Strategy to improve financial viability of pumped storage hydropower: Techno-economic analysis of pumped storage hydropower with existing conventional hydropower

Abstract

The energy transition from fossil fuels to clean energy is inevitable to limit climate change. Pumped storage hydropower can compensate for the balancing of load, provides various ancillary services, and integrates variable renewable energy in the grid. However, uncertainties such as market structure, long-term natural gas prices, variable renewable energy penetration, government incentives, and regulatory policy, making it difficult to develop a viable business case for new pumped storage hydropower project. This research article considers improving financial viability of new pumped storage hydropower project by reducing upfront capital cost by utilizing existing conventional hydropower resources and reducing pumping/charging costs by finding a potential site where a water stream reaches the upper reservoir directly. The fast-track, cost-effective, and environmentally friendly approach investigates the true potential of this configuration for the case study of 200 MW Paras pumped storage hydropower with integrated 300 MW Balakot conventional hydropower. The article considers numerous scenarios for both closed-loop and open-loop pumped storage hydropower and calculates the levelized cost of energy storage for all scenarios. The conclusion is that utilizing existing conventional hydropower resources and considering water stream entering directly into the upper reservoir decreases the overall levelized cost of energy storage from 13.73 to 11.77 US$ cents/kWh (14% decrease). Results of the levelized cost of energy storage can help experts, regulators, power producers, and investors realize the importance of pumped storage hydropower as a reliable, cost-effective, and sustainable energy storage technology to integrate variable renewable energy.