There is an over eight decade-long rich history of the successful development of pumped storage hydropower plants all across the globe.
Hydropower energy storage has been a part of the energy grid of many countries since the very birth of hydropower plants. Plausibly, due to the ease of energy generation and the flexible energy storage inherent in reservoirs.
Pumped storage plants are sought after especially for their ability to provide bulk energy and ancillary services to the grid at low $/kWh rates. It has been almost a century since PSH has been around. That being noted, technology is constantly evolving.
Pumped storages are especially efficient in ensuring that renewable energy supply in the region is smooth even during peak energy demand periods. This can also be interpreted as PSH providing power balancing services.
Though hydropower pumped storages are superior to traditional power stations in terms of energy efficiency, renewability, and environmental sustainability. Pumped storage hydropower plants also need to be economically feasible to be widely accepted across the globe.
Following is a brief cost analysis of a regular pumped storage hydropower plant.
Technical Costs
There are numerous ways of calculating the costs of a particular project. Every variant of accounting for the cost of power generation carries along with its insights.
Examinable costs include equipment costs (i.e., turbines, PV modules, shafts, etc), installation costs, fixed and variable operating and maintenance costs, and many more.
Analysis of costs can be extremely elaborate, however, here we have kept the scrutiny fairly simplified. This approach was selected for easier comparison and transparency, helping the audience cross-reference the data of different regions and countries with a global average as well as compare costs with other power generation counterparts.
Capital Cost
The capital cost of such plants consists of two water reservoirs, a waterway connecting them, and a power station including a pump/turbine for pumping water upstream and generating electricity. Keeping under consideration the large terrain coverage of the system, the cost of a typical PSH project is higher than other ESSs given the construction, commissioning, and potential environmental evaluations.
The research estimated the cost of a single-speed unit to be $1500-$4700 kW. Further estimated claims include that each additional adjustable-speed unit would come with a 10-20 percent higher cost.
Most currently functional pumped storages were developed in the 1970s and 80s.
U.S. Bureau of Reclamation report on the Mt. Elbert Pumped Storage Power Plant states that it cost around $2020/kW.
ORNL further estimated two values for PSH plants. Firstly, between $1800 – $3200/kW for adjustable-speed PSH plants, and the second estimate of $2230/kW was taken from a Black &Veatch report (2018).
Usually, project costs for most sites are not broken down into components as all projects have different scenarios and situations. But for standardizing a general trend from the research content, we have considered an assumed case where upper and lower reservoirs are being built in existing natural water bodies. Besides this, the entire construction process of a regular PSH is taken into consideration.
The following pie chart shows the pictorial representation of the data gathered from the Energy Storage Cost Report July 2019, as documented in the table.
| Field | Expenditure ($/kW) |
| Owner’s cost | 370 |
| Engineering, procurement, and construction | 390 |
| Tunnels | 135 |
| Powerhouse excavation | 80 |
| Powerhouse | 835 |
| Upper reservoir | 420 |
| Estimated Lower reservoir | 420 |
| Total Cost | 2640 |
A Pie chart portraying components of capital expenditure of a regular pumped storage
Power Conversion
Pumped storage projects are basically ‘large water batteries’ which make use of excess energy in the region to pump water up to an elevated reservoir – converting electrical energy to potential energy. Pumping this water to the upper reservoir can be called equivalent to recharging a battery.
Pumped Storage Hydropower functions under the principle of spot price arbitrage. By definition, arbitrage is the practice of taking advantage of differing prices between markets. In the electricity spot market, this loosely translates to buying electricity from pumping during low demand/price hours while generating and selling during high price/demand hours.
Subsequently, during periods of high energy demand, the stored water is released down upon the turbines of the generators like conventional hydropower plants. The difference in costs of low demand electricity and high demand electricity is the basis of the profit generation of a pumped storage plant.
Such pumped storage turbines are already under use for decades, helping boost system reserves and the reliability of power transmission in energy grids. Moreover, the cycle energy efficiency of these plants exceeds 80% (proving extremely favourable in comparison to traditional thermal power plants).
Fixed and Variable Operation
Oak Ridge National Laboratory (ORNL) recently finalized its 4-year research, testing, and analysis project. Along the lines of that innovation-based project, ORNL has put out research looking into PSH costs.
On the subject of fixed costs, for a standard PSH plant, it is estimated that the range is between $6.2 – $43.30/kW-yr. These fixed costs consist of labor, taxes, and insurances.
The variable costs are majorly dependent on the number of starts and stops in the operations. Such costs include repairs or rehabilitation of circuit breakers, runners, welding joints, axles, as well as all other electrical and mechanical components present in the turbine station.
According to ORNL research, unit start costs of most pumped hydro range between $300 – $1000. Estimating variable cost with the assumption of a standard 100MWh plant which goes through 20 cycles in a year computes it around 0.000094 to 0.0003 cents/kWh. These negligible rates compared to the operation costs are the reason why variable costs of PSH projects have been set to 0 in many reports.
Maintenance Cost
PSH plants after commencing operation require little maintenance. Annual O&M costs are often indicated as percentages of the investment cost per kW-yr. Usually, the values range from 1% to 4%.
The IEA supposes 2.2% costs for large-scale projects and up to 3% for smaller plants. These costs usually consist of reconditioning of various electrical and mechanical equipment such as turbine overhauls, control systems, generator rewinding, etc.
However, these estimates do not include major repairs such as renewal or reconditioning of penstocks, tailraces, etc.
A recent study with an alternative approach suggests estimated operational and maintenance costs of large-scale hydropower projects to be around $45/kW-yr. For similar small-scale projects, O&M costs were estimated at around $52/kW-yr. The higher per-unit cost in small-scale projects as compared to large-scale projects is due to ‘economies of scale’.
These figures are quite consistent with earlier research. The values mentioned are also consistent with data collected by IRENE and GIZ under small-scale hydropower plants.
Plant Cycle Efficiency
Research estimate that regular PSH units are capable of lasting up to 50 years or 20000 cycles with a full cycle efficiency of around 80%. Another research has concluded safer estimates of a 20-year lifespan with full-cycle efficiencies ranging from 70 to 87 percent.
Energy Storage Technology Cost Comparison
Pumped storage is widely recognized as an electricity source. However, the fundamental function of PSH plants for with they are named “World’s Largest Batteries” is energy storage.
The most tangible cost comparison of these PSH plants can be made only with other energy storage options.
Considering all types of batteries ranging from Lithium-ion (Li-ion) and lead-acid batteries to Pumped Storage Hydropower (PSH) and Compressed Air Energy Storage (CAES), the basic capital cost to power rating comparison is illustrated in the graph below.
Graph to compare costs and power production of PSH with other energy storage options.
Based on the above-illustrated data, PSH and CAES provide the lowest cost in $/kWh. However, PSH is a much more mature technology with better full-cycle efficiency.
Besides, PSH’s innovative prospects show that it is soon going to take over most transmission and distribution grid support alternatives.
Future Collaboration Prospects to Improve Efficiency
Pumped Hydro is considered to be a mature energy storage technology with most projects currently present being from the 1970s and 80s. Furthermore, the concept of this very source originated way before this.
170 GW of this technology is currently installed and is operational internationally.
Alongside this, various design innovations are underway to further improve its features such as the efficiency of the plant, its environmental implications, and response time.
Such developmental ideas include closed-loop PSH projects as a solution to avoid impact on natural waterways.
Apart from improvements, research and development are underway regarding new and more practical combinations of PSH plants. Pumped storages are most ideal as a backup energy supply, working to bridge the demand and supply short term gaps and smoothen the energy transmission in power grids.
This concept solves the most basic backlash of renewable energy sources – irregular/discontinuous supply of energy. New locations are being considered to make completely renewable energy-powered local grids with the backup aid from PSH projects.