NHA Report Identifies Challenges To Realizing Pumped Storage’s Potential

October 5, 2021

by Peter Maloney
October 5, 2021

A new report from the National Hydropower Association (NHA) provides recommendations for policymakers and other stakeholders aimed at raising the profile of pumped storage hydropower (PSH) and making the technology better able to support the growing level of intermittent renewable resources coming on to the grid.

The 2021 Pumped Storage Report notes that pumped storage provides 94 percent of the bulk energy storage in the United States, but the last PSH project—a 40 megawatt (MW) plant in California – was commissioned in 2012.

“The acceleration of wind and solar deployments underscores the increasing need to integrate large amounts of variable resources,” Cameron Schilling, NHA’s vice president of market strategies and regulatory affairs, said in a statement. “This report shines a spotlight on the value of pumped storage, while providing a path forward for solving the market, policy and regulatory hurdles that hinders its growth. In addition to financing, for pumped storage to fully realize its growth potential, it requires market policies that appropriately value its grid services.”

A total of 1.8 gigawatts (GW) of PSH projects have received permitting authorizations, and over 50 GW of PSH have been issued preliminary permits or in the process of receiving permits, but no new projects have yet to begin construction.

The report also noted that pumped storage hydropower is nearly two to three times less expensive than lithium-ion batteries on a per kilowatt hour (kWh) basis and PSH’s annual operations and maintenance costs at $20 per kilowatt hour year are three times lower than batteries.

Nonetheless, NHA said the key takeaway from a 2020 survey of developers it conducted is that developing a PSH project is “a risk, and without some policy or market modifications there may not be adequate long-duration energy storage capacity to meet the demand from wind and solar resources.”

The NHA report recommends that

  • Congress should create a stand-alone Investment Tax Credit (ITC) for all storage technologies, to ensure that PSH can compete with other storage resources on a level economic playing field.
  • States need to send a market signal that long duration storage will be needed to meet aggressive climate goals, and state legislatures should adopt robust long duration storage targets with long lead times to ensure that the demand is met and that all technologies have a chance to compete.
  • In regional markets, the Federal Energy Regulatory Commission (FERC) should ensure there are sufficient compensation mechanisms for frequency response, inertia, flexible ramping, condensing, voltage control and black start and other services provided by PSH. In addition, some renumeration should be provided to those technologies like PSH that can provide broader system benefits that are hard to quantify and measure.
  • Utilities should work with the Department of Energy, PSH developers and the national laboratories to ensure that the full benefits of PSH, including the full range of services provided by advanced turbine technologies, are accurately modeled in integrated resource plans.
  • FERC and other stakeholders should work to reform the licensing process, including allowing projects with minimal environmental impacts to be expedited.

“Current market and energy policies do not fully value the critical services that PSH can provide to the grid,” the NHA report said.

With the potential for 50 GW of pumped storage, “now is the time to develop new long-duration energy storage resources to enable a reliable, clean energy grid, the NHA report said.