Timely implementation of market reforms key to improve financial viability of pumped hydro storage: Icra – EQ Mag
NEW DELHI : The timely implementation of market reforms is important to improve the financial viability of pumped storage hydro project (PSP) in the country, according a report by ratings agency Icra Ltd.
According to the report, the levelised tariff for pumped storage hydro projects in the base case (capital cost of ₹6.5 crore per MW and 16.5% return on equity) is estimated at ₹4.98 per unit while the landed tariff including cost of energy required for pumping is estimated at Rs. 8.92 per unit.
“Timely implementation of market reform proposals as highlighted in the draft guidelines also remains important to improve the financial viability of PSPs,” it said.
ICRA said that the pumped storage hydro projects have a long economic life of 40 years, are based on very mature and indigenous technology and are efficient. They are also cost competitive.
The levelised cost (capital cost of 250 USD/kwh) using BESS is estimated at Rs. 11.1 per unit which is twice the base case cost estimate (conversion) of Rs. 4.98 per unit for pumped storage hydro projects.
‘’Nonetheless, the timely implementation of market reform measures as highlighted in the guidelines remains important to improve the financial viability of PSPs,‘’ stated Girishkumar Kadam, Senior Vice President & Co-Group Head – Corporate Ratings, ICRA.
It added that with increase in installed renewable energy capacity, the share of renewable energy (RE) power in electricity generation is expected to increase from 11.5% in FY2022 to 28% by FY2030. Increasing sources of intermittent power (wind and solar) would necessitate higher storage capacity for maintaining grid stability.
The guidelines comprise various measures such as for the monetization of ancillary services, exemption from free power obligation / local area development fund, state GST reimbursement, and rationalization of environment clearance.
The pumped storage hydro projects (PSPs) offer significant benefits in the form of frequency regulation, storage/ time shifting, ramping capability, black start capability, peak shaving, reactive power and voltage control, and spinning reserves. They are, therefore, best suited for supporting grid operations.
Source: livemint
