Concessional finance, rationalized environment clearances for pumped storage projects
3 min read . Updated: 10 Apr 2023, 09:09 PM IST
Premium- The guidelines said that in order to ensure the viability of the pumped storage projects, states shall ensure that no upfront premium is charged for project allocation
NEW DELHI : The union ministry of power on Monday came up with the guidelines for pumped storage projects and said that it would support pumped storage projects (PSP) through concessional climate finance and rationalized environment clearances.
The guidelines said that in order to ensure the viability of the pumped storage projects, states shall ensure that no upfront premium is charged for project allocation. It also said that the discarded mines including coal mines in different parts of the country could be used as hydro storage and thereby become natural enablers for development of hydro pumped storage projects (PSP).
The guidelines sent by the ministry to the states and state-run power companies noted that efforts would be made to identify and develop exhausted mines or coal mines as prospective PSP sites in consultation with the the ministries of coal, mines and state governments.
“Hence, in order to initiate and accelerate the pace of establishment, PSPs may be supported through concessional climate finance. Sovereign green bonds issued for
mobilizing resources for green infrastructure as a part of the government’s overall market borrowings may be deployed in the development of PSPs which utilize
renewable energy for charging,“ it said.
The ministry has also pitched for “rationalization of environmental clearance" for pumped storage projects. Noting that off-river pumped storage projects, are located away from the river course and have minimum impact on the riverine ecology, the guidelines said that “they need to be treated differently for grant of
environmental clearance“.
“Liberalisation would be taken up for allowing base line data collection for one (1) season for off-stream closed loop PSPs and two (2) seasons
for off-stream open loop PSPs (excluding monsoon season) for the purpose of carrying out Environment lmpact Assessment (ElA) and preparing Environment
Management Plan (EMP) required for EC, and for allowing collection of baseline data for carrying out EIA/EMP studies before issuance of Terms of Reference (ToR),“ the the ministry said in its guidelines.
As PSPs are energy storage projects and do not produce energy. They are net consumers of energy and so, these projects would be out of the purview of free power liability.
Financial institutions like Power Finance Corporation, REC and IREDA shall treat PSPs at par with other renewable energy projects while extending long term loans of 20-25 years tenure. The debt equity ratio of PSP projects can be up to 80:20, in consultation with the financial institutions, as per the guidelines.
The ministry has also mandated that developers will have to start construction work within a period of two years from the date of allotment of the project, failing which allotment of the project site shall be cancelled by the state. However, relaxation of one year may be granted to those projects where delay in start of construction is attributable to pending environment clearance and forest clearance, provided that the applications are submitted to concerned authorities within timelines agreed at the time of award of the project.
Also, apart from allotment through competitive bidding and tariff based competitive bidding, states may award projects directly to hydro public sector enterprises or state PSUs on a nomination basis, for early development of the sector in the country.
The focus on energy storage comes in the backdrop of India’s ambitious target of 500 GW of installed renewable energy capacity by 2030 and net zero carbon emission by 2070.
In the union budget for FY24, Centre had announced to come up with a detailed framework for pumped storage projects and a viability gap funding scheme for Battery Energy Storage Systems with capacity of 4,000 MWh.