Efficiency of Pumped Hydro Storage
- Round-trip Efficiency: The round-trip efficiency of PHS facilities varies between 70% and 80%. This means that for every unit of electricity used to pump water to the upper reservoir, only 0.7 to 0.8 units can be generated when the water flows back down. Although this results in a net energy loss, PHS remains economical due to its ability to buy electricity at low prices during off-peak hours and sell at higher prices during peak demand.
- Net Energy Consumption: Despite the efficiency losses, the economic value lies in buying cheap and selling dear. This strategy can offset the energy losses, allowing PHS to generate revenue.
Impact on Overall Cost
- Variable Costs: The efficiency influences variable costs, as more energy is consumed in the pumping phase than is generated in the production phase. However, if the spot price during pumping is significantly lower than during generation, this can be profitable.
- Capital Costs: High initial capital costs are a significant factor for PHS installations. These costs are somewhat mitigated by the long lifespan of PHS facilities, often exceeding decades. The efficiency affects operational profitability but does not directly alter capital costs.
Financial Considerations
- Market Conditions: The profitability of PHS is heavily dependent on electricity price variations in the market. Large and frequent price differences between off-peak and peak hours enhance the economic viability of PHS projects.
- Long-term Investment: PHS requires substantial upfront investments, but its long-term stability and contribution to grid resilience can justify these costs as part of a broader energy strategy.
In summary, while the efficiency of PHS affects its operational economics, its overall cost-effectiveness is more closely tied to its ability to exploit market price variations and provide essential grid services.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-efficiency-of-pumped-hydro-storage-impact-its-overall-cost/
