Pumped storage hydropower has a vital role to play in future green grids, providing the storage and balancing services to keep energy supply stable and reliable. But until now, these services have been undervalued, writes IHA Chief Executive Officer Eddie Rich. 

Pumped storage hydropower accounts for almost 90 per cent of the planet’s installed global energy storage capacity. As more wind and solar power comes on to electricity grids around the world, we need more energy storage technologies like pumped hydro to ensure continued electricity supply when the sun doesn’t shine or the wind doesn’t blow, without falling back on fossil fuels. At IHA we call this the ignored crisis within the energy crisis.  

India has assessed that it needs at least 18.8 GW of pumped storage hydropower capacity to support the planned integration of wind and solar into India’s grid by 2032, and potentially more if other energy storage systems are not financially viable. The Indian Government has also recently revised its figure of pumped storage hydropower potential from 96 GW to 106 GW. 

Having identified the need and the potential, the next step is to create the market to make these projects viable.  

India’s new Draft Guidelines to Promote Development of Pump Storage Projects set out the financial mechanisms and policies to help make this happen by placing a financial value on the reliability and flexibility of this technology (rather than just its electricity generation) and thus remunerating project developers and operators appropriately. Additionally, the Guidelines set out potential tax and land exemptions that may also help to improve the financial viability of pumped hydro projects. 

India’s Proposed Market Reforms for the Guidelines are an excellent example of how to value the economic benefit of pumped hydro and the policies to better grow it.  

There is also a focus on innovation. The guidelines explore the use of exhausted mines as potential pumped storage sites and how India’s green sovereign bonds could be issued for the development of pumped storage projects. 

In addition to the Draft Guidelines, India have also published an Energy Storage Obligation in July 2022 which creates a demand for the technology by indicating the target percentage that distribution companies will need to procure of wind and solar through pumped storage and battery storage from 2023-2030. In 2021, they waived inter-state transmission charges for wind and solar generation for pumped hydro, and provided budgetary support towards cost of Enabling Infrastructure, such as roads and bridges, for hydropower and pumped storage projects.  

The International Hydropower Association (IHA) applauds the development of these Draft Guidelines and congratulates the Indian Ministry of Power for its vision and leadership in the pumped storage space. We encourage countries around the world to look at these innovative proposed guidelines as a model to enable the necessary growth of pumped storage hydropower.  

A forum for speeding growth 

In November 2020, IHA set up the International Forum on Pumped Storage Hydropower. The Forum brought together 13 governments, including India, and over 70 organisations from around the world, to create recommendations for how pumped hydro development can be sped up and its role recognised in the clean energy transition. 

One of the Forum’s deliverables ‘Pump it up: Recommendations for urgent investment in pumped storage hydropower to back the clean energy transition’, identified the need for providers of essential grid, storage and flexibility services to be renumerated for all the services they provide and I discussed it with Hon R K Singh, India’s Minister of Power, in Delhi in October. 

This publication is a vital tool for unlocking the potential role pumped storage hydropower can play in the clean energy transition. I encourage policymakers to regard it as such when plotting their roadmaps to net zero. 

A global pumped storage renaissance  

India is not the only country making swift progress in enabling the development of pumped storage. In New South Wales, Australia, a $44.8 million funding package was announced in September 2022 to unlock the development of five new pumped storage projects with a combined capacity of nearly 1.75 GW. This funding will go towards pre-investment activities, including feasibility studies and developing a business case for projects. 

A month later, Queensland Premier Annastacia Palaszczuk announced an ambitious plan to develop the world’s largest pumped storage project, set to provide 5 GW of installed capacity and 24 hour energy storage to the state grid. 

It is clear from these cases in Australia and with India’s draft guidelines that there are ways to get pumped storage hydropower development over the line. They all follow the same three steps:  

1. Identify your long duration energy storage needs. 
2. Identify your potential sites. 
3. Create the market conditions or financial mechanisms to make the projects viable.  

As well as Asia and the Pacific, there are exciting announcements and developments on pumped storage in China and the US. The whole world needs more energy storage, and the good news is that we are not short of potential. A global atlas developed by Professor Andrew Blakers at Australian National University, has identified more than 600,000 potential locations for pumped storage around the world.  

The only form of acceptable hydropower is sustainable hydropower 

Even in those countries where we are seeing exciting progress, there is a necessary fourth step. We need more pumped storage hydropower to reach vital net zero targets, but this should not be done at the expense of communities, the environment and biodiversity.  

IHA has championed the development of the Hydropower Sustainability Standard, an independent certification system that can help to improve and monitor the sustainability of hydropower projects.  

All pumped storage sites should be developed and operated with a commitment to sustainability, and this standard is a vital tool to make this happen. We hope to work with India and other countries to promote the embedding of the Standard into the regulations.  

Find out more about Pumped Storage Hydropower 

Learn about hydropower in India 

Explore the findings of the International Forum on Pumped Storage Hydropower