Pumped Storage Hydropower Valuation Guidebook: A Cost-Benefit and Decision Analysis Valuation Framework
As an energy storage technology, pumped storage hydropower (PSH) supports various aspects of power system operations. However, determining the value of PSH plants and their many services and contributions to the system has been a challenge. While there is a general understanding that PSH resources provide many services and benefits for the operation of power systems, estimating the value of these services—and especially the monetary value of some of those services—has been a challenge. The objective of this project, funded by the U.S. Department of Energy’s (DOE’s) Water Power Technologies Office (WPTO), is to advance the state of the art in assessing the value of PSH plants and their contributions to the power system. The specific goal is to develop detailed, step-by-step valuation guidance that PSH developers, plant owners or operators, and other stakeholders can use to assess the value of existing or potential new PSH plants and their services. The specific goals of this project are: (1) to develop comprehensive and transparent valuation guidance that will support consistent valuation assessments and comparisons of PSH projects or project design alternatives, (2) to test the PSH valuation guidance and its underlying methodology by applying it to two selected PSH projects, and (3) to transfer and disseminate the PSH valuation guidance to the hydropower industry, PSH developers, and other stakeholders. The authors believe that the application of a consistent, transparent, and repeatable valuation process will advance valuation assessments and allow stakeholders to compare valuation analyses performed for different PSH projects or design alternatives. It will also increase the acceptance of valuation results and enable better understanding of the true value that PSH technology brings to the grid.