Pumped Hydro Storage in the Brazilian Power Industry: A Sustainable Approach to Expanding Renewable Energy

Luciano José da Silva, Virginia Parente, José Oduque Nascimento de Jesus, Karla Patricia Oliveira Esquerre, Oz Sahin and Wanderbeg Correia de Araujo (wanderbeg_ca@hotmail.com)
Additional contact information
Luciano José da Silva: Institute of Energy and Environment, University of São Paulo, São Paulo 05508-900, SP, Brazil
Virginia Parente: Institute of Energy and Environment, University of São Paulo, São Paulo 05508-900, SP, Brazil
José Oduque Nascimento de Jesus: Department of Industrial Engineering, State University of Amapá, Macapá 68901-258, AP, Brazil
Karla Patricia Oliveira Esquerre: Graduation Program of Industrial Engineering, Federal University Bahia, Salvador 40210-630, BA, Brazil
Oz Sahin: School of Public Health, University of Queensland, Herston, QLD 4066, Australia
Wanderbeg Correia de Araujo: Department of Industrial Engineering, State University of Maranhão, São Luís 65081-400, SL, Brazil

Sustainability, 2025, vol. 17, issue 5, 1-24

Abstract: This study evaluates whether pumped hydro storage (PHS) systems are economically competitive compared to natural gas thermal power plants in meeting peak load demand in Brazil and identifies the barriers and challenges that hinder their widespread adoption. It also examines the strategies, market mechanisms, and policy implications necessary to improve the economic and operational viability of PHS, enabling greater integration of variable renewable energy sources into the Brazilian power system. Using the levelized cost of electricity (LCOE) method, PHS is compared with natural gas thermoelectric plants for peak demand scenarios in Brazil. The results of simulations indicate that PHS is economically viable for operations exceeding seven hours per day, offering lower costs. In contrast, natural gas technologies are more cost-effective for shorter operations. The results provide two key contributions: they characterise the basic conditions under which PHS systems are more competitive than thermal power plants in meeting electricity demand, and they propose a methodology for calculating the LCOE of the analysed technological options, tailored to the Brazilian energy market. The conclusions highlight the potential of PHS to contribute to Brazil’s sustainable energy transition, provided that appropriate policies are implemented. These policies are especially crucial in scenarios where PHS is not economically competitive, to ensure compensation mechanisms for the flexibility services provided and the implementation of carbon pricing. Additionally, retrofitting existing hydropower plants to incorporate PHS components may reduce costs and mitigate environmental impacts compared to constructing new PHS facilities.

Keywords: energy transition; peak demand; energy storage; sustainability; gas turbines; flexibility (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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