Current Challenges

Overcoming Barriers

Despite the numerous benefits of pumped storage hydropower (PSH), several significant challenges must be addressed to unlock its full potential. These challenges span regulatory, market, financial, environmental, and social dimensions.

Regulatory: The complex and lengthy regulatory process is one of the most formidable barriers to new PSH development. In the United States, the Federal Energy Regulatory Commission (FERC) typically oversees the licensing of hydropower projects, including PSH. Although recent efforts have been made to expedite the licensing process for closed-loop PSH projects, developers still face considerable delays and uncertainties.

  • Permitting Timelines: Obtaining all necessary permits and approvals can take five years or more, adding to the already lengthy process of completing engineering, equipment purchases, project construction, and commissioning. This lengthy timeline discourages investment, as financial returns are delayed and project risks are amplified.
  • Inter-agency Coordination: Developers must navigate a labyrinth of federal, state, and local regulations, often involving multiple agencies with differing priorities and requirements. This lack of coordination can lead to redundant reviews and conflicting directives.

Market Structure

Current market structures do not fully recognize or compensate PSH's diverse services, leading to underinvestment in this crucial technology.

  • Inadequate Market Compensation: PSH provides various ancillary services, yet many are either undervalued or not compensated in existing market frameworks. Markets and regulatory entities also generally will not recognize the benefits of PSH, both a transmission asset and a generator, even though it serves as both.
  • Short-term Focus: Market mechanisms often favor short-term solutions over long-term investments. With its high upfront costs and long development timelines, PSH struggles to compete with quicker-to-deploy technologies like batteries, even though its far longer lifespan would reduce rates for ratepayers in the long run.

Financing: Securing financing for PSH projects is challenging due to their capital-intensive nature and extended development periods.

  • High Capital Costs: The initial investment required for PSH projects can be daunting, often reaching billions of dollars. This high capital cost is a significant barrier, especially in markets with limited financial incentives for long-duration storage.
  • Investment Risk: Investment Risk: Long lead times and potential delays increase perceived risks for investors, making it difficult to secure funding.

Construction and Resource Availability:

  • Skilled Workforce: The construction and operation of PSH facilities require a diverse and highly skilled workforce. This includes engineers, hydrologists, environmental scientists, and a robust trade school-trained workforce as machinists, operations specialists, and maintenance technicians are crucial for these facilities' day-to-day functioning and upkeep.
  • Supply Chain Constraints: The availability of essential materials and equipment can be a limiting factor, and global supply chain disruptions can potentially delay project timelines.

Environmental and Social Challenges

Site Selection: Identifying suitable sites for PSH projects is increasingly difficult. They require significant elevation differences between reservoirs, appropriate topography and geological conditions, access to transmission, and a source of fill water (see below) while minimizing environmental impacts.

Public Perception and Community Engagement: Public support is crucial for the success of PSH projects. Addressing concerns about environmental impacts and engaging with stakeholders early in the process is essential.

Availability of Water: Water is already a scarce resource in much of the country, and the planned use of available water in underground aquifers or from surface water sources for a new PSH project can be very controversial for the local communities, which may depend on that water for drinking, crop irrigation, support of livestock, or to maintain environmentally sensitive wetlands and streams. The amount of water required for most well-conceived pumped storage projects is not dramatically high in the context of area water budgets. Still, early engagement with local communities and stakeholders is essential; additional water supply impact studies may be required during the licensing process. Mitigation technologies that could be explored to reduce overall water losses for PSH include reservoir and tunnel liners to reduce seepage and leakage and floating solar or other floating covers (e.g., balls or hexagonal tiles) to reduce evaporation.

Policy and Legislative Support: Policy frameworks at the federal and state levels need to better support PSH development and integration.

  • State-Level Policies: State policies often focus on short-duration storage solutions, implicitly excluding PSH from procurement targets. States need to recognize the value of long-duration storage and include PSH in their renewable portfolio standards and energy storage mandates.

Technological Integration: Integrating PSH with other emerging technologies presents opportunities and challenges.

  • Hybrid Systems: Combining PSH with other renewable energy sources, such as wind and solar, can optimize energy storage and generation. However, developing and managing hybrid systems requires sophisticated control technologies and advanced grid management practices.
  • Digitalization: Adopting digital technologies and smart grid solutions is essential for enhancing PSH's efficiency and responsiveness. Implementing these technologies can be complex and costly, requiring significant investment in infrastructure and training.

International Collaboration and Learning: Leveraging global best practices and collaborating on international projects can help overcome some of the challenges faced by PSH development.

  • Knowledge Sharing: Countries with advanced PSH projects, such as China, Australia, and Switzerland, offer valuable lessons in project design, regulatory frameworks, and technological innovations. International collaboration can facilitate the exchange of knowledge and experience, helping to streamline PSH development globally.
  • Joint Ventures: International joint ventures can pool resources and expertise, reducing risks and costs for individual developers. Collaborative projects can also attract funding from multilateral development banks and international investors.

While pumped storage hydropower faces significant challenges, addressing these barriers through coordinated efforts among policymakers, industry stakeholders, and communities is essential. PSH can continue to play a pivotal role in the global transition to a sustainable energy future by streamlining regulatory processes, enhancing market mechanisms, securing financing, and leveraging technological advancements.

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