Two large renewable energy companies, Avaada and ACME, have opposite views over pumped hydro storage. While Avaada sets great store by pumped storage plants (PSP), building one and planning another, ACME questions the need for PSP “when electrochemical battery costs are falling rapidly and are easy to put up”, a view shared by others, too, including the Tamil Nadu bureaucrat Rajesh Lakhoni, when he was the chairman and managing director of Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).

Both Avaada, part of the Welspun group, and ACME ventured into the Indian renewable energy sector very early. 

Brookfield-backed Avaada today has 5 GW of capacity, after selling 1.1 GW of assets to Tata Power Renewable Energy in 2017. Avaada founder and Chairman Vineet Mittal says the idea is to add 5 GW every year between 2026 and 2031. 

Mittal told businessline that Avaada has “very ambitious” plans for PSP — two projects, worth ₹14,000 crore, are on the anvil.

But to Nikhil Dhingra, group CEO of ACME, the PSPs hold no appeal. ACME, whose company ACME Solar Holdings raised ₹1,300 crore through an initial public offering last November, has 2.5 GW of renewable energy capacity under operation, as part of 7 GW of contracted capacity. 

While ACME does not rule out putting up PSPs, it is “not rushing into it” because it believes that batteries are getting better and cheaper.

PSPs are capital-intensive, hard to build and could get priced out of the market by batteries, according to Dhingra. 

He told businessline that ACME would get into PSP only if there is “no merchant risk”, or there is a firm, long-term offtake agreement. On the other hand, Mittal’s approach is to oversize PSP so that there is always a “certain merchant capacity” available, because there is a “big demand for peak power on the exchange”.

The perception difference could be over the assessment of the duration of peak power demand. Dhingra said PSPs would make sense for peak demand of more than four hours — until then the cheaper battery storage may serve better. Mittal says he has customers for 10-hour supply from pumped storage. 

Wait-and-watch mode

The differing views of Avaada and ACME illustrate the PSP’s big picture in India, especially the reason for the huge gap between plans and implementation. 

According to the Central Electricity Authority (CEA), India is looking at 79,325 MW of PSPs. Eight projects with 4,745 MW are supposedly under operation, but 1,440 MW of capacity is not working; three more projects are expected to be commissioned in 2025 — Greenko’s much-delayed 1,200 MW Pinnapuram project in July; the 1,000 MW Tehri II in August; and the 500 MW Kundah project in Tamil Nadu in December. 

Six with 7,970 MW are under construction and four with 4,100 MW capacity have had their project reports “concurred” by the authority but are yet to begin work. As many as 47 projects, with 62,510 MW, are in the ‘survey and investigation’ stage. Clearly, developers have announced plans but are waiting and watching. 

A reason for the hesitation, experts say, is the dynamics of ‘peak demand’ itself. Last year, Ghanshyam Prasad, Chairperson, CEA, said India’s peak demand hours were shifting from evening to solar hours. 

Secondly, with the advent of smart meters and demand-side management, the hope is that the peak will flatten. PSPs are too big a financial commitment on these shifting sands.