A contribution on electricity storage: The case of hydro-pumped storage appraisal and commissioning in Italy and Spain

This paper investigates hydro-pumped storage appraisal and commissioning in Italy and Spain. It argues that analyses to evaluate what is the most cost-efficient flexibility solution, including the possibility of improving existing facilities and regulatory frameworks, should be implemented on a case-by-case basis, as electricity storage is only one out of many possible sources of flexibility. Where pumped hydro is identified as the best solution to provide the ancillary services needed, a market's ability to deliver it should then be tested, by addressing the major concerns for ex-ante appraisal the paper identifies. Only where a market ‘fails’ to deliver such capacity, a case for commissioning hydro-pumped storage may be justified. The key areas are then: (i) the criteria to define capacity adequacy and (ii) the procedures to select who should build and who should run such facilities. The risks and challenges identified suggest that this solution should be considered with caution.