Consider storage in long-range energy planning and incentivise its deployment if necessary
Governments should consider pumped-storage hydropower and grid-scale batteries as an integral part of their long-term strategic energy plans, aligned with wind and solar PV capacity as well as grid capacity expansion plans. Flexibility should be at the core of policy design: the first step needs to be a whole-system assessment of flexibility requirements that compares the case for different types of grid-scale storage with other options such as demand response, power plant retrofits, smart grid measures and other technologies that raise overall flexibility.
In liberalised electricity markets, long lead times, permitting risks and a lack of long-term revenue stability have stalled pumped-storage hydropower development, with most development occurring in vertically integrated markets, such as in China. Dedicated support mechanisms, such as capacity auctions for storage, could help promote deployment by providing long-term revenue stability for pumped-storage hydropower and battery storage plants.