1. Regulatory and Licensing Complexities
Pumped storage projects encounter protracted licensing processes, often taking twice as long as solar, wind, or natural gas projects. Closed-loop or off-channel systems still face regulatory hurdles despite recent efforts to streamline approvals.
2. Financial and Market Barriers
- Revenue uncertainty: Projects struggle to secure bankable revenue forecasts without government-backed mechanisms or clear market structures for ancillary services like grid stabilization.
- High upfront costs: Significant capital investment is required, with limited guarantees for long-term returns, especially in regions lacking supportive policies.
3. Aging Infrastructure and Climate Risks
Many existing facilities are aging, while new projects must mitigate risks from extreme weather events (e.g., flooding, shifting precipitation patterns) that threaten dam safety and operational viability.
4. Policy and Value Recognition Gaps
Current markets often fail to adequately compensate pumped storage for its grid-balancing capabilities, such as frequency control and renewable integration, reducing investor confidence. Policy frameworks in some regions lag behind Europe, where storage incentives are more advanced.
Key Quote: “The key risk […] is the difficulty in establishing a firm revenue forecast in the absence of government support and regulation” (Judith Plummer Braeckman, CISL Fellow).
Policymakers and industry stakeholders emphasize the need for revenue certainty and streamlined permitting to unlock the sector’s potential.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-challenges-facing-the-pumped-storage-hydropower-industry-today/
