Perspectives: The Pumped Storage Conundrum

Elizabeth Ingram

Pumped storage is proven, it’s needed, and it’s a valuable resource that will likely be even more valuable in the future. And because I always like to provide data to back up my assertions:

The World Energy Council reported in 2016 that storage hydropower (including pumped storage) represents 99% of the world’s operational electricity storage. And, “With the increased deployment of variable renewable energy technologies such as wind and solar, hydropower is increasingly recognised as an important system management asset capable of ensuring reliable renewable supply.” The council says that more than 144,000 MW of pumped storage capacity is installed worldwide.

The report lists installed pumped storage capacity by region in 2015, and some clear leaders emerge:

– East Asia, 57,999 MW

– Europe, 50,949 MW

– North America, 22,618 MW

– South and Central Asia, 6,146 MW

The remaining world regions (Southeast Asia and Pacific, Middle East and North Africa, Africa, and Latin America and the Caribbean) each have less than 2,500 MW.

In China, the World Energy Council says pumped storage capacity is expected to reach 70 GW by 2020 (from 23 GW in 2015). China is notable because “the legislation allows the state grid to own both transmission and generation assets, recognising the value of pumped-storage projects for a better operation of the electricity network.”

In another perspective, Andrew Wade recently wrote on the UK site The Engineer, “In pumped hydro storage there is a tried-and-tested technology that not only fits the bill for future energy needs but has been doing the job for well over a century.” The UK has four operational plants and is putting its money where its mouth is by developing the 99.9-MW Glyn Rhonwy pumped storage project.

The exciting part is, “The process behind its selection also threw up hundreds of other viable UK sites. By exploiting just a handful of these, pumped hydro could be the last missing piece of the UK’s clean energy puzzle.”

So why isn’t more pumped storage being built worldwide? Hydro Group Associate Editor Gregory B. Poindexter explores this question and more in the article on page 8.

One factor that caught my attention, that I don’t see discussed as much as probably merits, is the effect market pressures can have on pumped storage, whether that be the decision to build (or not) or the long-term financial success of an operating facility.

“No energy solution can exist outside of the real and competitive pressures of the market. Technical viability and environmental benefits won’t be enough to get projects over the line if they can’t demonstrate their financial soundness.” This quote comes from Nick West and Donald Vaughan of consulting firm Entura and was posted on the ecogeneration website.

Compared to the “old days” when energy arbitrage was the traditional revenue source for pumped-storage hydro, West and Vaughan say market volatility is likely to be the norm where they work, in Australia, especially in light of the upcoming retirement of several coal-fired power stations.

This greatly complicates the process of getting pumped storage approved and built, as financing requires a firm revenue forecast, which can be especially challenging for an asset that has a lifecycle of as long as 100 years. In addition, the proposed project itself could have a significant influence on the market in which it will participate, West and Vaughan say, with a large pumped storage project likely to “influence the market to such an extent that the utilization of the project may be significantly reduced, which will reduce project returns.”

Despite the limitations, there is continued interest in building pumped storage worldwide. HydroVision International 2018 features several sessions on this topic, including a session in the New Development track (Bold, Beautiful and Powerful — Case Studies of Large Conventional and Pumped Storage Projects) and one in the Policies and Regulations track (Pumped Storage: How to Make it Work).

In addition, HydroVision International will host the first Grid Scale Energy Storage Summit, where industry leaders will explore the synergies between pumped storage hydro and renewables, such as wind and solar. Visit www.hydroevent.com to learn more.

Elizabeth Ingram Sig

Managing Editor

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