CERC wants to make PSPs more attractive, but industry points to execution issues

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India has 290 GW of identified PSP potential, but operational and under-construction capacity is just 23.3 GW 

By M Ramesh

Updated - October 28, 2026 at 07:47 PM.

The Central Electricity Regulatory Commission today released a proposal allowing pumped storage projects (PSPs) to sell electricity in the High Price Day-Ahead Market (HP-DAM). If adopted, this will enable PSP plants to earn better prices because the price limit in HP-DAM is ₹20 per kWh, compared with ₹10 in the conventional DAM.

However, industry sources, while welcoming CERC’s move, say the bigger challenge is getting projects built amid growing opposition to tree-felling and land diversion.

India has identified nearly 290 GW of pumped-storage potential, but only 7.43 GW is operational, and another 15.87 GW is under construction, according to figures cited in CERC’s October 28 order.

Market sources said access to the high-price segment could improve storage projects’ revenue prospects, particularly during peak-demand periods, and strengthen the investment case for a technology that requires large upfront capital expenditure and long construction periods.

Execution challenges

However, industry sources pointed to execution as the more immediate hurdle. PSPs require reservoirs, tunnels, access roads, and other infrastructure, often in hilly, forested terrain. Even projects that have obtained statutory clearances can face local protests over tree-felling and environmental impact, potentially delaying construction.

The issue has come into focus with Torrent Power’s 3,000 MW Saidongar-1 project in Maharashtra’s Raigad district. Estimated to cost around ₹15,000 crore, it is designed as India’s largest pumped storage project and is targeted for completion by March 2030. The project uses the elevation difference in the Sahyadri terrain, with a reported head of about 550 metres.

Local media reports describe protests against the project involving residents, environmental activists, and political leaders, including Shiv Sena (UBT) leader Aaditya Thackeray and NCP (SP) MLA Rohit Pawar. The controversy centres on the proposed tree felling and diversion of forest land. Reports on October 27 said protests had halted the tree-felling exercise.

Torrent, however, said the project underwent environmental impact assessment, public consultation, and appraisal by the Union Environment Ministry’s expert committee before receiving environmental clearance in January 2026. It said the clearance stipulates safeguards covering forest and wildlife protection, water management, muck disposal, slope stabilisation, biodiversity and restoration.

Responding to businessline‘s queries over ecological damage and livelihoods, a Torrent spokesperson said the issue was not whether a large infrastructure project had an impact, but whether that impact was scientifically assessed, avoided where possible, minimised through design and mitigated during construction. The company said it was addressing livelihood impacts through compensation and applicable rehabilitation provisions, employment opportunities for project-affected families, skill development, and community programmes.

On the specific question of restoration, the spokesperson said Torrent would plant approximately 60,000 trees across the project’s green belt, muck-disposal sites and other areas, adequately compensating for the 48,000 trees to be felled for the project. It also identified and handed over 253 hectares of private land, with an existing tree cover of about 70,000 trees, to the Forest Department for compensatory afforestation; it plans to plant another 30,000 trees on this land.

Asked whether compensatory afforestation could result in monoculture, the spokesperson said the project would follow the species mix approved by the Forest Department, with emphasis on diverse native and locally suitable species. The company said restoration would encompass soil stabilisation, drainage, watershed management, habitat improvement, and biodiversity protection, rather than merely meeting a numerical plantation target.

Industry observers say that while environmental concerns are not unfounded, building PSPs is impossible without felling trees. PSPs, along with Battery Energy Storage Systems (BESS), are indispensable for a power system that is increasingly dependent on variable renewable energy, such as solar and wind.

An expert at the World Resources Institute, who asked not to be named, told businessline that developers should not be hindered from altering natural landscapes for critical development projects if they responsibly balance the impact with meaningful conservation elsewhere.

Published on October 28, 2026

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