The International Hydropower Association (IHA) has launched a Pumped Storage Hydropower (PS) Toolkit to address policy challenges and accelerate the development of new projects worldwide. Pumped storage hydropower is the largest form of renewable energy storage, with nearly 200GW of installed capacity, providing over 90% of global long-duration energy storage.

As energy systems increasingly rely on variable renewables like wind and solar, pumped storage is critical for ensuring grid stability. However, the IHA highlights several key barriers that hinder the growth of new pumped storage projects, including:

  • Long development timelines – PS plants can take over a decade from planning to operation, with delays in permitting and licensing.
  • Investment uncertainty – High capital costs and long payback periods make financing difficult, particularly without clear long-term revenue mechanisms.
  • Regulatory and market challenges – Some markets do not fairly compensate PS for the essential grid services it provides, while others classify PS plants as both energy generators and consumers, leading to double grid access charges.
  • Site selection complexities – Identifying viable locations that balance economic, social, and environmental concerns requires coordinated planning.

Key policy recommendations

To overcome these barriers, the IHA has put forward six key recommendations for policymakers:

  1. Assess long-term storage needs – Governments should evaluate future storage requirements to ensure energy systems remain reliable as more renewables are integrated. Clear long-term targets will give developers confidence to invest.
  2. Streamline site selection – Policymakers should identify the most suitable sites for pumped storage development, integrating planning with wind and solar expansion to maximise efficiency.
  3. Simplify permitting procedures – A predictable, time-bound process for approvals can reduce project delays and lower costs. Governments should ensure regulatory agencies are well-resourced to speed up decision-making.
  4. Create stable revenue mechanisms – Given the high upfront costs of PS projects, policymakers should introduce financial frameworks that provide long-term revenue certainty, attracting investment.
  5. Reward energy storage in markets – Electricity markets should be designed to fairly compensate storage technologies for their ability to stabilise the grid and support renewable energy integration.
  6. Pay for ancillary services separately – PS plants provide critical grid services such as frequency regulation and fast start-up capabilities. Ensuring these services are separately procured and remunerated will enhance system reliability.

Global case studies & targets

The toolkit includes case studies from several countries demonstrating successful policy initiatives including:

  • Australia’s integrated system plan – A framework to support long-term energy storage planning.
  • The UK’s pumped storage future – Policy discussions on unlocking new investments.
  • China’s “PSH-plus” model – A strategy combining pumped storage with other renewable energy assets.

The IHA emphasises that while progress has been made, further policy action is needed to meet global storage targets and ensure a reliable, flexible energy system for the future.

For more details, visit the IHA website.

* There will be a webinar at 16:00 GMT today that will dive further into this toolkit and cover pumped storage policy in action