Madhya Pradesh Issues PHS Policy To Add 12 GW Of 4-Hour ESS

Madhya Pradesh requires 29,956 MW of solar and 5,293 MW of wind capacity by 2034-35 to meet its energy demand. Under the CEA’s resource adequacy plan for Madhya Pradesh, it projects a 5.36% compound annual growth rate (CAGR) in energy capacity from 2024-25 to 2034-35 to meet state power needs. Madhya Pradesh’s recent scheme for the Implementation of Pumped Hydro Storage (PHS)is aligned with these needs accordingly.

The CEA’s Resource Adequacy Plan projects approximately 12,000 MW of four-hour energy storage capacity needed in the state to manage the addition of renewables. Madhya Pradesh Power Management Company Limited (MPPMCL) is responsible for procuring power on behalf of all state DISCOMs and will need to secure storage capacity in addition to other energy sources. To address this requirement, the Government of Madhya Pradesh (GoMP) has introduced this scheme to develop a comprehensive ecosystem for promoting pumped storage projects in the state.

Thus, the Ministry of Power (MoP) regulations to promote development of energy storage (including pump storage) in its 22nd July 2022 rule prescribed Energy Storage Obligation (ESO) as 4% of total energy consumed through energy storage sources by FY 2029-30. Additionally, its previous order dated 23rd November 2021 and 29th May 2023 waived Inter-State Transmission Charges on transmission of the electricity generated from Hydro PSP project where construction work is awarded before 30.06.2025. Keeping in mind the long gestation periods for these projects.

Policy goals

The Madhya Pradesh project document mentioned, “It would be developed through three modes. Under the policy, Mode I involves the allocation of pumped hydro storage (PHS) sites on a nomination basis to central public sector undertakings (CPSUs). The state has also outlined additional modes for developing pumped storage projects, including those catering to third-party requirements, power exchange, or captive consumption. Mode III involves project selection through a tariff-based competitive bidding process, while Mode IV covers the allocation of self-identified off-stream PHS projects.

Securing Allotment

MP policy added, “Initial Allotment Letter will be issued to the eligible developer upon submission of a bank guarantee of ₹1 lakh/MW in favor of the nodal agency, valid for one and a half years, with a claim period of six months. This Initial Allotment Letter will grant exclusivity rights to the PHS project developer for one and a half years. During this period, the developer must conduct bids to procure power from the storage facility on behalf of the state. Additionally, the policy includes provisions allowing solar developers to charge a bid process management fee of ₹1 lakh/MW from the successful bidder upon bid completion.”