Erik Steimle, Chief Development Officer at Rye Development, shares his insights into closed-loop pumped-hydro energy storage systems. He explains how these innovative projects use artificial reservoirs to provide long-duration storage without harming natural waterways. The discussion highlights the economic potential, longevity, and efficiency of pumped-hydro compared to lithium-ion batteries. Steimle also addresses regulatory challenges, community engagement, and recent bipartisan support aiming to streamline permitting for these crucial renewable energy initiatives.
Closed-loop pumped-hydro systems utilize two artificial reservoirs, offering reliable long-duration energy storage without impacting natural waterways.
While upfront costs of pumped hydro exceed a billion dollars, their longevity of over 100 years ensures lower overall lifecycle costs.
The permitting process for new pumped hydro facilities is complex and lengthy, often taking eight to ten years due to federal regulations.
Deep dives
Pumped Hydro Energy Storage Basics
Pumped hydro energy storage serves as a crucial technology for balancing renewable energy sources like solar and wind on the grid. It operates by pumping water uphill during times of excess energy, then releasing it downhill through turbines to generate electricity when demand is higher. This method effectively acts as a large battery, providing longer duration storage beyond the capabilities of lithium-ion batteries, which typically last around ten hours. The recent interest lies in closed-loop pumped hydro systems, which utilize two artificial reservoirs instead of relying on natural rivers and dams, vastly expanding potential locations for such projects.
Environmental Impacts and Sustainability
Closed-loop pumped hydro systems offer significant environmental advantages compared to traditional methods. Since these projects do not affect natural waterways, they minimize ongoing water consumption and ecological disruption. The water used in the system is sealed within lined reservoirs, allowing for a one-time fill-up that only requires minimal compensation for evaporation. This makes them more sustainable and easier to permit, as they do not create the ecological concerns commonly associated with large dams and rivers.
Economic Considerations and Long-Term Viability
The upfront capital costs for pumped hydro systems can exceed a billion dollars, making them initially more expensive than lithium-ion batteries. However, their long lifespan—often exceeding 100 years—means they can provide lower overall costs over time. The Department of Energy has noted that the levelized cost of pumped hydro ranges from $70 to $170 per megawatt-hour, which is competitive with other storage technologies. Utilities view these projects as valuable long-term investments due to their reliability and lower environmental impact.
Challenges in Development and Permitting
Developing new pumped hydro facilities in the U.S. often involves an extensive and complex permitting process, typically lasting eight to ten years. This lengthy timeline can be attributed to the federal regulations enforced by the Federal Energy Regulatory Commission, which adds layers of public engagement and environmental assessments. Despite the reduced environmental impact of closed-loop systems, they still face the same regulatory hurdles as traditional pumped hydro projects. The hope remains that recent legislative efforts will streamline the permitting process to encourage more investments in this technology.
Future Outlook and Market Position
There is a growing interest among utilities in the U.S. for long-duration energy storage solutions, presenting a promising market for pumped hydro systems. The current demand for energy storage is being driven by the increasing load associated with new technology, such as data centers. Although there are numerous proposed pumped hydro projects across the country, their realization hinges on overcoming the competition from rapidly advancing lithium-ion battery technologies. Ultimately, the unique advantages of pumped hydro may make it an essential component of the future energy landscape, especially in areas with favorable geography.
In this episode, I talk with Erik Steimle of Rye Development about the new wave of "closed loop" pumped-hydro storage projects. Unlike traditional systems that rely on rivers and dams, these projects use two artificial reservoirs — providing reliable long-duration storage without impacting natural waterways. We explore the economics of these billion-dollar facilities, their 100+ year lifespans, and how they compare to lithium-ion storage.
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