CERC Proposes High-Price Market Access for Pumped Storage Projects Amid Execution and Land Challenges

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

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

According to figures cited in CERC’s October 28 order, 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.

Despite the regulatory push, industry sources point to execution as a more immediate hurdle. PSPs require infrastructure such as reservoirs, tunnels, and access roads, often located in hilly and forested terrain. Even projects with statutory clearances frequently face local protests over tree-felling and environmental impact, which can potentially delay construction timelines.

These challenges are reflected in Torrent Power’s 3,000 MW Saidongar-1 project in Maharashtra’s Raigad district. Estimated to cost around ₹15,000 crore, the project is designed as India’s largest pumped storage project, utilizing the elevation difference in the Sahyadri terrain with a reported head of about 550 metres, and is targeted for completion by March 2030.

Local media reports have highlighted protests involving residents, environmental activists, and political leaders, including Shiv Sena (UBT) leader Aaditya Thackeray and NCP (SP) MLA Rohit Pawar. The controversy centres on proposed tree-felling and the diversion of forest land, with reports on October 27 indicating that protests had temporarily halted tree-felling work.

Torrent Power stated that 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. The company noted that the clearance includes safeguards for forest and wildlife protection, water management, muck disposal, slope stabilisation, biodiversity, and restoration.

Addressing queries regarding ecological impact and livelihoods, a Torrent spokesperson stated that the issue is whether project impacts are scientifically assessed, avoided where possible, minimised through design, and mitigated during construction. The company plans to address livelihood impacts through compensation, rehabilitation provisions, employment opportunities, skill development, and community programmes.

Regarding ecological restoration, Torrent stated it would plant approximately 60,000 trees across the project’s green belt and muck-disposal sites to compensate for the 48,000 trees to be felled. Additionally, the company has identified and handed over 253 hectares of private land with an existing cover of about 70,000 trees to the Forest Department for compensatory afforestation, with plans to plant another 30,000 trees on that land using approved native species.

Industry observers note that while environmental concerns are prominent, building PSPs involves infrastructure development in natural landscapes. Along with Battery Energy Storage Systems (BESS), PSPs are regarded as necessary for a power system increasingly dependent on variable renewable energy sources like solar and wind.

An expert at the World Resources Institute, speaking anonymously, noted that developers should be able to alter natural landscapes for critical development projects provided they responsibly balance the impact with meaningful conservation efforts elsewhere.

"The CERC proposal to allow pumped storage projects into the High Price Day-Ahead Market is a positive step to improve revenue visibility and attract capital for capital-intensive energy storage assets. However, as seen with large infrastructure projects, regulatory approvals are only the first step. Execution risks, particularly local clearances, land diversion, and environmental compliance, require active stakeholder engagement and robust mitigation strategies to ensure timely completion and investor confidence." — Dr. Shishir Gupta, Founder & CEO, StartupLanes