It was stated that PSPs make use of excess grid power from thermal power stations or other sources to pump water from a lower reservoir to an upper reservoir. This stored water can then be utilized to generate power during peak demand periods when there is a shortage of electricity.

According to NHPC CMD R K Vishnoi, "NHPC is currently working on developing PSPs with a total capacity of 20,625 MW across different states in the country. Additionally, we have signed several Memoranda of Understanding (MoUs) with entities such as the Department of Energy in Maharashtra, GRIDCO in Odisha, DVC, and the Department of Energy in Andhra Pradesh to further this objective."

He explained that the large-scale development of hydro PSPs is of utmost importance as it can play a significant role in balancing the power grid and meeting peak power requirements. Additionally, it can facilitate energy arbitrage, provide ancillary services, and assist in the smooth integration of renewable energy sources.

Vishnoi emphasised that NHPC, in alignment with the changing energy landscape and market trends in the country, has diversified its business portfolio to focus on the development of PSPs as part of its business growth plan.

The Ministry of Power has introduced various policy initiatives to expedite the implementation of PSPs, recognizing their importance in integrating intermittent renewable energy sources with the power transmission grid. These projects enable the supply of dispatchable renewable energy and contribute to fulfilling the peak power demands of the grid.

Previously, Power Secretary Alok Kumar had mentioned that the ministry had issued guidelines for PSPs in April 2023, receiving a positive response from the industry. He stated, "I have been informed that the industry has approached the Central Electricity Authority (CEA) with proposals for nearly 30,000 MW of PSP projects."

The CEA has projected a requirement of 236 gigawatt hours (GWh) for Battery Energy Storage Systems (BESS) and 27 GW for PSPs by the fiscal year 2032 in India.

India has identified a potential capacity of approximately 119 GW for PSPs, consisting of 109 projects. Currently, eight projects with a capacity of 4.7 GW are operational, and four projects with a capacity of 2.8 GW are under construction. The government aims to commission 39 hydro PSPs with a total capacity of 47 GW by fiscal year 2030.

Furthermore, the CEA has granted approval for two projects totaling 2.3 GW, and construction for these projects is expected to commence soon.