5 min readNew DelhiJan 31, 2026 05:54 AM IST
The Central Electricity Authority (CEA) has proposed a major regulatory reset to fast-track the expansion of hydro pumped-storage projects (PSPs).
In its latest roadmap, the CEA has recommended allowing hydro PSPs within eco-sensitive zones (ESZs) and up to a 10-km aerial distance from protected areas where ESZs have not been formally notified. It has also called for a differentiated regulatory framework for renewable energy projects and relaxation of stringent conditions applicable to the Western Ghats.
The recommendations come amid environmental concerns and local protests against PSPs in states such as Tamil Nadu, Karnataka, Rajasthan and Maharashtra’s Western Ghats, where communities and activists have flagged potential risks to forests, fragile ecosystems and endangered wildlife.
Eco-sensitive zones are areas surrounding protected areas, notified by the Ministry of Environment, Forest and Climate Change, to protect environmentally fragile ecosystems. Currently, PSPs and hydropower projects are prohibited within ESZs as well as the default 10-km buffer around protected areas.
If implemented, the recommendations — outlined in CEA’s roadmap for developing 100 gigawatt of hydro pumped storage capacity by 2035-36 released on Tuesday — would mark a significant policy shift. It will allow PSPs to be developed in ESZs where such projects were barred earlier. The roadmap seeks to address India’s growing energy storage challenge arising from the increasing penetration of variable and intermittent renewable energy sources such as solar and wind.
India’s total installed PSP capacity is projected to rise sharply to 87 GW by 2033-34 from the current 7.1 GW. It also estimates the installed PSP capacity is expected to cross 100 GW by 2035-36, as per CEA estimates. The CEA has prioritised PSPs over Battery Energy Storage Systems, citing their ability to provide flexible, fast-responding grid balancing support and store electricity for longer durations. PSPs are large-scale energy storage systems that use the gravitational potential of water to store and generate electricity. They operate by pumping water from a lower reservoir to an upper reservoir during low electricity demand or surplus renewable generation, and releasing it back through turbines to produce power during peak demand. The roadmap also calls for extending viability gap funding (VGF) support to PSPs — on the lines of VGF scheme for BESS — to help offset high capital costs.
Environmental bottlenecks
The CEA roadmap flags environmental and forest-related clearances as a key reason behind the slow pace of PSP development in India.
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“Presently, the environmental clearance and forest clearance processes of PSPs are very cumbersome, since these projects are treated at par with the conventional hydro projects for the purpose of grant of EC and FC,” it read.
The roadmap noted that PSPs built on existing reservoirs, on-the-river sites, or off-the-river locations have a significantly lower environmental impact compared to conventional hydropower projects.
“Further, unlike the conventional hydro projects, development of PSPs do not lead to significant displacement of people and thus, require minimum rehabilitation and resettlement,” it added.
Thus, it proposed that PSPs developed on existing reservoirs and off-the-river sites be treated as a distinct category while processing environmental and forest clearances. It flagged multiple regulatory and procedural bottlenecks that continue to slow the development of pumped storage. One key issue is the difficulty in finding suitable non-forest land for compensatory afforestation, especially near project sites. It also pointed out regulatory issues such as the blanket prohibition of PSPs within ESZs and the default 10-km buffer around protected areas, which, according to the CEA, limits project development in resource-rich regions.
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Delays in forest clearances, particularly the Stage-II approval, were flagged as another major challenge. According to the CEA, these delays are caused by prolonged state-level approvals of rehabilitation and resettlement plans.
It also highlighted issues delaying PSP projects such as the need for fresh environmental clearances even for small increases in generation, pending approvals of mining plans, and long gaps between Stage-I and Stage-II clearance, among others.
Easing green norms
The CEA has also proposed easing several environmental and land-related norms to speed up the development of pumped storage projects. It has suggested allowing the use of degraded forest land — twice the area of forest land diverted — for compensatory afforestation, instead of non-forest land, a provision that is currently available only to central public sector undertakings and captive coal block developers. The authority has also recommended creating a national-level land bank for compensatory afforestation, with mapped degraded land, a GIS-based repository and a monitoring framework.
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