Pumped storage hydroelectricity is a storage method that uses two reservoirs to store energy. When is it most economical?

• A. It uses chemical batteries in reservoirs.
• B. It is a storage method using two reservoirs to store energy; most economical with price differentials between off-peak and peak periods.
• C. It's a type of solar storage.
• D. It's mainly for flood control not energy storage.

Answer: (B)

Pumped storage stores energy as gravitational potential energy by moving water between two reservoirs at different elevations. When electricity is cheap during off-peak times, pumps lift water to the upper reservoir; when demand and prices rise during peak times, the water is released to drive turbines and generate electricity. This setup relies on price differences over time to be economical: you buy energy at low prices and sell it at high prices, capturing the spread.

Because building and maintaining the facility involves high upfront costs, it only pays off if it can cycle frequently and capitalize on sizable price swings between off-peak and peak periods. In grids with little or no price variability, the economics don’t pencil out as well.

It isn’t chemical batteries, and it isn’t solar storage. While pumped storage can aid flood management as a byproduct in some cases, its primary value is energy storage and grid balancing through price arbitrage and rapid response.