Only 7 GW of 280 GW pumped storage installed, Ministry of Power finds

The Committee on Public Undertakings examined the operations of National Hydroelectric Power Corporation Limited (NHPC) to identify issues affecting the commercial viability and development of hydropower and pumped storage projects in India.

This concerns the Ministry of Power, state governments, and the public sector undertaking NHPC, affecting citizens through potential impacts on electricity costs, grid stability, and project delays.

• The Committee flagged that high capital costs, lack of power grids at construction sites, and free power demands by state governments erode project viability.
• The Committee noted that state governments impose water cess on non-consumptive water use, which is outside their jurisdiction, and that such provisions were added after agreements were signed.
• The Committee recommended a structured viability gap funding framework, ensuring power grid availability before peak construction, and a standard model implementation agreement with dispute resolution and water cess protections.
• The Committee recommended adopting a 70%-75% consent threshold under the Forest Rights Act for large hydropower projects to prevent indefinite stalls caused by minority dissent, and initiating clearance at the pre-feasibility stage.
• The Committee recommended creating a digital land bank of degraded forest land for compensatory afforestation and allocating sites within six months of application.
• The Committee recommended forming an inter-ministerial group to develop a uniform framework for compensation of unclassified state forest land to prevent dual compensation claims by tribal communities and state governments.
• The Committee recommended supporting pumped storage development through expedited site allotments, prioritised clearance, and guaranteed electricity purchase mechanisms.
• The Committee recommended a dedicated policy framework to grow the contractor ecosystem, including pre-qualification incentives, mentorship, and skill development, due to the limited number of specialized contractors.

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