Interest in Pumped Storage Hydro Is Heating Up

In March 2023, SSE Renewables, one of the leading developers and operators of renewable energy across the UK and Ireland, announced a £100 million down payment on the first pumped hydro storage (PSH) project in the UK since 1984. The Coire Glas PSH plant, located in Lochaber in the Scottish Highlands, is planned to deliver up to 1.5 GW / 30 GWh in 2031. The initial proposal for a 600 MW plant was increased to 1,500 MW in October 2020. The Coire Glas development will be an open loop system, using Loch Lochy as the lower reservoir and pumping water over 500 meters uphill where the upper reservoir will be constructed.

Valuable insights on policy, financing, and project development can be gained from Coire Glas both within and outside the UK. New PSH projects in developed countries are rare, so assessing issues arising in the UK can provide lessons relevant to other markets requiring large-scale energy storage.

PSH Projects Will Play a Key Role in the Green Energy Transition

PSH is the most mature long-duration energy storage (LDES) technology. Used since the late 19th century, it currently constitutes over 90% of grid energy storage capacity worldwide. However, the popularity of PSH projects has declined since the 1980s due to abundant cheap natural gas as well as the development of nuclear energy, which reduced the need to store energy. The UK currently has four PSH plants, providing a combined 26.7 GWh of energy storage capacity.

SSE’s initial investment in the Coire Glas project follows increasing market interest in LDES technologies. PSH will be one of the key technologies serving grid flexibility needs, providing a mature and tested energy storage solution. Since curtailment increases at higher renewable energy penetration levels, the duration over which suitable energy storage systems can economically operate is also expected to rise.

Policy Support Is Required for PSH Projects to Take Off

SSE anticipates making a decision about Coire Glas’s investment in 2024. The company estimates that a total capital investment of over £1.5 billion will be required to complete the project. LDES policy developments in the UK will be a key indicator for whether SSE decides to move forward with the project. The British energy security strategy anticipates £100 billion in private sector investment in the transition to net zero, driven by the government’s Ten Point Plan for a Green Industrial Revolution and its Net Zero Strategy. Because the biggest hurdle for PSH projects is the high upfront cost—over 70% of the estimated £1.5 billion investment in Coire Glas will be for civil engineering expenses—developers are likely to need government investment support to complete large PSH projects.

If the Coire Glas project goes ahead, it will provide many benefits to the UK electricity network—including rotating inertia for frequency control, rapid and extensive dynamic load following, and dynamic fault current injection for fault prevention systems. However, PSH developments require collaboration between the developer and relevant government agencies. In addition to finances, there are many questions to address in the construction of such a large project, including environmental concerns like water management and land use as well as socioeconomic issues.

External observers should monitor the policy developments in the space, as well as the permitting process, to learn about the modern-day challenges facing large PSH projects.