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Industry-first guide charts path to unlock investment in pumped storage hydropower

  • Industry-first guide charts path to unlock investment in pumped storage hydropower
  • New guide launched today provides key decision-makers with recommendations for de-risking investments in pumped storage, responding to a rapid global shift toward renewable energy.

About the entity

International Hydropower Association
Our mission is to advance sustainable hydropower by building and sharing knowledge on its role in renewable energy systems, responsible freshwater management and climate change solutions.

Themes

Pumped Storage Hydropower (PSH) is the largest form of renewable energy storage, with nearly 200 GW installed capacity providing more than 90% of all long duration energy storage across the world with over 400 projects in operation.

The guidance note delivers recommendations to reduce risks and enhance certainty in project development and delivery. It also equips key decision-makers with the tools to effectively guide the development of pumped storage hydropower projects and unlock crucial finance mechanisms. By utilising the recommendations provided, a new market entrant will be better able to understand the risks and create a mitigation strategy to address them.

Developed by a working group with members from across the pumped storage hydropower industry chaired by Bechtel Corporation and supported by the secretariat of the International Hydropower Association. The working group was created to respond to the urgent need for long-duration energy storage to support the rapid global shift towards renewable energy.

President of IHA, Malcolm Turnbull commented: “The failure to adequately focus on this need for long duration electricity storage is the ignored crisis within the energy crisis. PSH has the unique capacity to resolve this challenge at huge scale, well beyond the reach of even the largest batteries. Pumped hydro systems can also provide inertia and grid stability without reliance on fossil fuels. The recommendations within this guidance note set a course for delivering the energy storage solution the world needs. Policymakers and the industry need to act on these recommendations now to be in with a chance of meeting net zero goals by 2050.”

Global Business Development Manager, Bechtel and Working Group Chairman, Chris McMonagle commented: “It is impossible to achieve an efficient, reliable, net zero power grid without combining renewables with large-scale, long duration energy storage. PSH, sometimes known as ‘Rechargeable Water Batteries’, is the most abundant, proven, and efficient form of long-duration energy storage. This new guidance note seeks to explore how the PSH market can make improvements to the development process and ensure reliability and confidence in delivering projects. It is the result of excellent analysis, healthy debate, and open sharing of industry best practice.”

Working group members include Brookfield RenewablesEuropean Investment BankBritish Hydropower AssociationGE Vernova, StantecKPMGMott Macdonald, World Bank GroupQueensland HydroDentons LLP and the University of Cambridge.

Some overarching principles outlined in the guidance note include:

  • Private Sector Delivery, Public Sector Enablement: The private sector is prepared to deliver PSH at the required scale, but for success in a liberalised electricity markets depends on governments recognising the need for storage, government support mechanisms where necessary, and long-term revenue visibility.
  • Investment in Project Development: Owners must invest in early project development. The more investment in preparation and the sooner an experienced delivery team (Owner and Supply Chain) focuses on setting the foundations, the greater the chances of success.
  • Good Project Management Equals Good Risk Management: Ensuring well-coordinated teams to support interface risk mitigation is essential.
  • Optimal Delivery and Commercial Models: Effective allocation of risk is vital. Risk should be minimized by those best placed to manage it, and residual risk should be shared by those best able to bear it.

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