March 2021

While there is a general understanding that pumped storage hydropower (PSH) is a valuable energy storage resource that provides many services and benefits for the operation of power systems, determining the value of PSH plants and their various services and contributions 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), was to advance the state of the art in assessing the value of PSH plants and their contributions to the power system. The specific objective was to develop a 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 were: (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.

In addition, in a companion project, WPTO is currently funding the development of an online PSH Valuation Tool, with the objective to help the Guidebook users navigate through the PSH valuation process.

Report Organization and Content

The PSH Valuation Guidebook includes the following sections:

Executive Summary

1. Introduction

2. General Overview of Valuation and Decision Analysis Methods and Approaches

3. Valuation Guidance for Pumped Storage Hydropower

4. Methodological Approaches for Valuation of PSH Services

5. Integration of Results for Valuation of PSH Services

6. Summary and Conclusions


A: List of Metrics

B: Representative Analytical Modeling Tools

C: Capacity Expansion Planning

D: Cost-Benefit Analysis

E: Multi-Criteria Decision Analysis

F: Glossary of Terms

Following the Introduction, Section 2 provides a general overview of methods and approaches typically used in valuation analyses of various grid technologies. Section 3 provides an overview of the proposed PSH valuation framework and describes in detail the 15-step valuation process. Section 4 provides extensive technical detail on various methods and approaches that can be used to assess, quantify, and estimate the value of different PSH services and contributions to the grid. Section 5 discusses how to integrate the results of valuation assessments for various PSH services in a comprehensive and consistent manner and develop the resulting value streams for use in the cost-benefit analysis. Section 6 provides a summary of key conclusions.

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