Industry-first guide sets path to unlocking pumped-storage hydropower investment

The new guide is titled “Enabling the development of new pumped-storage power plants: A briefing note for decision-makers on reducing the risks of pumped-storage investments.”

Pumped-storage hydropower (PSH) is the largest form of renewable energy storage. With a total installed capacity of almost 200 GW, it provides more than 90 percent of global long-term energy storage. More than 400 projects are currently in operation.

The briefing includes recommendations to reduce risk and increase certainty in project development and implementation. It also equips key decision makers with the tools to effectively guide the development of pumped hydro projects and unlock key financing mechanisms. By using the recommendations presented, a new entrant will be better able to understand the risks and create a strategy to mitigate them.

Developed by a working group composed of members from across the pumped-storage hydropower industry led by Bechtel Corporation and supported by the International Hydropower Association Secretariat, the working group was formed to address the urgent need for long-term energy storage to support a rapid global transition to renewable energy.

“The lack of adequate focus on this need for long-term electricity storage is an ignored crisis within the energy crisis,” said IHA CEO Malcolm Turnbull. “PSH has the unique ability to solve this challenge on a massive scale, far beyond the reach of even the largest batteries. Pumped-storage hydro can also provide grid inertia and stability without relying on fossil fuels. The recommendations in this briefing note set the course for delivering the energy storage solution the world needs. Policymakers and industry must act on these recommendations now to have any chance of achieving net zero emissions targets by 2050.”

The working group includes Brookfield Renewables, the European Investment Bank, the British Hydropower Association, GE Vernova, Stantec, KPMG, Mott Macdonald, the World Bank Group, Queensland Hydro, Dentons LLP and the University of Cambridge.

The briefing outlines some overarching principles, including:

Private sector delivery, public sector support: The private sector is prepared to deliver PSH at the scale required, but success in a liberalised electricity market depends on governments recognising the need for storage, introducing government support mechanisms where necessary, and ensuring long-term revenue transparency.

Investment in project development: Owners must invest in early project development. The more investment in preparation and the faster an experienced delivery team (owner and supply chain) focuses on laying the foundation, the greater the chances of success.

Good project management equals good risk management: Ensuring well-coordinated teams support risk mitigation at the interface is essential.

Optimal Supply and Commercial Models: Efficient risk allocation is key. Risk should be minimized by those best placed to manage it, and residual risk should be shared by those best able to bear it.

“An efficient, reliable, net zero energy grid cannot be achieved without combining renewables with large-scale, long-duration energy storage,” said Bechtel Global Business Development Manager and Working Group Chair Chris McMonagle. “PSH, sometimes known as ‘water storage,’ is the most common, proven and efficient form of long-duration energy storage. This new guidance note aims to explore how the PSH market can streamline the development process and provide reliability and certainty in project delivery. It is the result of excellent analysis, healthy debate and open sharing of industry best practices.”

For additional information:

International Hydropower Association (IHA)