The finalization of the Guidelines for Pumped Storage Hydro Projects (PSP) by the Ministry of Power has paved the way for the development of PSPs to meet the increasing demand for energy storage assets in India. The long-term impact of exempting PSPs from environmental clearance for ecologically fragile regions like the Northeast will continue to dominate the policy discourse on the guidelines. The decarbonization of energy generation in the country faces the challenge of smooth integration of renewable energy for grid safety and stability while catering to growing demand for electricity. The rationale behind the government pushing PSPs is that generation of two other forms of renewable energy—wind and solar—connected to the grid depends on the time of day, seasons, and weather conditions and hence cannot be regulated to meet the storage demand for peak hour requirements. The PSP technology facilitates storing substantial amounts of energy by constructing two reservoirs, one at a higher altitude, and pumping water from the reservoir downhill to the reservoir uphill through a tunnel. Stored water from the uphill reservoir is released through a turbine for electricity generation when needed. Unlike conventional hydropower projects, which generate energy, PSPs do not produce electricity and only store energy for generation, due to which they are also called “Water batteries.” Other arguments advanced in support of PSPs in the Power Ministry documents are that PSPs have a long service life of more than 40–50 years, which is much longer than any other energy storage technology presently available. This also results in a low cost of delivered energy over the life of the project. Besides, PSPs are non-polluting and more environment-friendly, and thirdly, PSPs account for over 95 percent of installed global energy storage capacity, and it is estimated that pumped hydro projects worldwide store up to 9,000 gigawatt hours (GWh) of electricity. It explains that PSPs are generally designed for a longer duration of discharge of more than six hours to meet peak demand or to compensate for the variability in the grid due to variable renewable sources like solar and wind. To put it into perspective, currently, Battery Energy Storage Systems are designed for up to four hours of discharge, generally due to which the “firm capacity of PSPs during peak hours is guaranteed and relatively immune to grid conditions.” According to estimates of the Central Electricity Authority, on-river pumped storage potential is 103 GW, and the country also has a large capacity of off-river pumped storage potential, against which eight PSPs with a total generation capacity of 4745 MW are operational, four projects with a total capacity of 2780 MW are under construction, and 27 projects with a total capacity of 29,930 MW are in different stages of development. These figures speak volumes about the PSP technology gathering momentum in the country. It is estimated that the country would require 26.7 GW of energy from PSPs and 47.2 GW of Battery Energy Storage Systems (BESS) to meet the demand for the integration of renewable energy in the energy mix until 2032. The requirement of environmental clearance was considered a barrier to the faster development of PSPs, and the government hopes that dilution of the green nod will attract investors and also fast-track PSPs. The arguments advanced in the document are that the environmental impact of PSPS constructed on existing reservoirs on on-the-river sites and off-the-river sites is much less than conventional hydroelectric projects and may be treated as a separate category for processing clearances. The availability of input power for pumping water to uphill reservoirs and other input power at an affordable cost, in addition to the cost of storage and conversion losses, is a crucial factor that determines the upfront cost of PSPs and has remained a key barrier to their promotion. These factors affect the commercial viability of PSPs and keep investors away, as higher tariffs resulting from higher upfront and input costs run the risk of losing out to competitive price bids by power purchasers. The operational cost of PSPs is lower and storage is longer than BESS, but the energy loss in PSPs is around 20–30%. The government is hopeful of overcoming these challenges with the availability of solar and wind energy at a cheaper rate. However, environment experts have raised the red flag over dilution of the green nod and cautioned that consequences could be costly and may lead to irreversible ecological loss from submergence of human occupants and loss of forests due to the construction of reservoirs without carrying out environmental impact assessments, more particularly in respect of off-the-river PSPs. Wider stakeholder consultation and impact assessment of PSPs that are operational or under construction will help arrive at a pragmatic conclusion. This will help the government weigh the two options of ease of doing business and preventing irreversible ecological loss in the northeast region while formulating policies to achieve climate goals and sustainable energy generation.