Electric utilities may be underestimating the value of pumped storage hydropower (PSH) due to limitations in current modelling and asset valuation practices, according to a new technical report developed by the National Laboratory of the Rockies in collaboration with the Tennessee Valley Authority.
The study, Challenges and Opportunities for Electric Utility Modeling and Asset Valuation Frameworks, reviews how utilities assess new investments and highlights gaps in tools used to evaluate pumped storage hydropower projects.
The report finds that asset valuation is becoming more complex as power systems change rapidly, driven by increased deployment of variable renewable generation, growth in inverter-based resources, and uncertain demand trends.
Pumped storage hydropower is identified as a key technology of interest because of its ability to provide energy balancing, firm capacity and ancillary services. However, existing modelling approaches often fail to capture the full range of these services or how their value may evolve over time.
Researchers reviewed industry practices across several modelling areas, including capacity expansion, production cost, hydrological systems and transmission reliability. The analysis found that tools commonly used by utilities can lack sufficient temporal resolution, integration and representation of ancillary services, which can lead to incomplete valuation of long-lived assets such as pumped storage hydropower.
The report also highlights challenges in integrating different models and data sources, noting that manual workflows and inconsistent assumptions can limit the ability to assess assets under a wide range of future scenarios.
To address these issues, the authors recommend improvements such as better integration between models, expanded scenario analysis, enhanced representation of grid services, and adoption of research-grade tools developed by national laboratories.
According to the report, adapting modelling frameworks could help utilities make more informed investment decisions and better account for the role of flexible hydropower in supporting reliability and resilience in evolving electricity systems
