JSW Neo Energy, a wholly owned subsidiary of JSW Energy, has entered a power procurement agreement with the Uttar Pradesh Power Corporation (UPPCL) to provide 1,500 MW/12,000 MWh of pumped hydro energy storage capacity.

Under this agreement, JSW will provide the storage capacity for 40 years and receive a fixed capacity charge of ₹7.72 million (~$91,623)/MW/Year.

The pumped hydro project will be in Uttar Pradesh’s Sonbhadra district and is designed to allow scheduled energy discharge for up to eight hours per day, with maximum operations of six continuous hours.

The project’s commissioning will take place within the next six years.

Following this agreement, JSW’s total committed energy storage capacity has reached 28.3 GWh, which includes 26.4 GWh from its pumped hydro storage portfolio. The company has stated that it is on track to meet its target of achieving 40 GWh of energy storage capacity by 2030.

In February this year, Adani Green Energy also secured a letter of award from UPPCL for a 1,250 MW pumped storage project under the same tender. Adani’s project, known as the Panaura Pumped Storage Project, will also be developed in the Sonbhadra district and carries a minimum operational commitment of 40 years. This project, like JSW’s, is expected to be completed within six years.

To support such initiatives, the Ministry of Power introduced tariff-based competitive bidding guidelines for procuring stored energy from pumped storage projects, whether existing, under development, or new.

As outlined in the National Electricity Plan 2023, India will need approximately 74 GW/411 GWh of energy storage systems by 2032. This requirement includes 27 GW/175 GWh from pumped storage projects and 47 GW/236 GWh from battery-based energy storage systems.

Additionally, the Ministry revised the budgetary support framework for hydroelectric and pumped storage projects, with a total allocation of ₹124.6 billion (~$1.42 billion).

This financial support will benefit projects amounting to a cumulative hydroelectric capacity of 31 GW, which includes 15 GW of pumped storage capacity, to be developed between FY 2025 and FY 2032.

The budgetary support is capped at ₹10 million (~$114,428)/MW for projects up to 200 MW and ₹2 billion (~$22.88 million) plus ₹7.5 million (~$85,820)/MW for projects exceeding 200 MW, with a potential increase to ₹15 million (~$171,640)/MW for exceptional cases.

The program applies to all hydropower projects above 25 MW capacity, including those undertaken by private developers through transparent bidding processes. It also encompasses all pumped storage projects, whether captive or merchant and covers those with a letter of award issued for their first major package by June 2028.