Pumped Hydro Storage Market

Pumped Hydro Storage Market Size

Global Pumped Hydro Storage Market size was valued at USD 43.67 billion in 2023 and is projected to grow from USD 47.51 billion in 2024 to USD 89.27 billion by 2031, exhibiting a CAGR of 9.43% % between 2024 and 2031. The market is experiencing steady growth due to rising demand for sustainable energy sources and advancements in pumps and turbine technologies.

In the scope of work, the report includes service offered by companies such as Andritz AG, Duke Energy Co., Enel SpA, GE Vernova, Voith GmbH & Co. KGaA, Iberdrola, S.A., MITSUBISHI HEAVY INDUSTRIES, LTD., Toshiba Energy Systems & Solutions Corporation, PowerChina, Tata Power, and others.

Rising government incentives and policies for sustainable energy generation are driving the pumped hydro storage market growth. Governments worldwide recognize pumped hydro storage as essential for the transition to sustainable energy. They support this through subsidies, low-interest loans, tax incentives, hydroelectric production incentives and policies such as feed-in tariff.

• For instance, in October 2024, The U.S. Department of Energy (DOE) has announced that 39 hydroelectric facilities across the country will receive USD 12 million in incentive payments for the electricity they generated and sold in 2023.

The number of pumper hydro storage stations is expected to increase as governments worldwide announce support for sustainable energy through various plans and targets.

A pumped hydro storage (PHS) system stores energy by moving water to an elevated reservoir when electricity demand and prices are low. When demand increases, the stored water is released into a lower reservoir, where it generates energy through a turbine. This versatile energy storage technology plays a crucial role in maintaining grid stability by balancing supply and demand, while also supporting the integration of renewable energy sources like solar and wind.

Increasing focus on reducing carbon emissions with use of clean energy technologies spurs the demand of these systems. Moreover, surging electricity demand, rapid urbanization in developing economies, and stringent regulatory measures are fostering market growth.

Analyst’s Review

Companies are focusing in hydro turbine technology and solutions to develop an efficient and advanced system for pumped hydro projects. To enhance grid reliability, they are expanding sustainable portfolios by investing in the pumped hydro storage, complementing energy sources such as wind and solar. Additionally, investments in grid integration solutions, control systems, and smart monitoring technologies are aimed at improving operational efficiency.  

• In September 2024, the Government of Maharashtra has signed a memorandum of understanding (MoU) with Megha Engineering and Infrastructures Limited (MEIL) to develop 4,000 MW pumped hydro energy storage plants.

Governments are initiating programs to promote clean energy, prioritizing environmental sustainability, cost-optimization and digitalization.

Pumped Hydro Storage Market Growth Factors

The growing demand for electricity across commercial, industrial, and other sectors are fueling the growth of the pumped hydro storage market. As nations and companies expand, the demand for reliable, sustainable energy sources increases. Commercial and industrial operations face fluctuating energy demands, requiring effective energy storage technologies to balance supply and demand.

Companies started investing to set up a pumped hydro storage projects. Pumped hydro storage provides an efficient method by storing excess power during low-demand periods and releasing it during peak times, maintaining grid stability.

• For instance, in January 2023, the Greenko Group has announced an investment of USD 1.2 billion to develop a pumped storage project in the Neemuch district of Madhya Pradesh, India. The project will have a storage capacity of 11 GWh per day and will be connected to the interstate transmission system. It is expected to be commissioned by December 2024.

The rising integration of renewable energy sources, such as solar power and wind, propels demand for pumped hydro storage systems. These systems support energy storage and supply power when needed. As companies prioritize sustainability and energy efficiency, the adoption of these systems is rising.

The pumped hydro storage market faces challenges related to land and water use. Constructing hydro storage plants requires significant land, which leads to deforestation and the displacement of local communities. These reservoirs also impact water systems, altering aquatic ecosystems, water flow, and water quality, particularly in areas where environmental balance is fragile.

Sustainable solutions are being developed to mitigate these challenges, such as by utilizing existing water bodies like inactive dams and abandoned mines to minimize additional land and water use. Innovative designs, like closed-loop systems, rely on water cycling between two reservoirs, reducing dependence on natural sources and minimizing environmental impact.

Pumped Hydro Storage Industry Trends

There is a surging interest in the closed-loop pumped hydro systems, which do not rely on natural water sources and have less ecological impact. These systems utilize two artificial reservoirs, enabling more flexible site selection and minimizing environmental concerns.

• The U.S. Department of Energy’s Advanced Research Projects Agency (ARPA-E) funded various closed-loop projects for electric vehicle batteries to enhance this technology and make it a usable option for more locations.

Closed-loop systems are anticipated to become a favored choice for new pumped hydro stations as environmental regulations tighten, particularly in regions with limited water resources.

The renewal of pumped hydro storage plants to enhance efficiency is fueling market growth. These plants improve water management by complementing lakes and existing reservoirs. Innovative methods, such as battery hybridization, hydrogen production, floating solar panels on water reservoirs, and waste-heat recovery, are being integrated with hydropower plants. Additionally, ocean power plants are utilizing turbines from hydropower plants.

Segmentation Analysis

The global market has been segmented based on type, source, capacity, and geography.

By Type

Based on type, the market has been bifurcated into open-loop and close-loop. The open-loop segment led the pumped hydro storage market in 2023, reaching a valuation of USD 29.93 billion. Open-loop systems require lower capital investment by leveraging existing water bodies, reducing the need for artificial reservoir construction. They further provide enhanced operational efficiency due to the natural replacement of water.

• The Government of India has revised its budgetary support scheme, allocating of ₹12,461 crore for infrastructure development in the hydropower sector from 2024-25 to 2031-32.

These systems are easier to incorporate with actual water management, offering benefits such as energy storage and efficient utilization of water resource. They further provide large-scale energy storage, stabilize grid fluctuations, and improve the viability of renewable sources such as wind and solar, contributing to a more sustainable energy mix.

By Source

Based on source, the market has been categorized into natural reservoirs and artificial reservoirs. The natural reservoirs segment captured the largest revenue share of 64.00% in 2023. Pumped hydro systems effectively store and release energy by utilizing water's potential energy.

During periods of low demand, water is pumped to higher levels. When demand rises, the stored water is released to generate energy, balancing supply and demand. This constant renewable energy source improves grid stability and supports the shift toward other renewable energy sources.

By Capacity

Based on capacity, the market has been segmented into below 500 MW, 500-1000 MW, and above 1000 MW. The above 1000 MW segment is expected to garner the highest revenue of USD 40.49 billion by 2031.

Hydro storage plants with capacities above 1000 MW provide enhanced energy storage, crucial for grid stability and meeting demand. These plants are appropriate for offering and grid balancing services and incorporation of sustainable energy sources. Their low cost per unit of stored energy in smaller installations makes them cost-effective for long-term utility scale energy power needs.

Pumped Hydro Storage Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia-Pacific, MEA, and Latin America.

North America pumped hydro storage market accounted for the largest revenue share of 28.76% in 2023, with a valuation of USD 12.56 billion. The region boasts a strong and well-established energy infrastructure, facilitating the seamless incorporation of pumped hydro storage systems.

It is actively investing in grid modernization and renewable energy projects while leveraging its abundant natural resources. Additionally, policies and initiatives are being implemented to support the adoption of these technologies.

• In October 2024, The U.S. Department of Energy’s (DOE) Water Power Technologies Office (WPTO) has announced over USD 33 million in funding for projects aimed at advancing hydropower and marine energy. This includes more than USD 8.6 million allocated to 13 hydropower technical assistance projects under the HydroWIRES Initiative and nearly USD 25 million designated for 25 hydropower and marine energy research and development projects at six DOE national laboratories. The U.S. Department of Energy’s Water Power Technologies Office (WPTO) launched Hydropower and Water Innovation initiative. This opportunity provides power companies and other stakeholders with access to national lab expertise and assets for overcoming valuation issues in the construction of pumped hydro storage projects and strengthening hydropower's role in the electric grid.

Government incentives and supportive regulatory frameworks have accelerated the development of pumped hydro storage facilities.

Asia-Pacific pumped hydro storage market is anticipated to grow at a CAGR of 10.40% over the forecast period. The regional market is witnessing an increasing focus on renewable energy sources, supported by rapid industrial growth and expansion of cities mainly in developing nations such as China, Japan, and India. These countries are making significant investments in energy infrastructure to meet the growing demand for electricity.

Additionally, government policies and incentives are being implemented to promote renewable energy practices, with China and Japan focusing on modernizing energy storage infrastructure to enhance grid stability.

Competitive Landscape

The global pumped hydro storage market report will provide valuable insight with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions.

Companies are implementing impactful strategic initiatives, such as expanding services, investing in research and development (R&D), establishing new service delivery centers, and optimizing their service delivery processes, which are likely to create new opportunities for market growth.

List of Key Companies in Pumped Hydro Storage Market

• Andritz AG
• Duke Energy Co.
• Enel SpA
• GE Vernova
• Voith GmbH & Co. KGaA
• Iberdrola, S.A.
• MITSUBISHI HEAVY INDUSTRIES, LTD.
• Toshiba Energy Systems & Solutions Corporation
• PowerChina
• Tata Power

Key Industry Developments

• October 2024 (Agreement): JSW Energy PSP Two Limited, has signed Agreement (ESFA) with Maharashtra State Electricity Distribution Company Ltd (MSEDCL) to supply 1,500 MW / 12,000 MWh of pumped hydro energy storage. The Pumped Hydro Project, located in Maharashtra's Thane and Nashik districts, will feature with an 8-hour discharge capacity, including a maximum of 5 hours of continuous operation. The project is expected to be completed in the next 48 months.
• April 2024 (Expansion): ANDRITZ has revealed their plan to expand the Cruachan pumped storage power plant in Scotland. The company will supply two advanced generating units, including pump turbines and motor generators, along with the required main inlet valves.
• August 2023 (Agreement): Mercia Power Response has entered into an agreement with RheEnergise to explore the potential deployment of long-duration hydro-energy storage, specifically High-Density Hydro (HD Hydro). The two companies will collaborate to identify appropriate locations for additional HD Hydro storage projects, leveraging RheEnergise’s technology.

The global pumped hydro storage market has been segmented as:

By Type

• Open-loop
• Close-loop

By Source

• Natural Reservoirs
• Artificial Reservoirs

By Capacity

• Below 500 MW
• 500-1000 MW
• Above 1000 MW

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • U.K.
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia-Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America