India Pumped Hydro Storage Strategy for the CEO - Market Size, Project Costs, Technology, Policies - India Renewable Energy Consulting – Solar, Biomass, Wind, Cleantech
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India Pumped Hydro Storage Strategy for the CEO – Market Size, Project Costs, Technology, Policies

by | Jul 31, 2025 | CO3, Corporate Leaders, Decarbonization, Dil Impact Topics, High Impact Topics, Hydro Power, Net Zero by Narsi, Power, Renewable Energy

Net Zero by Narsi is a series of brief posts by Narasimhan Santhanam (Narsi), on decarbonization and climate solutions.
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Strategic Insights Report: Pumped Hydro Storage

INDEX

  1. Executive Summary
  2. What is Pumped Hydro Storage?
  3. Why PHS now?
  4. Indian Market Opportunity
  5. Revenue Streams and Business Models
  6. Technical & Economic Parameters
  7. Investments in PHS
  8. Risks and Mitigation
  9. Decarbonization Advantage
  10. Comparison with Other Storage Options
  11. Call to Action

EXECUTIVE SUMMARY

WHAT IS PUMPED HYDRO STORAGE?

Pumped hydro storage is a mechanical energy storage system that works like a water based battery.
It has two water reservoirs at different elevations:
During low demand or surplus power, water is pumped from the lower to the upper reservoir using electricity.
During peak demand, water is released back down, spinning turbines to generate electricity, just like a conventional hydro plant.

KEY HIGHLIGHTS:

  • Proven, grid-scale technology used globally for decades, scalable to multi-GWh capacities for larger energy needs
  • Round trip efficiency: 70 – 80%
  • Storage duration: 4 to 10+ hours (flexible)
  • Lifespan: 50 – 80 years, far longer than batteries

WHY PHS NOW?

INDIAN MARKET OPPORTUNITY

REVENUE STREAMS

BUSINESS MODELS

Model Ownership Revenue Basis Risk Level Best Suited For
BOOT Private PPAs + Arbitrage + Grid Services Medium Infra funds, RE majors
PPP (Hybrid Annuity) Govt + Private Annuity + PPA + Market Low–Medium Infra + sovereign funds
Merchant Model Private Spot arbitrage + ancillaries High Energy traders, IPPs
RTC Bundled RE + PHS (hybrid) Fixed PPA (RTC) Medium RE players, ESG portfolios
Utility-Led (PSU) Public Cost-plus regulated Low Sovereign and state PSUs

TECHNICAL PARAMETERS

Parameter Typical Range / Value
Plant Capacity 100 MW – 3,000 MW
Storage Duration 4 – 10+ hours
Energy Capacity 400 MWh – 30 GWh
Round-Trip Efficiency 70% – 80%
Cycle Life 20,000 – 40,000 cycles
Reservoir Type On-river / Off-river / Closed-loop
Water Volume Required 1.0 – 1.5 million m³ per 100 MWh
Availability Factor >95%
Life Span 50 – 80 years

ECONOMIC PARAMETERS

Parameter Value / Range (India) Details / Source
CapEx ₹7 – ₹10 Cr/MW ₹1,400–1,800 Cr/GWh for 6–8 hrs (MNRE, CEA data)
OpEx (Annual) ₹8 – ₹13 lakh/MW Includes labor, admin, inspection; ~1–2% of CapEx annually
O&M Cost (LCOE contribution) ₹0.20 – ₹0.40/kWh Very low compared to BESS
IRR (with PPA) 12% – 16% Projected for long-term bundled PPAs
Project Payback Period 9 – 12 years With 30–40 year PPA at ₹4–6/kWh
Revenue per MW/Year ₹2.5 – ₹3.5 Cr Assumes time-shifting + fixed capacity charge
Cost per Stored MWh (lifetime) ₹5 – ₹7 lakh/MWh Much lower than Li-ion batteries (₹15–18 lakh/MWh)
Carbon Abatement Value ₹1.2 – ₹2.5/kWh (indirect savings) Helps reduce curtailment & thermal peaker dependency

INVESTMENTS IN PHS (COMMISSIONING)

INVESTOR TECHNOLOGY INVESTMENT CAPACITY LOCATION
Greenko Group Hybrid RE + 1.2-1.68 GW PHS ₹6,463 Cr 1,200 MW, up to 1,680 MW Telangana
JSW Neo Energy Standalone PHS with long term PPA ₹77.2 Lakh/MW-year 1,500 MW / 12GWh UP
Avaada Group Open loop PHS ₹15,100 Cr 3,600 MW Maharashtra
NHPC (PSU) PHS infrastructure project ₹4,000 Cr 750 MW Gujarat
Welspun New Energy Integrated PHS + Floating solar ₹13,500 Cr 1,200 MW PHS + 1 GW solar Odisha


RISKS

Risks in PHS

MITIGATION

Mitigation Strategies

DECARBONIZATION ADVANTAGE

Decarbonization Advantage

COMPARISON WITH OTHER STORAGE OPTIONS

Parameter Pumped Hydro Storage (PHS) Li-ion Battery (BESS) Green Hydrogen (Storage)
CapEx (₹/MW) ₹7–10 Cr/MW ₹6–8 Cr/MW ₹30–35 Cr/MW (electrolyser + tank)
CapEx (₹/MWh for 6–8 hrs) ₹1,400–1,800 Cr/GWh ₹4,000–4,500 Cr/GWh ₹12,000–15,000 Cr/GWh
Storage Duration 6–10+ hours (technically ∞) 1–4 hours 100+ hours
Round-Trip Efficiency 70%–80% 85%–92% 35%–45%
Cycle Life 20,000–40,000 cycles 3,000–6,000 cycles 5,000–10,000 cycles
O&M Cost (₹/kWh) ₹0.20–₹0.40/kWh ₹0.60–₹1.00/kWh ₹1.50+/kWh
Lifespan 50–80 years 10–15 years 20–25 years
Degradation <1% per decade 20–30% over 10 years Moderate (efficiency losses)
Best Use Case Long-duration RTC, peak shifting Short-duration backup, fast ramp Seasonal storage, long-term grid

MOVING FORWARD

  • Capitalize on Early-Mover Advantage in India’s ₹1.5 lakh Cr+ PHS pipeline — secure premium sites before policy and land access tighten.
  • Leverage Regulatory Momentum with ISTS waivers, VGF support, and 19.5 GW of mandated PHS capacity in the National Electricity Plan.
  • Diversify with Long-Term Stable Cash Flows from RTC + capacity-based PPAs, ensuring annuity-like returns for 40+ years.
  • Invest in ESG-Positive Infrastructure with low CapEx per MWh, high carbon offset (~110 MtCO₂/GW) and minimal social/environmental footprint.
  • Co-invest Alongside Sovereign & Strategic Capital in high-IRR, de-risked platforms led by Greenko, JSW, Avaada and state utilities.
  • Be Part of India’s Energy Transition Backbone — enable grid stability, RE firming, and 24×7 power delivery at the lowest storage cost.

WHY PARTNER WITH EAI?

  • Pioneers in Climate-Tech Advisory: India’s first dedicated cleantech consulting firm, with 15+ years of expertise across solar, wind, bioenergy, hydrogen, and storage.
  • Strong Track Record: Advised 200+ clients including Reliance, World Bank, GE, and Indian government bodies — trusted by both global institutions and Indian industry.
  • Deep Market & Policy Insight: In-depth understanding of MNRE, CEA, and state-level policies ensures faster project clearance and investment de-risking.
  • Access to Curated Opportunities: Unique reach into both large-scale projects and high-potential climate startups via platforms like Climafix.
  • End-to-End Project Support: From feasibility and site selection to financing and PPA structuring — we offer a 360° investment-ready ecosystem.
  • Strong ESG & Impact Credentials: All solutions aligned with SDGs and India’s net-zero roadmap — ideal for sustainable and climate-aligned portfolios.

Wish to have industry or market research support from specialists for climate & environment? Talk to EAI team – Call Muthu at +91-9952910083 or send a note to consult@eai.in


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About Narasimhan Santhanam (Narsi)

Narsi, a Director at EAI, Co-founded one of India's first climate tech consulting firm in 2008.

Since then, he has assisted over 250 Indian and International firms, across many climate tech domain Solar, Bio-energy, Green hydrogen, E-Mobility, Green Chemicals.

Narsi works closely with senior and top management corporates and helps then devise strategy and go-to-market plans to benefit from the fast growing Indian Climate tech market.

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