The Return of Pumped Storage Hydro

No pumped storage hydro schemes have been built in the UK for almost forty years. However, they can make a contribution to the Government’s strategic goals and deliver significant economic impacts.

BiGGAR Economics was commissioned by members of the UK Pumped Storage Hydro Working Group in early 2023 to consider the potential economic contribution that the technology can make. This group is convened by Scottish Renewables and the developers include Buccleuch Estates and the Foresight Energy Infrastructure Group, Drax, Intelligent Land Investments (ILI) and SSE Renewables.

Pumped storage hydro is an established and reliable technology which can play a significant role in supporting the UK’s transition to net zero by providing long duration, low carbon storage and improving the security of supply.

Importantly, because around 70% of the contracts associated with pumped storage hydro are related to civil engineering, a high share of contracts would be secured in the UK and in local areas. The technology, therefore, has the potential to create a substantial economic impact. 

BiGGAR Economics modelled six projects that are being brought forward by members of the Working Group. To develop and build these projects would require an investment of up to £8 billion, with an economic impact of: 

  • up to £5.8 billion million Gross Value Added (GVA) and 92,800 years of employment in the UK (with peak employment of 14,800 jobs annually);
  • including £926 million GVA and 14,500 years of employment in the local area (equivalent to £89 million GVA and 1,200 jobs annually).

These projects are in areas where they can support levelling up, are relatively labour intensive and many have already received planning permission, so are ‘shovel ready’.

Other pumped storage hydro projects could allow the technology to play an even greater role in the transition to net zero, with up to £12.7 billion in further investment and additional economic impacts.

However, current market arrangements do not provide the long-term investment signals required to bring forward investment in pumped storage hydro. Introducing a financial mechanism, such as a cap and floor, would reduce risk and incentivise investment, unlocking these substantial economic benefits.

Further Reading

More information about our economic impact assessment of pumped storage hydro can be found at the link below:

Posted 10.05.23

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