In 2013, wind and solar power combined to produce less than 5 percent of all U.S. utility-scale electricity. In 2022, that number was 13.6 percent. Renewable energy sources are expected to make up at least 33 percent of all U.S. power generation by 2030 without major changes to energy policy. By 2050, renewable energy sources could generate 80 percent of U.S. power.  The shift away from fossil fuels and other non-renewable energy sources is good for the environment, but it comes with its own challenges.

Possibly the most drastic issue with wind and solar power is ‘intermittency’. Sometimes the sun doesn’t shine or the wind doesn’t blow, meaning that backup systems need to supply power when conditions are not ideal. A massive winter storm in 2021 killed at least 246 people in Texas after natural gas generators and wind turbines failed due to cold, leading to blackouts and no power for heaters. Storms, wind droughts, and rainy days could cripple a power grid reliant on solar and wind power. A solution to this problem is energy storage.

With the continued growth of solar and wind power, it’s no surprise that experts estimate a massive increase in the demand for energy storage. Water batteries, also known as Pumped Storage Hydropower, already make up a staggering 93 percent of all energy storage in the United States. Pumped storage hydropower is an energy storage system that was first used in the United States in 1930. The basic concept of a water battery is simple: water flows through a conduit between two pools at different elevations, like an hourglass. Water batteries use the same technology as regular hydropower dams, except that the water can be pumped back into the upper basin when required.

Water Batteries, like all batteries, are a net loss of energy. It’s impossible to create a 100 percent efficient battery, as some energy will inevitably be lost during the transfer. Modern water batteries are about 80 percent efficient, meaning that 80 percent of the energy used to pump the water into the upper basin will be returned when the battery is being drained and electricity generated. In 2022, Hydroelectric pumped storage produced a net -6,034 Billion kWh, or about -0.1 percent of total utility scale electricity generation. Pumped water storage created a net loss of power, which is expected. It is a temporary solution for times where additional power is needed on the grid.

Pumped storage hydropower is typically used during peak hours of the day, when the demand is highest, and then ‘recharged’ by pumping the water back up when demand is low, typically at night. ‘Recharging’ water batteries often use excess energy on the grid from renewable energy sources, providing a kind of ‘release valve’ to prevent the grid being overloaded. Companies operating water batteries make money by selling power when it is more expensive and buying when it is cheaper, even if they use more power than they generate throughout the entire day. As solar energy becomes more common, water batteries may have to generate electricity at night instead to make up for a lack of solar power.

With historic success, why is pumped storage hydropower not talked about more? Well, because there are still some serious limitations to water batteries, and changes in technology have led many to work on energy storage alternatives. Like all hydroelectric power, pumped storage hydropower relies on local hydrology and cannot be built in many places. Additionally, upfront infrastructure costs for facilities can be extremely expensive, possibly costing billions of dollars and construction taking years to complete. Many governments and corporations are wary of such a large initial investment. Despite this, pumped storage hydropower can be cheaper in the long run than other energy storage sources and often requires less maintenance.

There are countless examples of companies attempting to come up with energy storage alternatives, such as gravity batteries, rust batteries, liquid oxygen batteries, compressed air, and industrial lithium ion battery storage. Many of these technologies are still in development, and even proven ones such as lithium-ion batteries may be impractical at a utility scale due to production cost and risk of fire. Still, some new energy storage technologies are projected to cost less per kWh than water batteries by the end of 2030.

Pumped storage hydropower is projected to remain cheaper than lithium-ion energy storage, even after years of innovation, but other forms of energy storage will eventually overtake pumped storage hydropower. Pumped hydro currently makes up 93 percent of U.S. utility-scale energy storage because of few scalable alternatives and its reliability, but not because it is the most efficient form of energy storage. As new technology enters the market, the share of pumped hydro energy storage will undoubtedly decline. There is also innovation in water battery technology itself, with multiple companies working on underground storage reservoirs to be used in places with unfavorable geography. Companies are working on making the underground pump storage modular and standardized, allowing for mass production at cheaper costs.

It is important to note that underground water batteries are mostly unproven, and that complete security in energy storage is still a long way off.  Lead, electrolysis, and even nickel-metal hydride batteries are expected to become cheaper utility-scale energy storage options. New technologies such as “flow batteries” that use liquid electrolytes may be on the horizon, or else an expansion of other clean energy sources such as nuclear. There are 22 U.S. states with clean energy goals by or before 2050, meaning a clean energy revolution is coming, and that energy storage will surely come with it.

The government has been proactive with this already, awarding hundreds of millions of dollars to fund potential energy storage innovations, but continued government involvement is critical to success. Historically, pumped storage hydropower has been an efficient and cost-effective energy storage solution that lasts decades. Water batteries will undoubtedly play a role in the future of energy storage as the ‘safe’ option, but it seems likely that new innovations will eventually provide more efficient solutions.


Written by Owen Rogers, Public Policy Intern


The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.