The National Hydropower Association (NHA) in the US has released its latest Pumped Storage Report to give an insight into historic development and current projects; new project opportunities and challenges; and technological advancement and resource capabilities.
“Pumped storage hydropower has proven to be America’s most effective resource for long duration energy storage,” says Cameron Schilling, NHA’s Vice President of Market Strategies and Regulatory Affairs. “The acceleration of wind and solar deployments underscores the increasing need to integrate large amounts of variable resources. This report shines a spotlight on the value of pumped storage, while providing a path forward for solving the market, policy and regulatory hurdles that hinders its growth. In addition to financing, for pumped storage to fully realise its growth potential, it requires market policies that appropriately value its grid services.”
With the first plant in the US being constructed nearly 100 years ago, pumped storage has played an important role in the US’ electricity landscape. There are 43 active projects across the country providing 22,878MW of storage capacity. These facilities range in size from 20MW to 3GW and are located in 18 states – five of which have 61% of the total national capacity. These are California (17%), Virginia (14%), South Carolina (12%), Michigan (10%) and Georgia (8%).
Strong signal
The NHA report explains that the past decade has witnessed considerable increase in the planned deployment of US pumped storage projects. At the end of 2019 there were 67 pumped storage facilities under various stages of development representing 52.5GW of new capacity, a 22% increase from 2018. The bulk of these projects are in the western US which account for 62% of projects and 75% of capacity.
Of the 67 projects only three have received their full FERC authorisation and none have begun construction. The three licensed projects are: Eagle Mountain in Southern California (1300MW), Gordon Butte in Montana (400MW) and Swan Lake in Oregon (393MW). In addition, FERC reports that over 50GW of pump storage development have been issued a preliminary permit or are in the process to receive a permit.
NHA says that although not all the 67 projects will become operational, the growing level of investor interest is a strong signal that there is significant consumer demand for long duration storage to balance the system, integrate renewables and increase the resilience of the grid.
The report goes on to list some of the many challenges faced by pumped storage developers and include:
- Tax policy – Current federal tax policy means some energy storage technologies receive a 30% investment tax credit while pumped storage does not. This can make a substantial difference within a competitive utility procurement setting.
- State procurement policy – Most states that have renewable portfolio standard mandates or energy storage procurement targets either implicitly or explicitly exclude pumped storage. Even “technology neutral” policies can include short development timelines or contracting structures that exclude PSH and favour other storage technologies.
- Market policy – Many of the grid services that PSH provides are either undercompensated or not compensated at all.
- Utility procurement policy – Most utilities do not accurately model the full benefits of PSH including the full range of services provided by advanced turbine technologies. Additionally, when comparing PSH to other alternatives utility planners often fail to account for the long lifespan differences.
- Federal permitting policy – Although recent changes created a two-year expedited licensing process for closed-loop or “off-river” pumped storage, the implementation of this process has made it difficult for projects to qualify. As of September 2021, no PSH project has successfully navigated the expedited process.
The NHA report has the following recommendations:
- Federal policy makers should pass a federal investment tax credit for storage to be on a level playing field with wind and solar. The credit should be a 10-year safe harbour to account for PSH’s long development timeline.
- Vertically integrated states should require consideration of long duration energy storage resources in integrated resource planning processes, including requiring equal consideration with traditional resources.
- The Federal Energy Regulatory Commission should develop clear policies on how generation assets like pumped storage can compete to provide transmission services while avoiding double recovery of revenues and limiting impacts to current market participants.
- State policy makers should allow all energy storage technologies, including PSH, to participate in renewable portfolio standard programmes (or clean energy standards) on a technology neutral-basis. In addition, state energy storage targets should incorporate longer term goals to ensure pumped storage, can compete with other technologies.
- Request FERC to establish a common methodology for value of energy storage and capacity products that can be utilised across the spectrum of technologies available to provide these services.
- Request FERC to streamline the licensing process even further for low-impact pumped storage hydropower, such as off-channel, modular or closed-loop projects.
This is the third NHA Pumped Storage Report and follows previous publications in 2012 and 2018. The Pumped Storage Report 2021 can be read in full at: https://www.hydro.org/news/nha-unveils-new-2021-u-s-pumped-storage-hydropower-report/
