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deep dive

Support mechanism primes pumped storage for comeback

  • There is a huge need for long duration storage and the most obvious and available solution is pumped storage hydro. Even if competing technologies were readily available – which they are not – the duration and efficiency of pumped storage is hard to beat
  • Belated recognition that a cap and floor system is vital to create a solid business model is welcome. However, there needs to be sustained urgency to ensure a steady project pipeline
  • Co-ordination will be critical. Most projects will be in Scotland. The volume of material and personnel required could easily strain the construction sector’s capacity to respond

The rapid rise of renewable generation on the UK grid has created a major problem. Sometimes there is too much green energy, at other times not enough. The more fossil fuels are retired, the greater the need for flexibility becomes.

While some point to the promise of just-round-the-corner technologies like carbon capture and green hydrogen, there is a hero already in our midst. A technology that is stalwart, established and ideally suited to the moment – pumped storage hydro (PSH).

Evolution of power provision

The UK has 2.8 GW of PSH capacity across four projects that were built decades ago to complement the country’s fleet of nuclear plants. These old PSH projects were necessary to address the quintessential surge in demand at half-time during football matches or the end of TV soaps.

Some 40 years later, the UK finds itself desperately in need of storage solutions for a set of very different problems.

For years, the country stored power in the form of fossil fuels – coal and gas plants could be turned up or down as needed. But these are being phased out to hit emissions targets.

Meanwhile, the combination of growing wind power and transmission bottlenecks is forcing the grid to curtail Scottish wind power and turn on gas plants at a cost of billions. The UK will need every tool available – demand response, new interconnectors and market reform – but long duration storage is the cornerstone.

A 2022 report by LCP Delta, for energy company Drax, found that during 2020-2021, almost 60% of significant wind curtailment instances lasted more than three hours. The more the UK builds wind, the bigger an issue curtailment will become. Given the shift to flexible electricity prices, the more frequent the instances where energy is essentially free.

Longer and stronger

Engineers are hard at work developing new and innovative ways to store energy. But right now there is only one established long duration energy storage (LDES) technology: pumped hydro. Even cutting-edge solutions such as flow batteries or liquid air energy storage (LAES) cannot match the duration that PSH offers.

PSH beats commercially theoretical competitors. But it will also last longer than any of them and – with large spinning turbines – provides ancillary benefits like inertia.

So, this is proven and practicable technology. Why has the UK not built out a new fleet of PSH projects?

The problem is that large upfront capital costs and the revenue model for long duration storage makes the business case challenging. 

“There’s a lot of risk,” said Simon Gill, an independent energy consultant who has worked with the Scottish government.  “You’ve got the greater complexity that your business case effectively depends on having lots of volatility in the market – that’s even harder to forecast.”

The PSH industry has been lobbying the government for years to enact a straightforward solution that would provide investors with enough certainty to greenlight projects – a cap and floor.

Drax's Cruachan pumped storage facility, in Scotland
Drax’s Cruachan pumped storage facility, in Scotland

Designing policies

At long last, the government has listened. In an LDES consultation that finished in March, the Department of Energy & Net Zero (DESNZ) said it intends to create a cap and floor and asked the industry for thoughts on its design.

The design is yet to be confirmed but there should be none of the uncertainty or disagreement that characterised the hydrogen business model.

Everyone expects the PSH cap and floor to essentially be a copy of the one used for interconnectors, where the regime sets a yearly maximum and minimum revenue that the asset can earn. These are then revisited every five years. So far so good.

The British Hydropower Association (BHA) has warned that following the same timeline as the interconnector regime would take another two years. Too long, from the association’s perspective.

The BHA is not the only entity pushing for pace. In March this year, former Australian prime minister and President of the International Hydropower Association Malcolm Turnbull sent a letter to Prime Minister Rishi Sunak welcoming the cap and floor announcement.

Turnbull urged that the scheme move quickly and open applications in early 2025. UK industry figures say DEZNZ is aware of the urgency. Ideally it wants to open applications for the new scheme in the first quarter of 2025. A general election is due in the interim, though, making speed more hope than expectation.

Co-ordination critical

A cap and floor system would help tackle the perennial problem of supply chains.

“It’s great if we get this mechanism in place, but it needs to happen sooner rather than later,” said Kate Gilmartin, CEO at the BHA. “Even if we do have it in place at the beginning of next year, there’s no guarantee that that supply chain will mobilise to deploy for UK projects because there’s a big global order book.”

Then there are the practicalities of how to co-ordinate the deployment of multiple similar projects in a relatively small market. Most of the pumped storage will be in Scotland. Having several multi-billion pound civil engineering projects happening at the same time will draw in a lot of contractors.

The Scottish government needs to play a convening role.

“We need to have processes in place to ensure the right kind of development to happen without projects impacting on each other or the wider market as well,” said Gilmartin.

Streamlining permits

In May 2023, the then first minister, Humza Yousaf, wrote to Sunak, on the topic. Yousaf joined calls for the UK government to support pumped hydro. Yousaf also raised the issue of “planning and consenting timescales” as a barrier for deployment.

“One key barrier is the Scottish government’s lack of devolved powers to reform the consenting regime in Scotland for grid projects and large scale electricity generation, the framework for which is set out in the UK Electricity Act – and which neither the Scottish Parliament or Scottish ministers can amend,” Yousaf wrote.

He also noted the Scottish government was “considering options and engaging with key stakeholders to streamline our processes and make efficiencies in existing consenting processes”. 

As to whether this streamlining has happened, a Scottish government spokesperson told E-FWD that the administration has been “planning for an increase in [pumped storage] applications for consent for some time”.

The government has made wider commitments to streamline processes and increase skills and resources across planning authorities, the spokesperson added. “We expect this will enable the determination of energy consents on a quicker and more consistent basis.”

It is laudable the government is preparing for the inflow of applications. It would be a shame if entirely predictable shortages of contracting capacity and skills delayed much-needed projects.

Priming the pipeline

The next question is how much PSH the cap and floor scheme could unlock and how quickly developers could deliver.

Critics and developers of competing technology have used the long development times on proposed projects as evidence that PSH moves too slowly to be a major contributor.

SSE Renewables’ Coire Glas project has been in the pipeline for well over a decade. It has yet to break ground.

Analysts have rightly pointed out that the company has had its designs and consents in place for years. The project has been increased and expanded in the intervening years. Ultimately, SSE has not reached a final investment decision (FID) because of the absence of a cap and floor.

“Obviously, it takes time to develop a project. But we shouldn’t say that because Coire Glas has taken 15 years that all future projects would also take that time,” said Gill.

ILI Group began developing pumped storage sites years ago in expectation that the technology would prove critical to the transition. The firm looked at over 130 locations in order to whittle this down to three. It then moved forward to secure applications and consents.

In December 2023, ILI sold the 450 MW Red John site to Statkraft. Mark Wilson, ILI CEO, hopes to see development on Red John (now called Loch na Cathrach) start in the next 18 months.

A second ILI site – Balliemeanoch – could be up to 1.5 GW and will be one of the biggest projects in Europe. Wilson expects that project to be in the planning system any day.

Pumped storage plans

The BHA says there are currently 12 projects with total capacity of 7GW – most in Scotland – in the PSH pipeline, all at varying stages of development.

Wilson has a higher estimate of just over 9 GW. He is confident that PSH will ultimately provide between 10 GW and 20 GW of storage capacity. “Probably closer to 20 GW,” he says, eager to dispel a common misconception that there are only a few viable locations. “There’s loads of sites available.”

Scottish Renewables claims its members have a combined pipeline of 9 GW of new PSH projects. These have over 190GWh of storage capacity.

Pumped storage relies on having two reservoirs in close proximity. Scotland’s topology means it has the lion’s share of suitable sites. But Quarry Battery Company has worked with consultants Fichtner to identify disused quarries that can be converted into pumped storage projects.

SSE Renewables plans to convert its 152.2 MW Sloy hydropower plant into a pumped storage facility.

All about the hours

Differentiating between capacity and duration is critical. Some hydropower industry figures feel more should be done to highlight the need for not just gigawatts, but gigawatt hours (GWh). When the focus turns to hours of energy, the reality becomes clear.

At the end of 2023, green energy trade association RenewableUK estimated the country’s operational battery capacity had reached 3.5 GW, providing just 4.2 GWh of storage.

The UK’s 2.8 GW of operational pumped storage, meanwhile, provides 32 GWh of storage. The long duration that PSH offers is ideal for tackling multi-day events. This can take the form of excess wind, when energy can be captured for negative prices, or when there is no wind and generation drops.

RenewableUK estimated that the total battery pipeline – including projects in early pre-planning – was around 81 GW. Precise data on GWh was unavailable. The association’s modelling estimated that if all this were to be built it would provide around 156 GWh of storage.

By contrast, just the 7 GW of PSH in the BHA pipeline would deliver 135 GWh.

This may seem sizable, but now when set against the scale of curtailment. A 2023 report from Carbon Tracker estimated 6.5 TWh of wind curtailment between January 2021 and April 2023. Of this, 3.4 TWh was in 2022 alone.

“Curtailment is going to start coming in lumps of tens and hundreds of gigawatt hours at a time,” said Gill. “So effectively, you need something that can absorb hundreds of gigawatt hours [of energy].”

Cost savings

This is why pumped storage can lower not just emissions intensity, but also system costs.

In a recent DESNZ-commissioned report, LCP Delta and Regen modelling suggested that adding just 3 GW of LDES by 2035 would decrease power system emissions intensity by up to 8%. Adding 12 GW could reduce the emissions intensity by up to 28%.

Furthermore, the report found 20 GW of LDES by 2050 would save up to £24 billion in system costs.

The report also argues pumped storage can act as a “risk mitigation”, should other technologies prove harder to deliver than hoped.

Evolving technologies

Although seasonal storage is likely the most plausible use for hydrogen, plans are not yet fully developed. SSE Thermal is working on such a project in east Yorkshire, with the potential to store up to 320 GWh of energy. The company is working, alongside Equinor, on a hydrogen-fuelled power plant at Keadby.

The UK is also planning a series of gas-fired plants with carbon capture.

Both green hydrogen and carbon capture are likely to emerge as important technologies. But the more sceptical one is about how quickly this will happen, the greater the argument is for utilising every megawatt of pumped hydro available.

“If we’re going to achieve those [emissions] targets by 2035 we just need to try and build out everything,” said George Martin, a senior consultant in LCP’s Energy Analytics practice.

The LCP-Regen report looked at a 2035 scenario with low use of gas CCS and green hydrogen. In this case, the only way to get emissions intensity to fall to the same level as the DESNZ net zero higher demand is adding 9.5-12 GW of what the report terms the “established LDES long archetype”.

“That’s pumped storage,” said Martin.

In a world rife with disagreement over targets, technologies and timescales, the existence of a no-regrets power project is a rare thing. The UK has a pipeline full of them, it should start building.

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