In a bid to harness the hydropower potential through public-private partnership, the Maharashtra Cabinet has cleared the Pumped Storage Project (PSP) policy. About 18 PSP sites in the Sahyadri ranges have been already earmarked for study through Central Public Sector Enterprises (CPSE) with the potential of 27,070 MW. Even though public sector organizations would play a greater role in the development of PSPs, these alone would not be adequate to develop the vast remaining hydropower potential. In view of constraints in the mobilization of financial resources considering a huge investment to be supported by the budget plan assistance, the government proposes to encourage a great private sector investment by providing incentives and relief to stimulate and maintain trends in that direction.
The state government through this policy proposes to develop megawatt level energy storage systems in the form of PSPs for safe and reliable operation of the gird, to promote co-located pumped hydro solar hybrid power projects for optimum utilization of land available with irrigation development corporations (IDCs) at the site and power evacuation infrastructure. In addition, the government would promote the PSP cum large lift irrigation scheme for inter-basin transfer of water.
The government has classified two categories for the implementation of the policy. According to Category I, under construction PSP where sizeable investment is already made by the state water resources development, PSP identified by the state government, water resources department/IDC lower and upper reservoir both or either owned by them and PSP identified by the state government, water resources department and IDC where the lower and upper reservoir is not owned by them. PSPs under Category I are undertaken by the state water resources department and sizable investment is already made. At present there is only one project: Koyna Left Bank Dam Foot Power House (2×40 MW). For the development of such PSP, first preference will be given to the state-run Maharashtra State Power Generation Company (MahaGenco) with the right of first refusal vests with it and stands valid up to 3 months from the date of intimation for project development.
If MahaGenco shows interest in development, the project may be developed by forming a joint venture (JV)/special purpose vehicle (SPV) between the state water resources department and the energy department. If MahaGenco does not take a decision in three months then it will be allotted to CPSE. If CPSE fails to make a decision for project development within three months from the date of intimation, then it will be carried through a transparent bidding process. The normative life of the project will be 40 years starting from the commercial operation date.
The hydropower development agreement (HPDA) will be on a build, operate, and transfer (BOT) basis.
Under Category II, PSP is identified by the developer (private/CPSE) where lower and upper reservoirs may or may not be owned by the state government, water resources department, IDC, and no expenditure is incurred by them. Under Category III, PSP cum lift irrigation scheme to transfer water from west-flowing rivers to deficit basins.
Under Category II, PSP sites are identified solely by the Government of India/CPSE/private developers and the allotment will be done directly through a memorandum of understanding route as per the union power ministry guidelines issued on April 10, 2023.
The right of first refusal for the purchase of energy generated will vest within state distribution licensees. The developer has to arrange for the pumping of energy and no capital investment will be made or revenue expenditure be incurred on any component of the project by the state government/water resources department/IDC.
Under Category III, PSPs will be allotted through a competitive bidding process. The PPP model shall be BOT with Viability Gap Funding (BOT-VGF). According to the state government, the objective of this model is limited to bringing the cost of inter-basin water transfer within the commercially viable limit. The advantage of going for the PSP cum lift irrigation scheme for inter-basin water transfer is that the lift irrigation scheme operates only in monsoon and thereafter remains idle while the PSP cum lift irrigation scheme with the same setup is used, it works as both PSP and lift irrigation scheme without idling. HPDA will be on a BOT basis and its term will be 45 years. The developer will develop, maintain and operate the PSP cum lift irrigation scheme during the agreement term at its own cost and after its expiry will carry out renovation and modernization. At the end of the term of the extended BOT period, the developer will hand over the project to the concerned irrigation development corporation.
Annual lease charges will be Rs 2.66 lakh per MW if both upper and lower reservoir facilities are made available to the developers by water resources department/irrigation development corporation. On the other hand, if either upper or lower reservoir facility is made available, the annual lease charges will be Rs 1.33 lakh per mw. These annual lease charges are for 2022-23 and the same will be increased by 5% compounding till they are further reviewed.
Sale of Energy
Energy storage capacity of PSP can be integrated with any solar and/or wind projects situated in any part of India including Maharashtra for delivering firm renewable energy (RE). The distribution license(s) in the state are not obligated to purchase the power from the PSP and to supply pumping energy to the PSP. However, distribution licensee (s) will have first right of refusal for all the benefits of the PSPs.
Co-located PSP solar and other RE hybrid projects
The developer at its own discretion may opt to develop hydro solar and other RE hybrid projects for optimum utilisation of land, water body and evacuation arrangements. Surplus land available if any with the state water resources department/irrigation development corporation will be handed over to the developer on lease with applicable lease rent. If the developer is willing to install floating solar in stations on reservoirs owned by the water resources department/irrigation development corporation, the necessary permission will be granted after ascertaining the viability.
For land leased out by state water resources department/irrigation development corporation installed solar panels, the annual additional lease charges will be Rs 0.10 per k Wh of net energy exported from the solar installation for 2022-23 and the same will be increased in every subsequent financial year by 5% compounding. For floating solar panels, it will be Rs 0.5 per kWh of net energy exported from the floating solar installation for 2022-23 and the same will be increased in every subsequent financial year by 5% compounding.
The developer may use the power produced from co-located solar/RE power plants for captive/pumping purpose or sale to third parties through open access or sale to any distribution licensee as per the provisions of the regulations and orders of the Appropriate Commission.
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