MOP Releases PSP Bidding and Procurement Guidelines, Seeks Public Feedback

The Ministry of Power (MOP) has invited public comments on draft guidelines for the procurement of storage capacity and stored energy from Pumped Storage Plants (PSPs) through competitive bidding. The guidelines aim at promoting the development of Pumped Storage Plants (PSPs) and providing a transparent, fair, standardised procurement framework based on open competitive bidding with appropriate risk-sharing between various stakeholders.

The MOP has invited comments on these draft guidelines from stakeholders within 15 days of the date of issuance to nre.section-mop@gov.in.

These guidelines are issued under Section 63 of the Electricity Act, 2003, for procurement of stored energy/storage capacity from Pumped Storage Plants (PSPs) through competitive bidding. The provisions of these guidelines will be applicable for the Developers, Procurers (End Procurers or Intermediary Procurers), and procurement of capacity or energy by the Procurers from existing, under-construction, or new PSP projects.

It may be noted that the National Electricity Plan 2023 identifies a significant need for Energy Storage Solutions (ESS) in India. The plan outlines a target of 74 GW/411 GWh of ESS by 2031-32, with 27 GW/175 GWh coming from PSPs and the remaining 47 GW/236 GWh from Battery Energy Storage Systems (BESS).

This move can also be said to be a part of the National Framework for Promotion of Energy Storage Systems (ESS) 2023, which is crucial for supporting India’s ambitious target of achieving 500 GW of non-fossil-based electricity by 2030.

The Ministry said that the guidelines for the procurement and utilisation of Battery Energy Storage Systems (BESS)  already exist, but there were no guidelines for PSPs. Thus, considering that PSPs have distinct requirements in aspects such as land acquisition, permits and clearances, project timelines, and performance parameters, there was a need for the  separate guidelines for PSPs to address the specific nuances of PSP technologies.

The new guidelines address the unique challenges and requirements of PSPs, which are essential for balancing the intermittency of renewable energy sources such as solar and wind. These plants play a pivotal role in enhancing grid stability by storing excess energy during periods of low demand and releasing it when needed.

The draft guidelines stipulate that projects should generally commence within specific timeframes, viz., 48 months for off-river PSPs and 66 months for on-river PSPs, from the effective date of the Power Purchase Agreement (PPA). Early commencement notices are required 15 days in advance, and the minimum capacity for part commissioning is set at either 50 percent of the project capacity or 50 MW, whichever is lower.

The guidelines also introduce provisions for managing part-commissioned projects. The payments for such projects will be made on a pro-rata basis, according to the commissioned capacity. Procurers have the option to either accept the part-commissioned capacity or sell it in the open market if they choose not to procure it until full commissioning. This flexibility aims to facilitate smoother project rollouts and better alignment with grid requirements.:

The draft guidelines also stipulate that if a foreign firm is selected as the successful bidder, it must comply with all laws and provisions related to Foreign Direct Investment in India.

Further, compensation mechanisms for off-take constraints due to transmission limitations or grid security issues are also outlined. For projects under the Tolling Tariff Model, any period of reduced off-take will be considered as deemed available for payment, provided the annual availability meets the normative levels specified in the Request for Selection (RfS).

However, in the case of the Composite Tariff Model, if the annual energy supplied falls short of the contracted amount, payment adjustments will be made, with procurers paying up to 60 percent of the composite tariff. Developers are also required to offer any unused capacity or energy as per the LPS Rules, with profits from the sale of un-requisitioned energy shared accordingly.

The draft guidelines have also provided detailed technical specifications for PSPs, including plant types (underground or surface), capacity, storage duration, and various performance metrics. For example, pump-turbine efficiency must exceed 90.5 percent and cycle efficiency should be above 80 percent.

The guidelines also mandate adherence to relevant IS and international codes, minimal environmental impact, and the use of both variable and fixed-speed machines where appropriate. These specifications are intended to ensure that PSPs are not only effective but also environmentally responsible.

With the option for feedback from stakeholders, the government aims at the collaborative approach to  address the diverse requirements of the energy storage sector while supporting India's broader goals for sustainable energy development. 

For complete details regarding the draft guidelines, visit the given link below:
https://powermin.gov.in/sites/default/files/webform/notices/Draft_TBCB_PSP_Guidelines.pdf