Revenue uncertainty holding back pumped hydro

Firms call for new ways of unlocking investment

A lack of certainty around long-term revenue is holding back the growth of pumped hydro in the UK, experts have warned.

Speaking today in Westminster, at the all-party parliamentary group for energy storage, representatives from both Scottish Power and SSE said it was one of the main barriers to the development of more schemes in this country.

SSE senior policy manager, Kate Gillingham, said her company’s planned new facility at Coire Glas, near Loch Lochy in Scotland, is “a major infrastructure investment, with large upfront capital costs and significant lead times”.

“However, the current market conditions do not provide sufficient revenue certainty to enable investment decisions on a new build project,” warned Gillingham.

She added, as a developer, SSE is “faced with the risk” that possible revenues may not “be sufficient to cover the capital and fixed costs” of future pumped hydro projects.

“For SSE, it is the lack of long-term certainty around available revenue and the certainty that these will stack up to make the project viable, which is a major barrier to a project like Coire Glas coming forward.

“We are keen to work with the government to find a solution to this,” added Gillingham.

“The long lead-times mean that in the time between an investment decision and the completion of a project, there could be substantial changes in government policy, which could have a significant impact on the viability of a project,” she warned.

Also speaking at the event, the head of UK hydro at Scottish Power, Ross Galbraith, said there needs to be “some way of unlocking investment” to help fund projects like their proposed upgrade at their Cruachan hydro pump scheme, which has been dubbed Cruachan 2.

“We need to get some way to mitigate the risk for investors to build new pump storage plants,” said Galbraith.

“That’s something we’re really keen work on and look at how we can support and mitigate the risks of large-scale investment associated with pump storage. Depending on the option we choose, Cruachan 2 will cost somewhere between £300 million and £500 million.

“The lead-time for construction is significant, so we need to find a framework to mitigate the risk of that investment.”

Earlier this month, the British government gave the go-ahead for the first grid-scale pumped storage facility to be built in this country for more than 30 years.

Developer Snowdonia Pumped Hydro was granted planning permission to turn two abandoned slate quarries at Glyn Rhonwy, North Wales, into water reservoirs that will store around 700 MWhs of electricity.

“We have fantastic technology. We’ve proven the flexibility of pump storage. We’ve got a really good project with Cruachan 2. We need to find some way of unlocking investment,” said Galbraith.