The race is on: Renewable energy companies compete for the best locations to build pumped-storage power plants

The outcome of this race — in which the right location has proven to be a critical but scarce resource — could shape the hierarchy of energy companies in a future in which India can break free from its dependence on coal.

Pumped-storage hydropower plants, energy storage processes that operate on hydropower principles, are gaining importance as renewable energy’s share of India’s energy consumption grows.

These power plants act as giant batteries that help bridge the gap in energy availability and supply that is inherent to green electricity generated using sunlight or wind.

However, it is difficult to find suitable locations for building this type of pumped-storage power plants.

“It’s a resource game,” he said. “If a location goes away, it’s gone for the next 100 years.”

The Central Electricity Authority (CEA) estimates that there is potential for about 103 gigawatts (GW) of pumped-storage on rivers. Off-river pumped-storage potential is also available, and suitable sites are currently being assessed across the country.

The highest density of such places is found in Andhra Pradesh and Maharashtra.

He is gaining

JSW Energy has already acquired around 6 GW of pumped-storage storage space, Adani Green has secured around 5 GW, and Greenko is estimated to have acquired around 7.6 GW of storage space.

Tata Power is building 2.8 GW of peak storage projects in Maharashtra. The company’s CEO and Managing Director, Praveer Sinha, told the Economic Times in a recent interview that the company has its own storage facilities and will not need to source them from outside sources.

JSW Energy, Adani Green, Greenko and Tata Power did not respond to questions at the time of publication.

There are currently nine pumped storage projects in operation in the country with a total installed capacity of around 4.7 GW. Five more projects with a total capacity of 4.1 GW are under construction.

In addition, states have awarded 39 projects with a total capacity of about 56 GW to entities such as Adani Green, Tata Power, Greenko, JSW Energy and other state-owned power companies.

Analysts say these projects have a relatively longer development period and that a significant portion of production capacity may not be launched until 2028.

Read also: The quest to store renewable energy in huge salt caves

“There is strong competition for pumped storage sites as these projects have specific requirements, including the need to build upstream and downstream reservoirs in close proximity. Therefore, a site with the required elevation benefits, together with the availability of continuous land, is needed for optimal functionality. Achieving the target of 27 GW by 2032 will require investment ₹1.6 lakh crore and debt of ₹“The storage component alone contributed Rs 1.2 lakh crore,” said Jatin Arya, director and head of ratings, CareEdge Ratings.

As per the National Energy Plan, India will need about 74 gigawatts of energy storage capacity by 2032. Of this amount, 27 GW is expected to come from pumped-storage hydropower and 47 GW from battery energy storage systems (BESS).

The key is in place

Pumped-storage power plants use two connected reservoirs at different heights to store energy. When water flows from the higher reservoir to the lower one, it produces electricity like a conventional hydroelectric power plant.

This helps fill the demand gap when renewable energy supply falls, for example after sunset. When there is a surplus of energy, it is used to pump water from a lower reservoir to a higher one. The system is more sustainable than conventional hydropower plants because the water is reused.

However, unlike coal-fired power plants or BESS, a pumped-storage power plant cannot be built on just any terrain.

“Site selection is key for pumped storage projects. There are only a few locations that provide the right combination of existing favourable topography, adequate pressure and proper geological stability to optimise construction and operating costs. Such locations will be very lucrative for companies looking to invest in pumped storage,” said Hitesh Singh, head of strategy at Afcons Infrastructure.

Afcons is one of the engineering companies specializing in the construction of pumped-storage power plants.

Key considerations in site selection include the geological and topographic profile of the site, Singh explained. For example, all things being equal, a site in Maharashtra, where basalt is more common, would be better for a hydropower plant than a site in Uttarakhand, where the geology consists of relatively younger Himalayan rocks.

Sagar Adani of Adani Green compares pumped-storage plant locations to natural resources.

“Ultimately, renewables are like any other resource game,” he said.

“For example, just like oil and gas, the value of an oil and gas company is fundamentally based on the oil reserves that it owns. Similarly, the value of any renewable energy company is based solely, exclusively, and exclusively on the locked-in reserves that it controls,” he said.

While Adani Green is also working on BESS, the young executive said the company could gain limited competitive advantage from batteries.

“If you have 100 acres of land, anyone can put it in battery storage. But in pumped hydro storage, we have a big competitive advantage. These are geographic locations that are locked down. If you have access to a location, only you have access to it,” he said.