India’s installed power capacity reached 466 GW as of Jan. 31, 2025, with solar (100 GW) and wind (48 GW) contributing 32% of the total. By 2032, solar and wind are projected to grow to 365 GW and 122 GW, accounting for 54% of a 900 GW system (as planned under NEP 2023). To ensure grid stability and optimize the use of these renewable sources, 27 GW/175 GWh of pumped storage plant (PSP) capacity is required by 2031–32.
The EDF report states that with India targeting the development of an additional 27 GW of pumped storage capacity by 2031-32, the role of private and international developers will be crucial in accelerating PSP deployment and strengthening the country’s energy storage infrastructure.
The report recommends measures such as refining storage capacity procurement, payment security mechanisms (PSM), and regulatory processes to facilitate smoother project execution and greater private sector participation.
The report states that in storage capacity procurement, eligibility criteria can be refined to encourage participation from experienced developers while allowing knowledge transfer through joint ventures.
Mandating detailed project reports (DPR) approved by Central Electricity Authority (CEA) before price bids in tariff-based competitive bidding would improve predictability of project costs and financial structuring. A two-step procurement process, where site selection and technical feasibility are assessed before price discovery, would further strengthen project viability.
“PSM can be enhanced to provide greater confidence to investors and developers. Establishing a centralized PSP procurement agency, modelled after Solar Energy Corp of India Ltd (SECI), could help streamline contracts, ensure timely payments, and improve risk mitigation. Introducing state-backed escrow accounts linked to Distribution companies (DISCOM) revenues would prioritize PSP payments and reduce payment uncertainty. To further safeguard financial sustainability, a structured pass-through mechanism for cost escalations due to geological or policy changes could provide flexibility while maintaining long-term tariff stability,” states the report.
Additionally, the report recommends simplification of approval processes through a single-window clearance system, addressing supply chain constraints through temporary waivers on import duties for critical PSP components until domestic production scales up to meet at least 75% of demand, and aligning PSP procurement with global environmental, health, and safety (EHS) standards to enhance investor confidence and ensure compliance with best practices.
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