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India Simplifies Approval Process for Off-Stream Pumped Storage Projects to Boost Energy Storage Capacity

In a significant move to boost energy storage infrastructure, the Ministry of Power has exempted off-stream closed-loop pumped storage projects (PSPs) from requiring approval from the Central Electricity Authority (CEA), regardless of their capital expenditure. This exemption aims to accelerate the development of PSPs, which are key to addressing the intermittency of renewable energy sources like solar and wind. However, developers must still seek technical guidance from the CEA.

The exemption applies only to off-stream closed-loop PSPs. For traditional hydroelectric projects with capital costs exceeding Rs30 billion, CEA concurrence remains mandatory.

India currently has around 6.4 GW of installed pumped storage capacity and a potential exceeding 200 GW. As of February 2025, more than 3 GW of off-river PSP capacity was under construction.

To further promote PSPs, the government has also waived free power obligations and Interstate Transmission System (ISTS) charges for projects that begin construction before June 30, 2028. Additionally, the CEA’s timeline for clearing Detailed Project Reports (DPRs) has been reduced from 90 to 50 days.

In April 2025, the CEA approved six major PSPs totaling 7.5 GW. The government has also introduced tariff-based competitive bidding guidelines to procure stored energy from these projects.