The following is a concise (and updated) summation of the earlier solutions. Here's what to do:
Add these strings and their respective parent keys:
pwrshell\(Default) < Open PowerShell Here
pwrshell\command\(Default) < powershell -NoExit -Command Set-Location -LiteralPath '%V'
pwrshelladmin\(Default) < Open PowerShell (Admin)
pwrshelladmin\command\(Default) < powershell -Command Start-Process -verb runAs -ArgumentList '-NoExit','cd','%V' powershell
at these locations
HKCR\Directory\shell (for folders)
HKCR\Directory\Background\shell (Explorer window)
HKCR\Drive\shell (for root drives)
That's it. Add the "Extended" strings for the commands only to be visible if you hold the "Shift" key, everything else is superfluous.