The Cost of Pumped Hydroelectric

Storage
Oscar Galvan-Lopez
December 11, 2014
Submitted as coursework for PH240, Stanford University, Fall 2014

Introduction
One of the largest challenges to the
generation of power is being able to supply
the demand for peak load. Power plants
operating at peak efficiency output the
same amount of power at any point during
a 24 hour period. Unfortunately, power isn't
consumed equally across all hours. Most
power is used during the day time to power
our AC, heaters, ovens, and during the
evenings when everyone gets home and
Fig. 1: Raccoon Mountain Pumped Storage
uses things such as washers, dryers, and
dish washers. In order to level the demand Facility (Source: Wikimedia Commons)
for peak power it would be very valuable to
have a way of storing and generating this power at a moment's notice. Two of the major
methods of storing this power are batteries and Pumped Hydro Storage (PHS). Here we
will take a closer look at the cost of pumped water storage vis--vis batteries and
conventional methods in order to understand the best options available.

Traditional Power Generators

When considering alternatives to generating electricity, we need to establish a baseline. A
natural gas turbine has, "a capital cost of $500/kW, fixed O&M of $15/kW-yr, and variable
O&M of 0.0055 $/kWh" with an additional $100/kW estimated for transmission and
delivery to the urban center. [1] This is the bar by which everything else needs to be
measured in order to determine the cost efficiencies. When analyzing costs it's important to
not get lost in the various numbers or figures. The first number, $500/kW refers to the
initial cost of the equipment for the ability to produce 1 kW of power. The second number,
$15/kW-yr, refers to operation and maintenance (O&M) of that initial $500/kW investment
per year. The third number, 0.0055 $/kWh, refers to operation and maintenance costs per
unit of energy produced. What's missing is the actual cost of the fuel which will be higher
in pumped water storage due to inefficiencies that range anywhere from 50-93%. [2,3] By
comparison, diesel generators have a capital cost ranging from $300-900/kW. [4]

Pumped
Storage Facility

Capacity
(MW)

Total Initial
Cost (Million)

Cost in Year 2000

Dollars (Million)

Capital Cost
per KW in $

Guandong

1200

424

424

353

Goldisthal

1060

860

860

811

Racoon
Mountain

1660

310

841

526

Taum Sauk

408

46

258

632

Northfield
Mountain

1000

140

543

543

Ludington

2076

322

1249

602

Helms

1050

600

2327

2216

BlenhaimGilboa

1000

200

776

776

Table 1: Initial capital costs of various facilities, costs adjusted for inflation to year
2000 dollars, and capital cost in $/kW in year 2000 dollars. [7]

Capital Costs
Currently, the cost of storing a kilowatt-hour in batteries is about $400. [5] Energy
Secretary Steven Chu in 2010 claimed that using pumped water to store electricity would
cost less than $100 per kilowatt-hour, much less than the $400 kilowatt-hour cost of
batteries. [5,6] But how much does it actually cost? Table 1 shows a list of pumped hydro
storage facilities, their work capacities, initial costs and costs adjusted to 2000 dollars. As
can be seen from the table, while the initial costs of pumped water storage may have been
$100/kW, those estimates are all from the 1970's. Once adjusted for inflation, the capital
cost ranges from $353/kW to $2,216/kW (2000 dollars) with median cost of about
$615/kW, a 20% premium on the cost of a natural gas turbine. [1] Another study found the
capital costs to range between $628.34 and $2,901 (2011 dollars). [8]
Pumped Storage
Facility

O & M (Million 2000

dollars)

Capacity Generated
Daily MWh

O & M in
$/kW

Taum Sauk

2.30

2700

5.64

Northfield Mountain

5.28

8500

5.28

Ludington

4.40

20760

2.12

4700

N/A

Blenheim-Gilboar

Table 2: Operation and Maintenance for a year adjusted for inflation to year 2000
dollars, daily energy generated, and Operation and Maintenance costs in $/kW in year
2000 dollars. [7]

Operation & Maintenance

The Northfield Mountain Pumped Storage facility with it's 1000 MW capacity had
operation and maintenance costs of $1.90/kW-year in 1979. This is compared to $12/kWyear for the Mt. Tom oil fired plant which has a capacity of 150 MW and $15/kw-year for a
natural gas turbine. [1,7] Assuming a 50 year lifespan for the facility, that would amount to
a savings of $505 in 1979 dollars between PHS and natural gas or a savings of $486
between PHS and diesel (the $1.90 was adjusted for inflation for an equal comparison with
the $15/kW cost from the year 2000). In O&M costs pumped water storage facilities have a
distinct advantage over the long term. The Taum Sauk Storage Facility and the Ludington
Storage Facility have similar O&M costs of $5.64/kW-year and $2.12/kW-year. [7] The
various O&M costs of several pumped water storage facilities can be seen in Table 2. [7]

Increased Productivity
The Guangzhou Pumped Water Storage facility in China was able to increase the efficiency
of the Daya Bay nuclear power plant from 66% to 85% in 2000. [2] The ability to store this
extra energy has allowed the nuclear plant to exceed its design capacity of 10,000 GWh in
2000 by a margin of 2,021 GWh. [2] This is a major advantage in having Pumped Hydro
Storage. The ability of PHS to level demand and store excess power allows power plants to
operate at their maximum efficiency all the time, creating a better return on investment.
The utilization factor is also important. The Taum Sauk Pumped Storage facility had a
utilization factor of 5-8%. This is in contrast with the Northfield Mountain Pumped Storage
facility or the Blenheim-Gilboa Pumped Storage facility which have utilization factors of
25% and 20%, respectively. The Ludington facility, on the other hand, generates electricity
10 or more hours a day. [7] A Hydro Generator that is not being used to generate and
deliver power is not providing a proper return on investment.

Conclusion
Pumped Hydro Storage seems to be a viable alternative to backup generators as a means to
cover peak demand. Not only that, by serving as a reservoir of excess energy, PHS systems
allow power plants to operate at their peak efficiency. However, PHS is not without it's
drawbacks. A low utilization factor essentially makes it a very expensive monument with
no actual utility. Also, the costs of construction can quickly balloon out of control such as
with the Helms Pumped Storage facility, whose initial cost estimate of $200 million
ballooned to $600 million in the course of several years. [7] Severe caution needs to be
taken to ensure that that does not happen, as a $2,327/kW capital cost would overshadow
any potential savings that could be earned from the difference in O&M.
Oscar Galvan-Lopez. The author grants permission to copy, distribute and display this
work in unaltered form, with attribution to the author, for noncommercial purposes only.
All other rights, including commercial rights, are reserved to the author.

References

[1] E. A. Gilmore, P. J. Adams, and L. B. Lave, "Using Backup Generators for Meeting
Peak Electricity Demand: A Sensitivity Analysis on Emission Controls, Location, and
Health Endpoints," J. Air Waste Manag. Assoc. 60, 523 (2010)
[2] "Project Completion Report On The Guangzhou Pumped Storage Stage II Project In
The People's Republic of China," Asian Development Bank, PCR:PRC 26369, November
2001.
[3] "Energy Storage Technology Roadmap: Technology Annex," International Energy
Agency, March 2014.
[4] Cory R.A. Hallam, et al, "Hybrid Closed-loop Renewable Energy Systems: El Hierro as
a Model Case for Discrete Power Systems," IEEE 6304314, 29 Jul 12.
[5] M. L. Wald, "From Harvard, a Cheaper Storage Battery," New York Times, 8 Jan 14.
[6] J. Mandel, "DOE Promotes Pumped Hydro as Option for Renewable Power Storage,"
New York Times, 15 Oct 10.
[7] "An Assessment of Hydroelectric Pumped Storage," Dames and Moore, November
1981.
[8] D. Connolly, et al, "Practical Operation Strategies For Pumped Hydroelectric Energy
Storage (PHES) Utilising Electricity Price Arbitrage," Energy Policy 39, 4189 (2011).