AI | storage demand AI drives
Surging electricity demand from artificial intelligence and hyperscale data centres is forcing utilities and policymakers to rethink grid reliability. A new industry report argues that large- scale pumped storage hydropower – particularly in the western US – could provide the long- duration capacity and grid stability required to support the next wave of digital infrastructure.
The Goldendale Energy Storage Project in Klickitat County, Washington, will deliver 1,200MW of dispatchable capacity with up to 12 hours of storage once completed. The project, developed by Rye Development and Copenhagen Infrastructure Partners, secured a 40-year FERC licence in 2026. Photo courtesy of Rye Development
ARTIFICIAL INTELLIGENCE IS reshaping the electricity sector as rapidly as it is transforming the digital economy. The explosive growth of hyperscale data centres, advanced semiconductor manufacturing and electrified industry is creating a new category of electricity demand: large, concentrated loads requiring extremely high reliability. For utilities and grid operators, this is creating a challenge that goes beyond simply adding new generation capacity. The issue is whether electricity systems can deliver reliable power at scale, in the right locations, and within the timelines demanded. A new report from the National Hydropower Association (NHA) argues that pumped storage hydropower (PSH) could play a central role in meeting that challenge. The report – Winning the AI Race: Tapping into Pumped Storage Hydropower – identifies more than 60GW of proposed PSH capacity currently moving through the US Federal Energy Regulatory Commission (FERC) licensing pipeline, across approximately 80 projects nationwide. Importantly, around 85% of those projects are located in the Western US, where electricity demand is expected to grow fastest and where many new data centre developments are being planned. For developers and system planners, the alignment between emerging demand centres and proposed storage projects highlights the potential role of long-duration storage in supporting the next phase of grid expansion.
Structural pressures on the grid The western US is expected to experience some of
the most dramatic changes in electricity demand over
the next decade. According to the report, electricity consumption across the Western Interconnection is projected to grow by more than 20%, driven primarily by data centres, advanced manufacturing and broader electrification. At the same time, more than 24GW of existing coal, gas and nuclear generation is scheduled to retire across the region. For grid operators, this combination of rising demand and declining conventional generation presents a structural reliability challenge. The replacement capacity coming online is expected
to consist largely of variable renewable generation and short-duration battery storage. While these resources play a critical role in decarbonisation strategies, they do not replicate the operational characteristics of the synchronous generation that has historically stabilised electricity systems. For large data centres powering AI workloads, this issue is particularly acute. These facilities require extremely stable power supplies and cannot tolerate extended outages or significant voltage or frequency deviations. The NHA report argues that PSH can directly address this emerging reliability gap. In addition to providing long-duration energy storage, PSH facilities contribute synchronous inertia, voltage support and black-start capability – services that are becoming increasingly scarce as conventional generation retires.
Long-duration storage at scale In the US, pumped storage already represents the
dominant form of long-duration energy storage. According to the report, PSH accounts for nearly 90% of installed long-duration storage capacity in the country. While battery storage has expanded rapidly over the past decade, most installations provide only a few hours of energy capacity. By contrast, PSH facilities are typically designed for eight hours or more of generation, enabling them to manage extended periods of system imbalance. This capability is becoming increasingly valuable as power systems integrate higher shares of wind and solar generation. Long-duration storage allows operators to shift large volumes of energy across daily or multi-day cycles, smoothing variability and reducing curtailment. PSH also provides operational characteristics
that remain difficult to replicate with other storage technologies. Mechanical inertia, for example, remains an inherent feature of rotating hydro turbines and generators. As renewable penetration increases and conventional
synchronous generation declines, this form of physical inertia is becoming increasingly important for system stability.
28 | April 2026 |
www.waterpowermagazine.com
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