Global Pumped Hydro Storage Market Extends at a Healthy CAGR of 9.0% by 2031

Introduction

Pumped hydro storage is a method of storing energy that increases the potential energy of water stored in large reservoirs to be converted into electrical energy. Gravitational potential energy is stored by transporting water from a lower-elevation reservoir to a higher-elevation reservoir. By keeping excess electricity from continuous baseload sources and intermittent renewables like solar and wind, pumped-storage hydropower allows for the smooth operation of grids during peak demand periods. As of 2020, PSH accounted for around 93% of grid-scale energy storage applications globally (pumped storage hydropower). Due to elements including PHS projects' lengthy lifespans and affordable life cycle costs compared to other energy storage technologies. Integration of variable renewable energy sources and grid stability are expected to drive the PHS market throughout the forecasted period. 

Market Dynamics

Grid Stability Protection and Renewable Energy Integration Drives the Global Market

Over the past ten years, installed renewable energy capacity and generation have steadily grown worldwide. Since variable renewable energy (VRE) sources like solar and wind produce power irregularly and at varied rates, it is imperative to store and release this energy so that it may be used when there is a surge in demand. To prevent power quality issues, a baseload power capacity is also required to guarantee grid stability during periods of low VRE generation. This is essential for the effective integration of sporadic renewable energy sources. Energy-storing systems (ESS) are quickly becoming a requirement for renewable energy projects. The sector's explosive rise in the renewable energy arena is likely to be one of the critical drivers of the growth of the worldwide pumped hydro storage market over the forecasted period.

The energy storage technology that has historically been used the most frequently worldwide is pumped storage. The International Hydropower Association estimated that as of September 2021, pumped hydro energy storage devices were in use at over 90% of grid-scale energy storage installations worldwide. 733.27 GW (26.2%) of installed renewable energy capacity came from wind energy, while 713.97 GW (25.5%) came from solar energy, according to IRENA's forecasts for the year 2020.

Technologies with the Cheapest Lifecycle Costs Among Commercially Viable EST Create Tremendous Opportunities

PHS projects had the lowest lifecycle cost per unit of energy generated compared to all other commercially feasible ESTs as of 2020. Pumped hydro storage is the pioneering large-scale EST. Technology has thus come a long way. The technology has been fully commercialized at a fraction of its original cost over the last century. PHS projects have exceptionally long lifetimes, an average of nearly 80 years, contributing to their low lifecycle costs. So, PSH has a much lower total cost than its closest price competitor, lithium-ion battery systems, when taking into account its entire lifespan and storage capacity in the GWh class.

Longer project lifetimes are possible through the maintenance and upkeep of existing assets. The Engeweiher pumped storage facility in Switzerland is the oldest continuously operating pumped storage system in the world, built-in 1907. Since it was extended at the start of the 1990s, it will remain in effect until 2052. PHS is a proven technology with enormous volumes, lengthy discharge durations, and the highest rating among ESTs; therefore, these projects have a long life and a relatively cheap capital cost per unit of energy despite the increased initial investment.

Regional Analysis 

Asia-Pacific is the highest revenue contributor to the market. The ongoing transition from fossil fuels in the Asian-Pacific area led to the development of renewable energy and hydropower. The pumped hydro storage facilities are mainly in China, Japan, the ASEAN region, South Korea, and India. Additionally, China stated that its goal was to achieve carbon neutrality by 2060 and a peak in coal usage by 2025. A total of 13.76 GW of new hydropower capacity, including 1.2 GW of pumped storage from the final four Jixi project units, was installed in 2020 due to increased investment in the renewable energy sector. State Grid Xinyuan Company, a division of State Grid Corporation of China, developed it.

Europe is one of the most aggressive regions regarding climate change, and hydropower has continuously been the region's leading renewable energy source. The contributions of solar and wind power increase as the country transitions to a greener energy mix. The year 2020 marked a critical turning point in the European Union's decarbonization path as it marked the first time that all renewable energy sources together produced more electricity than fossil fuels. Despite the COVID-19 pandemic's decreased demand for electricity, the world's hydropower output increased by 4% in 2020 compared to 2019, partly due to more robust production in the Nordic and Iberian regions. Improvements in pumped storage hydropower were then observed in the area to ensure a more dependable and flexible energy source.

Key Highlights

• The global pumped hydro storage industry was valued at USD 329 billion in 2022. It is projected to reach USD 714.55 billion by 2031, growing at a CAGR of 9.0% during the forecast period (2023-2031).
• Based on type, the global pumped hydro storage market is bifurcated into open-loop and closed-loop.
• The Asia-Pacific region is the fastest-growing region.

Competitive Players

1. General Electric Company
2. Siemens AG
3. Andritz AG
4. Mitsubishi Heavy Industries Ltd
5. Voith GmbH and Co. KGaA
6. Ansaldo Energia SPA
7. Duke Energy Corporation
8. EON SE
9. Enel SPA
10. Electricite de France SA (EDF)
11. Iberdrola SA.

Recent Developments

• February 2023- Slovenia utility DEM plans 60MW battery storage co-located with a hydroelectric plant and new PHES unit.
• February 2023- Hitachi Energy innovated a pioneering solution for a pumped hydro storage plant in Europe.

Segmentation

1. By Type
   1. Open-Loop
   2. Closed-Loop