Coal India (CIL) is likely to form a partnership with NHPC to explore the possibility of converting abandoned or closed mines into pumped storage projects (PSP) with the aim of fostering energy transition.

The Coal Ministry has directed CIL to partner with NHPC and other related agencies under its plan to set up PSPs at de-coaled areas where all the coal has been mined. Presently, CIL is in the process of finalising a consultant for the project. In addition, some of the closed mines could be auctioned out for the setting up of PSPs, from which the developer-cum-operator (DCO) would be able to sell power.

PSPs and battery storage projects are often used alongside solar or wind power projects, ensuring a stable power supply. PSPs are hydro-projects where two reservoirs at different heights generate power as water moves through turbines. In April this year, the Ministry of Power issued guidelines on concessional climate finance and uniform environment clearances for PSPs to add around five GW.

The Centre stated that the financial institutions such as Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Indian Renewable Energy Development Agency (IREDA) would treat PSPs at par with other renewable energy projects for extending long-term loans of 20-25 years to ensure financing for these capital-intensive projects. The debt-equity ratio of the projects can be up to 80:20 in consultation with the financial institutions.