Sunday Train: The Era of Reverse Pumped Hydro

In a sense, Sunday Train has been mentioning reverse pumped hydro before the Sunday Train actually existed. In 2007 at Daily Kos, in "Driving Ohio on Lake Erie" (reprinted in 2012 at Burning the Midnight Oil), reverse pumped hydro was mentioned as one technology for smoothing the variability of Lake Erie offshore wind. In 2008 on Docudharma, talking about what we could do if we pursued serious goals, as opposed to "predicting" what "they" are "likely to do", I mentioned it again. I mention it again in The Myth of Baseload Power. And it features in the description of where Biocoal would fit into among dispatchable renewable energy in Unleashing the Political Power of Biocoal.

But one thing that Sunday Train has not done is to give a closer look at the current state of play of reverse pumped hydro in the United State, what are the regulatory obstacles that stand in the way of greater development of reverse pumped hydro, and what can be done to sidestep or overcome those regulatory obstacles. Evidently, I must have been saving all of that for today, for placement below the fold.

What is Reverse Pumped Hydropower, and How Does It Help?

The idea of reverse pumped hydro is straightforward. If a reservoir dam can store energy from the annual flow of a river, generating power by running water stored at a height through a turbine ... suppose when you wanted to store power, you pumped water uphill, back into the reservoir. When you need the power, you can run that water back through the generator turbines. Used in that way, the reservoir is not a power source ... its an energy storage device.

Now, while reverse pumped hydro can be added to many reservoir dams, you don't actually need a hydropower dam for reverse pumped hydro. You don't even need a flowing water source. If you have a reservoir at the bottom and a reservoir at the top, you can simply pump the water from bottom to top and then allow the water to flow back from top to bottom.This so-called "closed-loop" reverse pumped hydro does not need to be connected to a river or a lake to work. It might obtain its water from surface water, but it can also obtain its water from ground water. It can even obtain its water from sea water or from waste water.

If an entire reservoir's worth of water is run through the turbines every two days or less, then that water is re-used over 150 times each year. Even if there are some losses to evaporation and leaks, the average gallon of water is going to be used hundreds of times for storing power. So the impact on water systems of well designed closed-loop reverse pumped hydro will be much more benign than the impact on water systems of the coal mining and coal fired power plants that can be more easily pushed when variable renewable power harvesting is combined with reverse pumped hydro.

To understand the point of reverse pumped hydro in supporting the harvest of abundant solar energy using solar PV and wind turbines, consider the snapshot to the right. The red is demand in the BPA (Bonneville Power Authority ~ mostly Washington, Oregon, Idaho and western Montana) area. Now, track down from the dips in demand, and look at what is happening to wind (in green, of course, with "dirty brown" for thermal) ... when the wind is blowing, its often blowing fairly strongly during off-peak periods.

Now, the BPA has abundant hydro resources, and it uses the scheduling of hydro power generation to balance the wind. And if you are wondering why adding up total BPA hydro, thermal and wind generation would give a value far in excess of BPA power demand ... that's because this is summer, when the BPA exports quite a lot of power to Southern California through multiple long distance transmission corridors, including the HVDC Pacific Intertie.

However, even with its abundant hydro resource, even the BPA has at time ordered wind generation curtailed. The problem that they face is that during periods of high river flow, the authority must maintain a certain degree of flow through the dam to avoid overtopping the reservoir, and they would rather generate power with that flow than release it through spillways. Wind operators complained that as they have no fuel costs, it was an unfair use of BPA monopoly power to force other harvesters of renewable energy to curtail in order to maintain its generation.

And, as noted in reporting on the FERC decision that followed this fight, because hydro reservoirs are integrated into water systems, there is an additional complication:

The agency said it acted to protect salmon and steelhead from high dissolved gas concentrations in spilled water that bypasses turbines. It said the action also maintained the reliability of the power grid and avoided shifting costs to BPA customers.

... so it was doing it, in part, for the fish (not necessarily because they have any intrinsic desire to help the fish, but because they operate under regulations in which they have to avoid having some impacts on downstream water quality).

Now, the US utility industry has long had a liking for hydro power, and since the big hydro projects of the Depression era, we have been building dams in a lot of the places where there is a good place to do it. Indeed, if you listen to critics of the impacts of some of these dams, it seems that we have often built these dams in places where there was not such a good place to do it (in the Pacific Northwest, those critics bear substantial responsibility for some of those regulations that the BPA have to comply with, and some of them would rather go further and remove some of those dams altogether).

The result is that in the US, we get about 6%-7% of our power from hydropower. And while there is a move to increase installation of new hydro facilities on already existing dams and water flow channels, and a move to increase installation of hydropower that works without a reservoir, generating power from the "run-of-river" ... our ability to use time-shift power generated by reservoir hydro facilities to "lean against the wind" is estimated to max out when wind is providing about 20% of our electricity.

And that is the appeal of pumped storage hydro. With pumped storage hydro, especially with the newer designs that are segregated from existing water systems, we can use the efficiency of hydro to store renewable energy generated when there is less demand, and make that energy available during peak demand. And with modern pumped storage hydro, that efficiency is substantial, with start to finish storage efficiency in excess of 80%.

And this is not just windpower. The so-called "Ducks Belly" is something that can happen where there is substantial solar PV roll-out. And here is part of the reason for the pushback against solar PV installation, since in so-called "deregulated electricity markets" (which is, in reality, just a different means of regulating electricity prices), a drop in net demand means a drop in price.

A lot of generating capacity is built on the assumption that a requirement for expensive "peaking" natural gas plants will push up the "marginal" price of power for a substantial part of the day during the highest demand parts of the year, and that all generators producing at a lower cost ... a majority of which is coal and combined-cycle natural gas ... will get a windfall during that period. And if a lot of solar PV generation takes demand off the grid, all of those financial spreadsheets are thrown into disarray.

Now, what someone with a pumped hydro facility could do is to buy power during the "Duck's Belly" period, when the price is lower, and then sell it during the "Duck's Head" period, when the price spikes. Indeed, on a day when there is such an abundance of Windpower in the late evening that it pushes the wholesale price down near zero, a pumped storage facility could store power for sale during the earlier part of the day before solar PV hits its peak, and then buy power during the "Duck's Belly" to sell during the "Duck's Head" ... and cycle through more than a full reservoir of storage in the same day. So reverse pumped hydro could be useful for integrating solar PV as well as for integrating substantially more windpower into the system.

What Is Going On in US Reverse Pumped Hydro

According to the industry advocates for this mode of storage, the Pumped Storage Development Council of the National Hydropower Association in their 2012 white paper, Challenges and Opportunities for New Pumped Storage Development. (pdf) there are now 40 reverse pumped storage facilities in the US, with a capacity of more than 20,000 MW. majority of pumped hydro was developed over 30 years ago, before establishment of the wholesale electricity markets that we presently rely upon, and were primarily focused on serving the needs of thermal and nuclear power generators. The most recently completed facility was a 40MW reverse pumped hydro facility in California that was part of a larger water supply project.

While there are not a lot of finished projects rolling out in the United States, there is substantial development, with preliminary applications filed with FERC for 34,000 MW in reverse pumped hydro capacity in 22 states. Over 2/3 of the capacity is for closed loop sites. Now, a preliminary application is needed to construct a facility, but not enough on its own. Indeed, it is only partway through the regulatory process, which for hydro facilities has normally taken five years. so this does not mean that 34,000 MW are presently under construction, but it does imply that there is a recent increase in interest in development new pumped storage hydro facilities. If all of the

Worldwide, there is a much more rapid roll-out of reverse pumped hydro, with the 127,000 MW installed worldwide in 2010 expected to exceed 203,000 MW worldwide this year, representing a growth rate of 10% per year, at which pace the world reverse pumped hydro capacity is set to double in under eight years. This puts the possible addition of 34,000 MW to the existing 20,000 MW capacity in better context, since we would be fortunate if enough of those projects are eventually completed to provide 20,000 MW additional capacity ... and with a regulatory cycle for hydro projects of 5 years for most hydro projects, even before a project can break ground, we could certainly not expect to double our capacity in 8 years.

Do We Need to De-Regulate Reverse Pumped Hydro ... or Better Regulate It?

According to the argument presented by those advocating for the industry, a large part of the obstacle to more rapid roll-out of reverse pumped hydro capacity involves regulation. But there are a number of distinct issues involved, which involve their own distinctive twists and wrinkles, so rather than give a laundry list, I will focus on a few in more detail.

A long standing regulatory issue has been the extended regulatory process that hydro facilities must go through. This is necessary for both reservoir hydro and new built run-of-river hydro, since a river or lake water system is a complex resource, providing benefits to a large number of species in addition to our own forming an ecosystem upon which we depend for biological survival, as well as being tapped for a large number of services the economy that is embedded within and dependent upon that ecosystem.

However, close-loop reverse pumped hydro system are not in day to day contact with river or lake water systems. They are therefore, more similar to other large industrial users of water. Indeed, they are more parsimonious in their water use than many large industrial users. So one long time ask by those interested in reverse pumped hydro has been a simpler regulatory process for closed loop systems. Congress agreed last year, as part of the Hydropower Regulatory Efficiency Act of 2013, which directed the Federal Energy Regulatory Commission to develop a two year permit process for closed-loop reverse pumped hydro, as well as for hydro projects placed on an existing conduit.

The second regulatory issue is more involved. When we last built substantial amounts of reverse pumped, most of it was built under a rate commission regulatory structure, in which the regulated utility had to make a case that their investment was appropriate and in the public interest, and if approved by the rate commission, the cost of the investment was included among the costs that were used to determined what prices they were allowed to charge to customers.

Most energy is now being produced and sold under a new regulatory structure, in which transmission authorities have a system of artificial markets in which they accept bids for the provision of distinctive services, which taken together allows them to maintain a high reliability electricity supply. The result of that system is, of course, that we have lost a lot of the planning capability that we once had. A market, after all, cannot design and operate a complex system, it can just help set up the rewards for those who do. And so, under a market based system, it is very important what services have been commodified in this way and can be sold by the owner of an energy supply asset.

But here is the wrinkle. This is not a "deregulated" system, its a differently regulated system, with some rules absolutely essential to avoid some of the abuses that a market based system is prone to. One of those is the owner of an essential facility manipulating the offers made to the market in order to manipulate the return on something else. For instance, the owner of a generating asset which was also an important provider of transmission services could sabotage access by another generator by denying the use of a transmission service at a critical time.

And so there are rules in place to prevent some of these abuses, some of them put in place by government authority, some put in place by Independent System Operators. Transmission assets cannot participate in markets for energy supply, nor in markets for support services. Market studies must be commissioned when third parties provide support services to transmission providers. And a third party is normally forbidden from selling support services to a public utility that is using them to satisfy its own obligations to customers under its regulated transmission tariff.

Each of these rules plays an important role in preventing abuses of the market-based system. But each of them interferes with the ability to use reverse hydro pumped storage to provide storage and grid reliability services. The rules are designed to create a clear distinction between generation and transmission. And at the same time, reverse pumped hydro can provide services such as stabilizing the voltage and frequency of a grid that are on the transmission side of the divide.

At the heart of the issue, an energy storage facility is not able to get up to the same mischief that an energy producer can, since it can only generate power that it has stored after previously buying it from the system. Ideally, this is something that the Federal Energy Regulatory Commission, FERC, would take up and create a new class of asset for power storage. The new class of asset would be able to both generate power, up to the amount of power it has stored from the grid, and to sell support services to transmission utilities alongside operators of transmission assets.

A third regulatory issue is the uncertainty created by the market based system, where an Independent System Operator can create a new market, specify a service that is traded in that market, with current transactions settle hourly or daily or weekly, and then turn around two years later and re-arrange what qualifies as what service and set up a different set of markets to trade in those newly defined bundles of services.

The need for grid reliability is going to persist so long as we rely upon an electrical grid to distribute electricity. The benefit of additional grid storage capacity will not just persist, but increase over time as more wind and solar PV is added to our renewable energy portfolio. We know that the needs will be there over decade and longer time frames. However, the terms under which third parties are rewarded for meeting these needs can change under very short notice.

The result is an unnecessary increase in the interest cost of building pumped storage, because investors recognize the uncertainty of the revenue flows associated with the facility. In many renewable energy projects, this kind of uncertainty is overcome with a long term power purchasing agreement. However, the way that the Independent System Operator spot market system is organized, the only organizations with the capability of entering into such long term agreements for energy quality support services are essentially forbidden from doing so. Generators cannot do so, because they cannot turn around and sell transmission-related services. Transmission utilities cannot do so, because the part of their business which could benefit from such service purchasing agreements are exactly those they are forbidden to purchase from third parties.

I do not know what regulatory reform would suffice to allow reverse pumped hydro facilities to enter into long term service purchasing agreements ... but if FERC can come up with a system that can allow that to occur (without at the same time opening the door to past abused that have since been closed), they would be doing a great service to the public interest in improving grid reliability while allowing us to reduce our reliance on suicidal sources of electricity, such as coal and natural gas.

Conclusions and Conversations

In all of this, I do not want to give the impression that reverse pumped hydro is a silver bullet. It is one proven, effective technology for grid scale energy storage. However, it may well be that other technologies currently in development will prove be more energy efficient and less capital intensive, and so more economically efficient.

However, we need to start ramping up the grid scale storage now, since our existing time-shifting capabilities are projected to be at their limit when we reach 20% wind penetration, and the year that we hit 20% wind penetration is too late to be getting started, since we need to have surplus capacity at that point in order to continue accelerating the roll-out of wind power.

And whatever that hypothetical future storage technology is, we will still be better off having the existing storage in place. Indeed, in developing the new regulatory rules to accelerate the roll-out of reverse pumped hydro now, they will face less difficulties in their roll-out if they can be rolled out in a system that is capable of rewarding newly built storage capacity in support of new capacity to harvest abundant, "use it or lose it" renewable energy resources.

So, this is where you jump in with what kind of renewable energy technology you would like to see the country place a stronger emphasis on, and if you wish, what changes to our existing rules and regulations you would like to see to make it happen.

And, of course, with any other topic you wish to raise regarding sustainable energy and transport. The conversation on the Sunday Train is determined, after all, by what you'd like to write about.





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