By Scott DeNeale and Eve Tysbina
As pumped storage hydropower (PSH) is becoming increasingly in demand to supplement new wind and solar power development, various siting and design options are being considered. Among these is the potential to develop PSH on current or former mine land.
An effort funded by the U.S. Department of Energy’s (DOE) Office of Clean Energy Demonstrations (OCED) aims to accelerate such clean energy development by demonstrating use of PSH and other clean energy technologies on mine land. During the first stage of research and background analysis, three U.S. national laboratories — Lawrence Berkeley National Laboratory, National Renewable Energy Laboratory (NREL) and Oak Ridge National Laboratory ORNL) — conducted literature review, studies and stakeholder outreach to assess development opportunities and considerations that are important for clean energy deployment on U.S. mine land. ORNL led the PSH portion of the effort. Among the challenges and considerations addressed are physical site characteristics, infrastructure access, and regulatory and socioeconomic considerations.
Notice: This manuscript has been authored by UT-Battelle, LLC, under contract DE-AC05-00OR22725 with the US Department of Energy (DOE). The US government retains and the publisher, by accepting the article for publication, acknowledges that the US government retains a nonexclusive, paid-up, irrevocable, worldwide license to publish or reproduce the published form of this manuscript, or allow others to do so, for US government purposes. DOE will provide public access to these results of federally sponsored research in accordance with the DOE Public Access Plan (https://www.energy.gov/doe-public-access-plan).
PSH development in the U.S.
As of Dec. 31, 2022, there are 42 open-loop PSH projects operational in the U.S., totaling 21.98 GW in capacity.1 Only one closed-loop project is operational, totaling only 0.04 GW. None of these projects are on current or former mine land.
According to data maintained by ORNL,2 the U.S. project development pipeline included 76 closed-loop PSH projects (totaling 68.0 GW in potential) and 18 open-loop projects (totaling 19.8 GW in potential). Among these projects, only three (totaling 2.1 GW, all closed loop) have been issued a license by the Federal Energy Regulatory Commission (FERC). Another 57 projects have received a FERC preliminary permit, while 34 have a pending preliminary permit. The wide majority of PSH projects in the development pipeline are being pursued by private/non-utility developers. Figures 1 and 2 plot PSH development pipeline data by status and developer type.
An estimated total of 13 PSH projects (totaling 3.42 GW) sited on mine land are in the development pipeline as of Dec. 31, 2022. All 13 are closed-loop designs. While none are operational, one project (Eagle Mountain) has been issued a license by FERC. Other projects either have been granted a preliminary permit or have a pending preliminary permit. Figure 3 provides a map of the PSH mine land projects considered for development.
Key development and deployment considerations
From June to October 2022, national labs conducted literature review and research, held a series of industry expert interviews, and hosted two in-person and one virtual stakeholder workshops. Total participants were about 500 for the workshops, across six technology categories, including significant PSH stakeholder participation. The efforts helped ORNL identify five key considerations associated with developing PSH facilities on mine land:
- Physical site characteristics. Some characteristics, such as the reservoir storage volume and the hydraulic head between the two reservoirs, do not deviate from regular PSH facilities. However, if the lower reservoir is represented by an underground mine, the presence of boreholes may dictate the arrangement, length and sizing of water conveyance structures. The geologic stability of the mine land used for PSH reservoir construction is extremely important to ensure reservoir water containment under the highly variable loading conditions. The presence of toxic releases in some mines provides an additional concern for water quality, which is not typically present in other PSH facilities. Also, like traditional PSH, lining may be required for both reservoirs, and upper reservoirs may require a spillway to avoid overtopping failure from high-precipitation inflows.
- Infrastructure access. PSH requires a set of substation equipment that is significantly different from many other clean energy technologies, but it was also found to require much more transmission investment. Large mines that could provide enough physical water storage are usually served by transmission lines rated up to 135 kV, which may not be sufficient for a large PSH project, such as the previously mentioned 1.3 GW Eagle Mountain project in California. Unlike some other technologies such as solar, PSH would likely require significant costs associated with transmission expansion.
- Regulation of PSH on mine land. Regulation is in line with traditional PSH development and is required both through local laws and partially through the federal requirements. FERC guidance discusses permitting of PSH projects, which includes the description of regular and expedited licensing processes for closed loop reservoirs. The main considerations highlighted in the guidelines include geology and soil, water resources, fish and aquatic resources, terrestrial habitat, endangered and protected species, tribal resources, socioeconomics, and aesthetics and recreation. The licensing process requires documented evidence of consultations on the areas of concern with relevant stakeholders such as state and federal agencies, Indian tribes, local landowners and nonprofits. The regulations related to grid interconnection and health and safety are typically local and are not covered in the federal rules.
- Social impacts, including general social acceptance of large infrastructure projects and project-specific considerations. As with other infrastructure and technology-based projects, information about social acceptance could be collected through stakeholder sessions or representative population surveys. International efforts to assess social considerations of PSH mine land application include evaluating demographics, openness to large infrastructure development, openness to renewable energy and storage in the particular community, anticipation of benefits and challenges related to the project, and sources of news about the project. A series of considerations related to energy justice were also highlighted by industry stakeholders and government officials.
- Access to financial resources. Considering many proposed PSH mine land projects are 100+ MW in size, projects could easily cost up to $1 billion or more. There are two major ways in which U.S. developers finance PSH projects. Vertically integrated utilities finance construction through own equity and debt. Utilities operating in power markets tend to split the investment. Part of the cost, which was found in some instances to be around 20%, is financed through investor equity. The other part is raised in the markets. Other sources, such as public bonds though public-private partnerships or public development grants, were not found to be significant for open pit PSH. Some developers mention tax credit as a helpful but not critical component of the financial structure. In terms of revenue streams, the regulated utilities in vertically integrated systems usually adopt revenue agreements. The investors that operate in wholesale power markets list several sources of revenue. According to investor opinions, revenue from ancillary services could make up to 70% of total project operating income. Another 30% would come from arbitrage in electricity markets.
The review suggests that developing PSH projects on former mine land is a viable option, as evidenced by the increasing interest found in the FERC development pipeline and among stakeholders involved in the DOE OCED and national laboratory outreach and engagement activities.
Proposed location of the Eagle Mountain pumped storage hydro project upper reservoir.
Federal clean energy demonstration opportunities
The DOE OCED issued a $450 million funding opportunity announcement (FOA) in April 2023 seeking proposals to “demonstrate the technical and economic viability of deploying clean energy projects on current (operating) and former (abandoned or inactive) mine land.”3 This opportunity will fund up to five demonstration projects, each of which will be funded at $10 million to $150 million, with a minimum 50% cost share. While no further proposals are being accepted, FOA awards should be announced in fall 2023 after the August full application deadline.
In addition to this FOA, the DOE OCED is also offering technical assistance through NREL.4
Scott DeNeale is a research staff member (water resources engineer) and Eve Tsybina is a research staff member (energy economist) with Oak Ridge National Laboratory.
Notes
1Johnson et al., 2023, https://hydrosource.ornl.gov/dataset/EHA2023
2Johnson and Uría-Martinez, 2023, https://hydrosource.ornl.gov/dataset/us-hydropower-development-pipeline-data-2023
4https://www.nrel.gov/state-local-tribal/ceml-technical-assistance.html
