In some places pumped storage is used to even out the daily generating load by pumping water to a high storage dam during off-peak hours and weekends, using the excess base-load capacity from low-cost coal or nuclear sources. During peak hours this water can be released through the turbines to a lower reservoir for hydro-electric generation, converting the potential energy into electricity. Reversible pump-turbine/motor-generator assemblies can act as both pumps and turbines*. Pumped storage systems can be effective in meeting peak demand changes due to rapid ramp-up or ramp-down, and profitable due to the differential between peak and off-peak wholesale prices. The main issue apart from water and altitude is round-trip efficiency, which is around 70%, so for every MWh of input only 0.7 MWh is recovered. In addition, relatively few places have scope for pumped storage dams close to where the power is needed.

* Francis turbines are widely-used for pumped storage but have a hydraulic head limit of about 600 m.  

Most pumped storage capacity is associated with established hydro-electric dams on rivers, where water is pumped back to a high storage dam. Such dammed hydro schemes can be complemented by off-river pumped hydro. This requires pairs of small reservoirs in hilly terrain and joined by a pipe with pump and turbine.

This schematic of the Gordon Butte project is typical of off-river pumped storage (Gordon Butte)

The International Hydropower Association has a tracking tool, which maps the locations and power capacity for existing and planned pumped storage projects.

Pumped storage has been used since the 1920s and today about 160 GW pumped storage is installed worldwide, including 31 GW in the USA, 53 GW in Europe and Scandinavia, 27 GW in Japan and 23 GW in China. This amounts to some 500 GWh able to be stored – about 95% of the world’s large-scale electricity storage in mid-2016, and 72% of that capacity which was added in 2014. IRENA reports that 96 TWh was used from pumped storage in 2015. The International Energy Agency's World Energy Outlook 2016 projects 27 GW of pumped storage capacity being added by 2040, mainly in China, the USA and Europe. However, as outlined in World Energy Outlook 2020, the geographical limitations of suitable pumped storage sites mean that other options, such as battery storage and thermal storage, are being explored.

For off-river pumped hydro the paired reservoirs normally need to have an altitude difference of at least 300 metres. Abandoned underground mines have some potential as sites. In Spain’s Leon region Navaleo plans a pumped hydro system in a former coal mine with a 710 m head and 548 MW output, feeding 1 TWh per year back into the grid. The project is anticipated to be commissioned in 2024.

Unlike wind and solar inputs to a grid system, hydro generation is synchronous and therefore provides ancillary services in the transmission network such as frequency control and provision of reactive power. A pumped storage project typically has 6 to 20 hours of hydraulic reservoir storage for operation, compared with much less for batteries. Pumped storage systems are typically over 100 MWh stored energy.

Pumped hydro storage is best suited for providing peak-load power for a system comprising mostly fossil fuel and/or nuclear generation at low cost. It is much less suited to filling in for intermittent, unscheduled generation such as wind, where surplus power availability is irregular and unpredictable.

The largest pumped storage facility is in Virginia, USA, with 3 GW capacity and 30 GWh of stored energy. However, useful facilities can be quite small. They also do not need to be supplementary to major hydroelectric schemes, but can use any difference in elevation between upper and lower reservoirs of over 100 metres if not too far apart. In Okinawa seawater is pumped to a cliff-top reservoir. In Australia a disused underground mine was considered for a lower reservoir. Israel plans the 344 MW Kokhav Hayarden two-reservoir system.

In Montana, USA, the $1 billion, 4 x 100 MW Gordon Butte Pumped Storage Hydro Project in the central part of the state will use excess power from the state’s 665 MWe of wind turbines, though this is less predictable than off-peak power designed to supply base-load. Absaroka Energy will build the elevated reservoir on a mesa 312 metres above the lower reservoir from 2018. It expects to supply 1300 GWh per year to supplement wind, with ancillary services.

A pilot project in Galdorf, Germany connects wind turbines, via an underground penstock, to a pumped storage power station. It comprises 13.6 MWe of wind turbines and 16 MWe of hydro capacity from pumped storage.