Role of pumped hydro storage in China’s power system decarbonization

Liqun Peng, Gang He and Jiang Lin

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: China has pledged to peak its carbon emissions by 2030 and achieve carbon neutrality by 2060. Decarbonizing the power system is key to achieving these targets. Pumped hydro storage (PHS) can play a crucial role in power system decarbonization by providing both short- and long-term energy storage, facilitating the integration of variable renewable energy and maintaining grid stability. However, there is a lack of systematic assessment of how much PHS is needed to support the stability and reliability of a zero-carbon power system. Here we use a high-resolution power system planning model to investigate the role of PHS. Our findings indicate that building excessive PHS may not be the most cost-effective path to achieve zero-carbon power system, if there is no major cost reduction of PHS. A planned capacity of 120 GW of PHS is already sufficient to balance electricity supply and demand by 2050, since battery storage capacity is projected to substantially increase between 2025 and 2050 and is emerging as a more economical solution to address the variability of renewable energy and accommodate demand growth. Our results suggest that over-investment in PHS could lead to unnecessary electricity price inflation. Further improvement of business models for energy storage in China's evolving electricity market is critical to facilitating the rapid and sustainable development of energy storage in a decarbonizing China's power system.

Keywords: Economics; Applied Economics; Affordable and Clean Energy; Climate Action; Business and Management; Policy and Administration; Energy; Applied economics; Policy and administration (search for similar items in EconPapers)
Date: 2025-07-01
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
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