, environment, seismicity and transmission connectivity. Site and approval risks are key delay drivers. Several proposed pumped storage projects (PSPs) are encountering delays due to ecological concerns, underscoring the need for rigorous pre-development and prioritisation of low-impact, closed-loop designs.
Recent large proposals in sensitive zones, including the Western Ghats, Nilgiri Hills, Karnataka and Rajasthan, have faced resistance due to forest diversion, slope stability, submergence and wildlife impacts. These challenges stem not from technical constraints but from incomplete baselines, weak pre-development and inadequate ecological diligence.
Mission-driven pre-development is therefore essential. Early screening, transparent detailed project report (DPR)/environmental impact assessment preparation, pre-secured land/water frameworks and proactive stakeholder engagement ensure viable sites progress. Prioritising closed-loop/off-river options and clustering sites as “storage parks” with shared transmission corridors, roads and water frameworks can accelerate deployment. Greenko’s Pinnapuram project illustrates the advantages of integrating solar, wind and PSH through coordinated design and pooled grid access.
Creating bankable models
The commercial viability depends on predictable, diversified revenue streams. Energy-only remuneration structures underpay PSHs because they do not monetise the full spectrum of services delivered. India needs a shift toward service-oriented remuneration. These include availability-based capacity payments, differential peak/off-peak tariffs, structured storage service contracts with the Solar Energy Corporation of India (SECI) or state utilities, ancillary and flexibility markets, hybrid renewable-PSH procurement frameworks, and long-tenor PPAs with indexed tariffs. Emerging SECI and Gujarat Urja Vikas Nigam Limited tenders indicate recognition of PSHs as service providers rather than conventional generators. A national storage tariff framework will formalise valuation, reduce investor risk and catalyse private capital.
Market integration and operational rules
PSHs are inherently two-way assets, consuming electricity during pumping and supplying it when generating, requiring market rules, settlement systems and despatch protocols that fully recognise this two-way functionality. PSHs must be integrated into the operational, economic and regulatory fabric of the grid. Their integration into day-ahead, real-time and ancillary markets, supported by transparent metering and equitable allocation of pumping costs, is essential for efficient operation. Advanced tools such as digital twins and artificial intelligence-based despatch can further optimise charging cycles, minimise losses and align PSH operation with renewable generation patterns.
Trends in renewable energy-rich states highlight growing interest in battery energy storage systems (BESSs) for applications demanding rapid deployment. Yet, BESS cannot meet multi-hour or seasonal balancing needs, underscoring the necessity of a coordinated PSH-BESS strategy: BESS for fast, short-duration variability and PSH for multi-hour, deep-flexibility and seasonal firming, both technologies deployed optimally across the time spectrum. Transparent curtailment data, mandatory PSH obligations and hybrid procurement frameworks will enhance operational flexibility and efficiency. A unified storage roadmap should assign roles, so each technology maximises its technical and economic impact.
Financing architecture and de-risking
PSHs require patient, long-tenor capital. They are capital-intensive but deliver stable, long-term returns suitable for sovereign funds, pension funds, environmental, social and governance (ESG) portfolios, and long-tenor investors. Unlocking capital at scale requires public-private partnerships with viability gap or availability-linked support, blended finance combining concessional debt with commercial equity, credit enhancement mechanisms, partial risk guarantees, green and ESG-linked bonds, an indexed tariff mechanism and infrastructure investment trusts for mature assets. Combined with standardised pre-development, storage parks, modular construction, repeatable design and domestic manufacturing of electro-mechanical equipment further reduces capital costs and enhances bankability.
Policy and institutional alignment
Despite the clear potential, execution remains fragmented. Divergent state approaches and the absence of a unified storage policy have become systemic risks, reinforcing the need for a coordinated national framework. India requires pragmatic, staged policy actions to mainstream PSH. A national pumped storage mission should consolidate planning, standardisation, financing and pre-development support. It can integrate state and central site pipelines, streamline inter-governmental approvals, administer calibrated pre-development grants (Rs 50 million-Rs 150 million per site), standardise DPRs and site-ranking frameworks, fast-track permitting, provide credit enhancement and payment security, and strengthen domestic supply chains and institutional capacity.
Clear planning, anchors and policy measures are essential. PSH capacity should be set at 10-20 per cent of total variable renewable energy with six to eight hours of discharge. Hybrid procurement frameworks combining PSH and BESS must be adopted to optimise system efficiency while maintaining developer flexibility. Storage obligations should be applied at the system level. Pre-development grants, credit enhancements, pooled procurement, and standardised closed-loop designs and storage parks will de-risk early stages and speed financial closure. A national storage tariff must be established to value availability, ancillary services and firming contracts. Regular publication of curtailment hotspots will enable prioritised, technically robust and environmentally responsible deployment.
Conclusion
PSH is no longer optional; it is foundational to India’s energy transition. Converting renewables into reliable, dispatchable, 24×7 power will define India’s clean energy success, and PSPs are central to this capability. The challenge ahead is executional, transforming identified potential into operational capacity through disciplined project preparation, robust commercial frameworks, innovative financing and institutional alignment. Done right, PSH will secure India’s grid stability, strengthen energy sovereignty, reduce curtailment and position India as a global leader in long-duration storage. PSH projects are not just storage assets, they are the structural pillars of a clean, resilient and self-sustaining energy future.
