A study recently released by Scottish Renewables, The Benefits of Pumped Storage Hydro to the UK, seeks to analyze the multiple benefits of pumped storage hydro for the UK power system, as well as the many issues that obstruct its development.
“It is widely acknowledged that greater flexibility is required in the electricity system of Great Britain (GB) to decarbonize at acceptable cost to consumers,” the report says. “In its Smart Power report, the National Infrastructure Commission estimated that greater flexibility could save consumers up to £8bn annually by 2030.”
The report indicates “pumped storage hydro (PSH) is one of the best proven technologies at scale to provide the required flexibility.”
There are four PSH schemes in GB, with an aggregate power output of 24 GWh and aggregate storage capacity of 2.8 GW. “No new schemes have been commissioned since the 1980s, but a number of sites have been identified by investors at which additional PSH capacity could be developed. This includes significant storage capacity which now has planning consent, one of which alone could more than double the total existing UK storage volume.”
The report contains several recommendations of actions for government and regulators to take to correct market failures:
- Internalization of economic externalities and missing markets: It will be essential to develop market mechanisms that can internalize the value to society of economic externalities that are not fully reflected at the moment.
- Correct distortions within network charging arrangements: A number of issues have called into question the appropriateness of existing charging arrangements. These arrangements must create a level playing field and allow the most efficient technologies to compete.
- Reduction of commercial risk associated with future policy decisions: If storage developers are to be expected to lace large amounts of capital at risk to deliver long-term investment in storage assets, it will be essential for government and regulators to provide a degree of commercial guarantee behind future policy direction.
- Introduce market mechanisms to recognize the long-term nature of the benefits of storage: The wholesale and capacity markets for power, balancing and ancillary services fail to deliver an efficient bankable result when the cost of providing those services involves relatively high capital cost assets, such as PSH.
The study was completed by DNV GL and was commissioned by Scottish Renewables on behalf of the Pumped Storage Hydro Working Group. Funding partners are ScottishPower, SSE and the Scottish government.
The full report is available here.