Policy |
Above: US hydropower is facing up to another wave of relicensing projects
enabling environment that will support the Australian energy system’s long-term needs. To achieve this, the recent IHA report looking at powering Australia’s future, recommends that the commonwealth government and the states and territories of Australia must consider the following actions: 1. Recognise that conventional and pumped storage hydropower are multi-benefit, strategic assets and should be valued accordingly by federal and state governments. Policymakers should recognise the long-term value and local community benefits that pumped storage and hydropower assets can provide for decades, beyond election cycles. Policies themselves need to be equally long term and stable and it’s important that policymakers have a thorough understanding of the specific role that hydropower and pumped storage plays in Australia’s energy mix, appreciating how that will increase in importance as thermal generation is replaced by variable renewable energy.
2. Plan for and invest in the hydropower infrastructure needed to best support energy storage targets set by federal and state governments national framework for hydropower. Policy frameworks should not only enable project development but also actively incentivise innovation that enhances PSH flexibility, co-optimises with variable renewables, and supports 24/7 carbon- free energy services.
3. Explicitly define long-duration energy storage as 8+ hours across all related policy mechanisms.
References
Why Hydropower Projects in Nepal Get Delayed: Understanding the Bottlenecks in Development by Sharma Manan and Rawat Sharma Samjhana. International Journal of Engineering Research & Technology (IJERT) Published by : ISSN: 2278-0181 Vol. 14 Issue 05, May-2025.
http://www.ijert.org
https://nepsetrading.com/ blog/govts-shift-to-take-and- pay-policy-risks-derailing- nepals-hydropower-ambitions
https://en.himalpress.com/ take-and-pay-ppa-model-will- be-amended-khadka/
Pumped storage hydropower: powering Australia’s energy future A supplement to the Enabling Pumped Storage Hydropower
Guidance Note. 2025. www.
hydropower.org/publications/ enabling-new-pumped-
storage-hydropower
www.marketplace.org/ story/2025/09/17/despite- gop-tax-credits-hydropower- faces-major-licensing-hurdles
4. Streamline licensing and permitting where possible to ensure minimal delays. At the state and federal government level, departments are called upon to support the environmental, water, and electricity permitting requirements, giving appropriate consideration to any measures to provide expedience and transparency on the timing of permits.
5. Design appropriate and consistent government support mechanisms to de-risk long-life energy storage assets. Such policy and regulatory support mechanisms should be consistent and seek to enable economic growth, supply chain resilience, local industry development, and be delivered sustainably.
6. Ensure electricity markets are designed with appropriate price signals which value firming and balancing services to incentivise the development of long-duration energy storage.
India’s pumped storage pivot India’s energy planners are increasingly turning to
pumped storage hydropower (PSP) as a cornerstone for grid stability and clean energy integration. In April 2023, the Ministry of Power issued formal Guidelines to Promote Development of Pump Storage Projects (PSPs), marking a major policy step to streamline approvals, allot project sites, and rationalise environmental clearances. Under these guidelines, 56 PSP sites totalling 73.24 GW were identified across 15 states/union territories and assigned to central public sector undertakings (PSUs). The guidelines also propose budgetary support for enabling infrastructure (roads, bridges, transmission
38 | November 2025 |
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links) and waiver of Inter-State Transmission System (ISTS) charges for PSPs commissioned under certain timeframes.
Recent developments further reinforce this momentum. The Central Electricity Authority (CEA) has approved a plan to accord “concurrence” to 13 PSPs (approximately 22GW) in 2025-26, with a target to have them commissioned within four years. The government has also introduced tariff-based competitive bidding (TBCB) guidelines for procuring storage capacity from PSPs, defining models such as “tolling tariff” and “composite tariff” to allocate responsibilities and risks between procurers and developers. Yet, challenges remain. India currently operates only a handful of PSPs (around 4-5GW capacity), and many of the projects in the environmental clearance pipeline have not yet begun construction. The process of securing land, forest and
environmental approvals continues to be complex, often requiring multiple clearances. Some PSP sites are located in regions with challenging topography or ecological sensitivity, adding complexity to environmental assessments and social consent processes. Looking forward, India’s strategy is to scale PSP deployment in line with variable renewable energy growth. The push for PSP is contained within the broader National Framework for Promoting Energy Storage Systems (ESS), which integrates PSP policy with battery storage, grid flexibility, and procurement mechanisms. If these regulatory reforms and incentives are sustained, PSPs could play a pivotal role in helping India meet its 500 GW non-fossil capacity target and stabilise grid operation.
US challenges Although the US hydropower sector retained access
to federal tax credits in legislation passed this summer, the industry is still facing significant challenges in the form of the permitting and licensing of projects. With hundreds of facilities coming to the end of their typically 50-year licence, the US industry is facing up to its next big wave of hydropower relicensing. Numerous different agencies or stakeholders,
up to ten or more, can be involved in the permitting process which, according to the National Hydropower Association, means it can take up to eight years to license a facility - longer than it takes to license a nuclear plant. This is what FirstLight Power finds itself in the middle of in Massachusetts. The company is now into the thirteenth year of a supposed five-year licensing process for two of its hydropower projects. In the interim it is waiting to make upgrades to its facilities while operating them under an extension of its old license. Although FirstLight has the means to keep its Massachusetts facilities running, some smaller hydro operators haven’t survived relicensing. Over 60 facilities have surrendered their licences in recent years, according to the National Hydropower Association. The challenge is finding investors who have the patience to wait for the length of time that it will take to recoup the investments made into rehabilitating and re-licensing of such projects.
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