Material Insights · Understanding the Material World

AC transmission and Pumped hydro storage

Pumped storage plants are the grid's oldest form of large-scale storage: they pump water uphill with surplus grid power and return it at peaks, and India is building a pipeline of them, about 7.4 GW running and 15.9 GW under construction in 2026, to balance solar.

AC transmission (energy) and Pumped hydro storage (energy): 4 relationships.

How they are linked

1. Grid power pumps water uphill

Physical flow · Weak · AC transmission to pumped hydro storage

When power is cheap, often at midday or at night, pumped storage plants draw from the transmission grid to lift water to an upper reservoir.

  • 0.8% of AC transmission energy used for pumping (site model)

Only a small share of grid energy is used for pumping, but the plants are large single loads that grid operators can schedule, which helps absorb surplus solar and wind.

Sources: Material Insights (Energy Institute, IEA data)

2. Stored water returns power to the grid

Physical flow · Strong · Pumped hydro storage to AC transmission

When water falls back through the turbines, the plant generates into the transmission grid; all of its output goes there.

  • 100% of pumped storage output delivered to AC transmission (site model)
  • 189 GW world pumped storage capacity, 2024

Pumped storage plants are large and connect at transmission level. World capacity rose 5% in 2024, with 8.4 GW added.

Sources: International Hydropower Association; Material Insights (Energy Institute, IEA data)

3. Balancing a solar-heavy grid

Transition · Rising · Pumped storage balances renewables on the grid

Solar output peaks at midday while demand peaks in the evening; pumped storage moves energy between the two over several hours, and also provides reserves.

  • 7,426 MW pumped storage in operation in India, 10 projects (2026)
  • 15,870 MW under construction in India, 11 projects (2026)
  • 100 GW CEA roadmap target by 2035-36

India has a further 8.1 GW with concurred project reports and about 93 GW under survey and investigation, and the CEA expects about 87 GW installed by 2033-34. Projects take many years, so the pipeline matters more than the target.

Sources: Central Electricity Authority; Power Line

4. Transmission charge waiver

Policy · High in India · Grid charges waived for storage

India waives inter-state transmission charges for pumped storage, as for batteries, because the plants both draw from and supply the grid, and the waiver lowers the cost of using the grid to store energy.

  • 30 June 2028 deadline for awarding construction to qualify for the full ISTS waiver

The June 2025 order gives a full waiver to pumped storage projects whose construction works are awarded by 30 June 2028, a looser test than the commissioning deadline that applies to co-located batteries, which suits the long build times of pumped storage.

Sources: Mercom India

For investors

Key learnings

  1. Pumped storage revenue comes from buying grid power cheap and selling it at peaks, so widening daily price spreads from solar raise its value.
  2. India's pipeline is large, 15.9 GW under construction and about 93 GW under study, but civil works and approvals make delivery slow and uncertain.
  3. Pumped storage competes with fast-falling battery costs for the same evening-peak role, so long-duration needs are its strongest case.

What to track

  • India pumped storage commissioned and under construction (MW): Shows whether the pipeline converts to capacity (Monthly · CEA status reports)
  • Peak versus off-peak prices on Indian power exchanges: Wider spreads raise storage earnings (Daily · IEX)

For policymakers

Key learnings

  1. India needs storage at transmission scale to balance solar, and pumped storage can store energy for many hours.
  2. The full ISTS waiver for pumped storage depends on construction being awarded by 30 June 2028, so awards before mid-2028 decide which projects get it.
  3. Potential is estimated at about 267 GW, far above the 100 GW roadmap, so the task is moving projects from survey to construction.

What to track

  • CEA concurrence of pumped storage project reports: New concurrences show the pipeline moving forward (Monthly · CEA)
  • Grid evening peak shortages: Shortages show storage additions lagging solar (Daily · Grid India)

India

India had about 7.4 GW of pumped storage running and 15.9 GW under construction in mid-2026, and the CEA roadmap aims for 100 GW by 2035-36.

Sources

  1. Status of pumped storage development in India, Central Electricity Authority (2026)
  2. CEA issues roadmap to 100 GW of pumped storage projects by 2035-36, Power Line (2026)
  3. Flagship 2025 World Hydropower Outlook out now, International Hydropower Association (2025)
  4. Energy flows, Material Insights, Material Insights (Energy Institute, IEA data)
  5. Power Ministry announces 100% ISTS charges waiver for PSPs, co-located BESS, Mercom India (2025)