At the 23rd edition of the Hydro Power in India conference organised by Renewable Watch and Power Line, Ghanshyam Prasad, Chairperson, Central Electricity Authority (CEA), spoke about the renewed momentum in hydropower and pumped storage project (PSP) development, key sector challenges and opportunities, and policy, regulatory and institutional reforms aimed at accelerating capacity addition. Edited excerpts…
Hydropower remains one of the most stable and reliable renewable energy sources, providing not just energy but also flexibility requirements. Despite its strategic importance, India has been able to harness less than 50 per cent of its hydropower potential so far. This underutilisation needs to be addressed urgently, particularly as the power system transitions towards higher shares of variable renewable energy.
States such as Arunachal Pradesh, Jammu & Kashmir, Himachal Pradesh and Uttarakhand continue to offer significant opportunities, with hydropower projects totalling 30-40 GW currently in the pipeline. These capacities are expected to materialise gradually over the next decade, extending into the early 2030s.
However, capacity addition alone is not the real challenge. The bigger issue lies in changing the sentiment surrounding hydropower development. For decades, hydro projects have been perceived as long-gestation, high-risk investments, often stretching over 15-20 years. This mindset needs to shift across the entire value chain, including developers, lenders, insurers and equipment suppliers.
A holistic approach, supported by coordinated policy interventions, is essential to accelerate execution timelines and restore confidence in the sector.
Through suitable policy reforms, the hydro sector has gotten a push, and the net result is that hydro PSPs are getting commissioned in around four years. Some future projects are even targeting commissioning within 33-36 months.
The growing challenge of non-solar hours
India’s power system today faces a very different challenge compared to the past. Solar generation during daytime hours is no longer the constraint. In fact, the system has been able to manage upwards of 70 GW of solar capacity during peak solar hours in recent periods.
The real challenge lies in meeting demand during non-solar hours, particularly in the evening and early morning, when solar generation drops sharply but demand remains high.
This is where energy storage becomes indispensable. India essentially has two viable storage options at scale: pumped storage hydropower and battery energy storage systems (BESSs). While batteries have attracted significant attention due to recent tariff discoveries, caution is warranted against drawing premature conclusions.
Many of the low tariffs observed so far are linked to short-duration, two-cycle applications, typically operating for two to four hours. As duration requirements increase and cycling patterns change, costs are likely to rise.
In contrast, pumped storage hydropower becomes increasingly competitive as duration requirements extend to around six hours in the evening and three to four hours in the morning. Beyond 2029-30, the system is expected to require long-duration storage on a large scale, a segment where pumped storage has clear advantages in terms of life cycle cost, durability and operational flexibility, providing the desired inertia to the system.
Expanding pumped storage potential
One of the most significant shifts in recent years has been the reassessment of India’s pumped storage potential. In 2022, the estimated potential stood at 94-97 GW. With the introduction of self-identified sites and proactive engagement with private developers, this figure has now jumped to approximately 270 GW. New sites are being reported almost every month, reflecting growing investor interest and improved policy clarity.
Projects in the PSP space are being driven by the private sector, marking a notable change from earlier phases dominated by public sector undertakings. This influx of private capital has been enabled by targeted policy reforms, particularly those related to site identification, project allocation by states, and streamlined approval processes by appraising agencies such as the CEA, Central Water Commission (CWC), Geological Survey of India (CSI) and Central Soil and Materials Research Station (CSMRS).
Improving DPR quality and approval timelines
The preparation and appraisal of detailed project reports (DPRs) have historically been a major bottleneck for hydropower and pumped storage projects. Until a few years ago, even consultants often lacked the expertise to prepare DPRs of the required quality.
To address this, the CEA, in coordination with institutions such as the CWC, GSI and CSMRS, conducted a series of workshops to build capacity and standardise expectations.
A clear checklist was developed to define exactly what needs to be included in a DPR and what appraising agencies should focus on. This has reduced ambiguity, repetitive queries and delays. Digital portals have been introduced to track each stage of appraisal transparently. As a result, approval timelines have come down sharply.
While the Ministry of Power (MoP) had set an internal target of 90 days for project clearance, many DPRs are now being cleared in less than 30 days of the submission of the complete DPR on the portal.
Environmental clearances and project categorisation
Another critical reform relates to environmental and forest clearances. PSPs have now been categorised into distinct buckets. Closed-loop, off-stream projects, which have no direct linkage to rivers, have been segregated and placed in a category requiring significantly fewer clearances. These projects do not require interstate approvals and have received a more facilitative approach from the Ministry of Environment, Forest and Climate Change.
Additional relaxations have been introduced for hydropower projects, although a few issues, such as requirements related to sample collection during investigations, are still under discussion. Resolving these could save four to five months in the project development timeline, particularly during the investigation stage.
Capacity addition targets and future pipeline
India is now entering a phase of accelerated pumped storage deployment. For the current year, the target is to commission around 2.6 GW of pumped storage capacity, with additional projects already nearing completion. The following year is expected to see another 2.9 GW commissioned, including several large projects.
Looking ahead, annual additions are projected to rise sharply in line with the country’s long-term resource adequacy plans, which indicate massive storage requirements both in GW and GWh terms as renewable penetration deepens through 2035 and beyond.
Road map to 100 GW of pumped storage
Recognising the scale of the challenge, the CEA and the MoP have revised earlier targets of 30 GW of PSPs by 2032. A new road map outlines a pathway to achieving 100 GW of PSP capacity over the next 10 years.
The report maps individual projects, assesses transmission readiness, estimates investment requirements, identifies manufacturing needs and consolidates policy interventions required to sustain momentum. The momentum is now firmly in place, but maintaining it will require coordinated action across the ecosystem.
Manufacturing readiness and supply chain risks
One of the key risks is supply chain constraints, particularly in equipment manufacturing. Past experience in the thermal sector, where limited domestic suppliers led to bottlenecks, serves as a cautionary tale. As pumped storage capacity additions scale up significantly, domestic manufacturers must be prepared to meet demand.
Equipment suppliers should proactively expand capacity and align with the projected project pipeline. Ensuring that turbines, generators and associated systems are manufactured domestically will be critical to avoiding import dependence and sustaining the pace of growth.
Challenges and opportunities ahead
The future outlook is positive. Going forward, developers should prioritise relatively straightforward sites as “low-hanging fruits” in the initial phase, especially closed-loop projects in peninsular India. After a prolonged period of stagnation, hydropower and pumped storage are witnessing renewed interest and confidence.
With supportive policies, faster clearances and growing private sector participation, there is a window of opportunity for the sector to play a defining role in India’s clean energy transition.
