The Uttar Pradesh Electricity Regulatory Commission (UPERC) has approved the tariff of ₹7.71 million (~$85,634)/MW/annum for procuring power from 1,500 MW of pumped hydro storage projects by Uttar Pradesh Power Corporation (UPPCL).

The Commission has also approved the pumped hydro storage power purchase agreement executed between UPPCL and JSW Neo Energy PSP Six on April 30, 2025.

Background

In February 2024, UPPCL issued a tender to procure power from 2,000 MW of pumped-hydro storage projects under a 40-year contract.

The tariff structure was based on capacity charges payable for the assured availability of storage services. It was linked to defined performance parameters, including an eight-hour discharge duration, a maximum of six hours of continuous discharge, and a declared cycle loss.

Five bidders submitted bids in response to the tender. The reverse auction was conducted in November 2024, following which final offers were evaluated in accordance with the bidding documents.

Following the electronic reverse auction, JSW Energy PSP Six emerged as the successful bidder for an aggregate capacity of 1,500 MW. A letter of award was issued in February 2025, and the pumped hydro storage power purchase agreement was executed on April 30, 2025.

The project will be developed in Sonbhadra district, Uttar Pradesh.

UPPCL approached UPERC seeking adoption of the tariff discovered through competitive bidding, approval of the bidding process, and approval of the executed agreement. UPPCL submitted that the procurement had been conducted strictly in accordance with the bidding documents previously approved by the Commission and that the tariff reflected transparent, market-based price discovery. It further submitted that pumped hydro storage would be a critical resource for meeting future demand and system balancing requirements.

JSW Energy PSP Six supported the petition, submitting that the project would provide long-duration storage services and that the discovered tariff was commercially viable in light of the risk allocation and performance obligations set out in the agreement.

Commission Analysis

The Commission observed that the procurement was undertaken through an open and transparent process and that no material deviations occurred that would undermine the sanctity of competitive bidding.

UPERC adopted a tariff of ₹7.71 million (~$85,634)/MW/annum, exclusive of GST, corresponding to a declared cycle loss of 23%. The Commission also noted that the total storage cost determined through the bidding process was ₹9.49 million (105,278)/MW/year, from which the adopted annual fixed charge was derived in accordance with the bidding framework.

While examining the pumped hydro storage power purchase agreement, the Commission identified certain drafting inconsistencies and ambiguities, particularly regarding the treatment of energy consumption during pumping mode, the handling of deviations from declared cycle loss, and the methodology for calculating adjusted monthly fixed charges. UPERC directed that the agreement be modified to clearly specify the applicable mechanism in cases where actual cycle loss exceeds the declared level.

The Commission clarified that excess input energy consumption beyond the declared cycle loss must be settled using the average power purchase cost approved by UPERC for the relevant year, and that such cost must be grossed up with applicable intra-state transmission charges and losses, as provided in the agreement.

After considering all submissions and records, UPERC held that the bidding process complied with the statutory framework and that the tariff discovered through competitive bidding was eligible for adoption under Section 63 of the Electricity Act.

The Commission adopted the tariff for the 1,500 MW pumped hydro storage project and approved the pumped hydro storage power purchase agreement executed between UPPCL and JSW Energy PSP Six. UPERC directed the parties to execute a supplementary agreement incorporating the clarifications specified in its order and to place the revised agreement on record.

The government issued tariff-based competitive bidding guidelines to procure stored energy from existing, under-construction, or new pumped storage projects. The minimum bid capacity for ISTS projects is 50 MW, and for intrastate transmission projects, it is 10 MW.

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