Pumped Storage Hydropower Cost Model

With NREL's cost model for pumped storage hydropower technologies, researchers and developers can calculate cost and performance for specific development sites.

A Pumped Storage Hydropower facility in Ludington, Michigan.

Photo by Consumers Energy.

Pumped storage hydropower (PSH) plants can store large quantities of energy equivalent to 8 or more hours of power production. As the country transitions to a 100% clean energy power grid, these plants could play a key role in keeping the grid reliable and resilient. But without adequate data on PSH development costs or performance, it's difficult to compare PSH to other technologies to identify which could maximize grid performance and reliability.

What Is the Pumped Storage Hydropower Cost Model Tool?

NREL's open-source, bottom-up PSH cost model tool estimates how much new PSH projects might cost based on specific site specifications like geography, terrain, construction materials, and more. The tool integrates data from users—including assumptions about PSH reservoir, dam, and conveyance characteristics—along with other design decisions, like reservoir volume and assumptions about indirect costs.

Using these data points, along with physical relationships and component cost equations, the tool builds a cost estimate for individual PSH projects.

How To Use the Cost Model Tool

The PSH cost model can calculate capital costs for a closed-loop PSH system that requires two new reservoirs. But users can also remove or substitute cost categories to suit their needs or start with the tool's default data, which represents a typical PSH facility. Users can select between large or small PSH systems; the cost model tool includes unique assumptions for each (25 megawatts is used as the threshold between large and small PSH).

The tool calculates the following:

  • Performance specifications for PSH components, such as hydraulic head, power output, and discharge flow rates
  • Component-level unit costs, total component costs, and total plant costs
  • An estimated total direct and indirect construction cost of a PSH system.

The cost model includes key specifications for a wide range of PSH infrastructure and provides definitions for all input specifications, assumptions, and PSH site components.

Illustration of a pumped storage hydropower system showing a power plant structure and the conveyance length between the upper reservoir and lower reservoir.

A simplified PSH system schematic shows key components included in NREL's PSH cost model, such as the dam/spillways, power plant structure, and water conveyance. Graphic by Besiki Kazaishvili, NREL

The cost model calculates plant performance specifications using physical and empirical relationships along with representative PSH system assumptions. When users enter reservoir, dam, and conveyance characteristics, the tool then calculates dam material volume, reservoir volume, and tunnel characteristics.

The tool estimates head, discharge, and power output at minimum, mean, and maximum power output conditions while incorporating empirical head loss from pipe friction as well as component efficiencies. The resulting quantities define the PSH facility's power production and energy storage potential. The user's assumed storage duration governs the relationship between power production and storage.

After the tool determines key PSH plant specifications, the model:

  • Calculates direct component costs as a unit cost* (e.g., cost per foot or per kilowatt)
  • Multiplies the unit cost by the estimated unit quantity (e.g., number of feet or kilowatts) and any applicable cost adjustment factors like inflation, locational differences, and non-inflation market rates.

After calculating direct costs, the model determines the indirect costs using markup rates for each indirect cost component (e.g., tax, contingency). The total plant cost is then the sum of direct and indirect costs.

* Unit costs are calculated using data provided by industry consultants or parametric relationships adapted from the Electric Power Research Institute's "Pumped-Storage Planning and Evaluation Guide." NREL researchers digitized the report's data and methods by extracting points from report figures and fitting them with regression models.

To validate the cost model, NREL researchers consulted with hydropower industry representatives and compared the tool's cost estimates to publicly available costs associated with the Eagle Mountain Project (a proposed closed-loop PSH facility in California).

Although component costs vary depending on cost categorization, design details, and indirect cost assumptions, modeled total cost projections agree within 26% of the Eagle Mountain Project proposal, which is well within the expected uncertainty range of the cost modeling tool (−30% to +50% or greater). The NREL team will continue to validate and adjust default assumptions in the model based on data collected from real projects that are currently in development and continued consultation from industry professionals.

Given the uncertainty in cost estimates, the model is set up to allow rapid sensitivity analysis to explore alternative input assumptions and their impact on costs. In addition to simple manual updates to individual inputs, the tool includes a macro-enabled parametric simulation feature that enables users to quickly explore several key input assumptions at a time.

The current PSH cost model has several limitations (some of which could be addressed in future versions):

  1. The model is useful for screening and for determining study feasibility, which implies an accuracy no better than −30% to +50% at both the component and total cost level (this is due to the inherent uncertainty in PSH design and construction).
  2. The model may be highly sensitive to atypical PSH project specifications that fall outside the bounds of the cost model equations.
  3. Current model assumptions include a fixed-speed pump and an embankment dam (alternative configuration choices for these and other components are not available but are being considered for future versions).
  4. The model does not yet include additional component disaggregation, such as within the power station, which could improve cost estimates.
  5. Market adjustments are used in the model to create cost relationships, which could have limited accuracy (particularly those from the 1990 Electric Power Research Institute report), and users might choose alternative adjustment factors based on their market knowledge.
  6. The model makes no estimation about how costs might change in the future based on technological improvements or other factors.
  7. The model does not include any policy or financial considerations. These must be incorporated by the user as adjustments on the cost model result.


A Component-Level Bottom-Up Cost Model for Pumped Storage Hydropower, NREL Technical Report (2023)

Learn more about PSH and other hydropower and marine energy technologies at NREL's Renewable Energy Discovery (REDi) Island, and watch a YouTube video about PSH operation.

View all NREL publications about PSH and hydropower.


The NREL PSH cost model was developed in consultation with HDR, Inc., and Small Hydro Consulting, LLC, who provided data, validation, advice, and review of the tool. These two industry partners provided perspectives across a wide range of potential PSH project sizing, which enables unique cost model characteristics for larger versus smaller PSH systems.


Stuart Cohen

Researcher V, Model Engineering


Vignesh Ramasamy

Researcher III , Economic/Financial Analysis