The Power Ministry has asked the State governments not to levy any free power requirement on pumped storage projects (PSPs). This is in contrast to the practice of allocating a percentage of the generated electricity to the home State free of cost, a senior government official said on Wednesday.

The development is part of a host of policy measures aimed at promoting growth of the energy storage systems (ESS) sector as India adds renewable energy capacity.

Energy storage helps the infirm renewable power convert into a Round-The-Clock (RTC) option when combined with storage.

Policy shift

Speaking at a workshop organised by the CII, Power Ministry Additional Secretary Srikant Nagulapalli said the Ministry held discussions with State government representatives at a recent State Power Ministers’ Conference in New Delhi. States were asked to do away with the practice of free power requirement for PSPs.

He emphasised that the government is moving from financial analysis to economic analysis for PSPs.

Besides, tenders related to battery energy storage systems (BESS) would be out over the next year under the viability gap funding (VGF) scheme. The Central Electricity Authority (CEA) is appraising 60 gigawatt (GW) of storage projects which are expected to be commissioned over the next six to eight years, Nagulapalli added.

During the event, CII released a comprehensive analysis for ‘India’s Outlook on Clean Energy Storage: A Roadmap to Net Zero’.

The analysis focused on the current state, challenges, and prospects of energy storage systems in India’s renewable energy landscape, providing insights and recommendations for stakeholders and ways to optimise the mix of pumped hydro and battery storage systems.

Storage technologies

The report, prepared in partnership with 6Wresearch, analysed various other storage technologies such as flow batteries, compressed air energy storage (CAES), flywheels, thermal energy storage (TES) etc. and highlighted their importance in the storage mix, its cost vis-à-vis energy densities.

The report has recommended a tax holiday for projects involving standalone BESS charged with renewable energy, storage coupled with transmission elements, and storage integrated with renewable plants.

Another suggestion is a uniform reduction of GST to 5 per cent across all advanced battery chemistries to facilitate large-scale deployment and reduce overall system costs.

The report also recommended that double taxation on electricity duty (ED) and cross subsidy surcharge (CSS) should not be applied to the input power used for charging ESS, as these systems are merely facilitating energy conversion.

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