The Indian government has released new “Tariff Based Competitive Bidding Guidelines for Procurement of Storage Capacity/Stored Energy from Pumped Storage Plants (PSPs),” marking a step towards enhancing grid stability and integrating renewable energy sources. The notification was issued on February 6, 2025.
These guidelines, issued under Section 63 of the Electricity Act, 2003, aim to promote the development of PSPs through a transparent and competitive bidding process.
Key Highlights
Addressing Renewable Energy Variability
The guidelines acknowledge the challenges posed by the variability of renewable energy sources and emphasize the crucial role of energy storage systems (ESS) in ensuring grid stability.
Pumped storage plants are recognized as a vital component of India’s ESS strategy, complementing battery energy storage systems (BESS).
National Energy Plan Targets
The National Electricity Plan 2023 foresees a need for approximately 74 GW/411 GWh of ESS by 2031-32, including 27 GW/175 GWh from PSPs.
Distinct Guidelines for PSPs
Recognizing the unique requirements of PSPs, separate guidelines have been formulated, addressing aspects such as land acquisition, permits, project timelines, and performance parameters.
Applicability
These guidelines apply to developers and procurers (end procurers or intermediary procurers) of storage capacity or stored energy from existing, under-construction, or new PSP projects.
Bidding Process
A single-stage, two-part (technical and financial) bidding process, preferably through electronic mode, will be adopted.
The guidelines outline technical and financial eligibility criteria for bidders.
Two different procurement modes are defined:
- the procurer identifies the project site, and
- the developer identifies the project site.
Contractual Guarantees
Provisions for earnest money deposit (EMD) and performance guarantee (PG) are included.
Tariff and Contract
The guidelines detail the process for tariff adoption by the appropriate commission and the terms of the power purchase agreement (PPA).
Two different tariff models are permitted, a storage charge model, and a composite tariff model.
Technical Requirements
The document provides guidance on defining the technical requirements for PSP projects.
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