Energy storage |
Right: Kruonis Pumped Storage Plant in Lithuania
The full guidance can be accessed at:
https://www.hydropower.org/ publications/enabling-new- pumped-storage-hydropower
then provide recommendations on how the major risks and issues should be addressed. “We agreed early in the process that it was important that we reach a collective view on how we can ‘de-risk the project’, not simply de-risk from any one participant’s point of view,” McMonagle explains. “We wanted to provide guidance for key decisionmakers, ie, policymakers, investors, off-takers, owners/developers, and the supply chain, so that they understand the unique risks and barriers to PSH development and are able to make early, informed decisions which will shape the development process to ensure reliability and confidence in delivering projects.” Described as being the outcome of “excellent analysis, healthy debate, and open sharing of industry
Pumped up principles
Overarching principles outlined in “Enabling New Pumped Storage Hydropower: A Guidance note for decision makers to de-risk investments in pumped storage hydropower”, include:
Private Sector Delivery, Public Sector Enablement The private sector is prepared to deliver PSH at the required scale, but success in liberalised electricity markets depends on governments recognising the need for storage, government support mechanisms where necessary, and long-term revenue visibility.
Investment in Project Development: Owners must invest in early project development. The more investment in preparation there is, and the sooner an experienced delivery team (owner and supply chain) focuses on setting the foundations, the greater the chances of success.
Good Project Management Equals Good Risk Management: Ensuring well-coordinated teams to support interface risk mitigation is essential.
Optimal Delivery and Commercial Models: Effective allocation of risk is vital. Risk should be minimised by those best placed to manage it, and residual risk should be shared by those best able to bear it.
best practice”, the guidance note will enable new market entrants to better understand the risks and create a mitigation strategy to address them. Key decision makers are also encouraged to adopt the recommendations to enable the industry “to deliver sustainable, affordable, reliable power for all”. Members of the working group gave their views of why such a guidance note was so important. “I have been working on PSH projects for over 35 years both for new construction and refurbishments and have seen many more projects fail in the process than I have seen succeed,” says Donald Erpenbeck, Vice President and Global Sector Leader for Dams & Hydropower at Stantec. “I continue to be surprised by experts/owners who oversimplify PSH and/or developers/owners who take PSH for granted in the energy transition mix. PSH Is one of the most technically difficult projects in the heavy civil works and the only thing more complicated than the technical is the financial/commercial aspects…. It is my hope that the guide produced by this group will increase the success rate of PSH projects in the development cycle and bring more projects to financial close in a more streamlined manner.” Amongst others, the guidance note raises the issue that the key risk to pumped storage hydropower is the difficulty in establishing a firm (bankable) revenue forecast in the absence of government support and regulation or a clear market mechanism, says Judith Plummer Braeckman, from the University of Cambridge Institute for Sustainability Leadership “Overcoming this risk is key to unlocking the power of pumped storage to support the grid in absorbing large amounts of variable renewable energy,” she says..
And as Jérôme Bridon, Senior Product Marketing Manager, GE comments: “To help reduce risks, ensure availability of skills and resources, and accelerate the development of pumped storage projects, collaboration between stakeholders along the value chain and supporting policies offering greater visibility are essential.”
34 | September 2024 |
www.waterpowermagazine.com
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