UK hydro storage is ‘undervalued’

There needs to be a radical overhaul of the way pumped storage hydro’s benefits are quantified to reflect the value it can bring to the electricity system, according to a new report by DNV GL.

The report – ‘The Benefits of Pumped Storage Hydro to the UK’ – was funded by the Scottish Government, SSE and ScottishPower and makes several recommendations to encourage the expansion of the technology.

It calls for market mechanisms that reflect the value pumped storage hydro brings to the electricity system.

Government and regulators should work closer together to reduce the risk presented by policy decisions, while government should also consider the introduction of a cap and floor style mechanism, as used by interconnectors which have a similar investment profile to pumped storage hydro, the report said.

The government should also ensure that network charging arrangements are fair and considered through a holistic review, it added.

The report noted that the UK electricity system already benefits from 24GWh of pumped storage capacity, split across four sites, largely in Scotland, with another 50GWh having planning permission.

DNV GL said the technology provides system services and alleviates network congestion costs by storing excess generation in constrained zones for later use, thereby avoiding or deferring investment in network reinforcement.

The technology also avoids wasting low-carbon electricity during periods of low electricity demand, as well as the environmental impact of new transmission infrastructure, the report said.

Scottish Renewables policy officer Hannah Smith said: “It is important that government creates the right policy environment to encourage investment.

“We would like to see a more level playing field for pumped storage hydro which reflects the value it can bring to the electricity system.” 

SSE director of development Mike Seaton said: “We’d like to see all parties working closely together to examine what steps can be taken to remove investment barriers which prevent new pumped storage projects being built.”

ScottishPower Generation Holdings chief executive Neil Clitheroe said: “We do not need subsidy to invest in electricity storage, but we do need a Government policy that would support our investment, and we will continue to work with Holyrood and Westminster to find common ground.”

Image: Cruachan pumped storage hydro power station in Scoland (Wikimedia Commons)