Dive Brief:

A proposal to build a 2.2 GW pumped hydro storage facility in Arizona moved one step closer to reality last week, after the Federal Energy Regulatory Commission (FERC) accepted its application for a preliminary permit.

The $3.6 billion project would be built at a U.S. Bureau of Reclamation reservoir on the Colorado River, and rely on transmission infrastructure that was part of the retired Navajo Generating Station coal facility. It would deliver power to Los Angeles, Las Vegas and Phoenix.

The acceptance is an "important early milestone," developer Daybreak Power said in a press release. If the project receives the required regulatory approvals, it could come online around 2030, aligning with ambitious renewables targets in Western states — "That is right, we believe, as the need for this sort of bulk storage is coming into full focus," Daybreak CEO Jim Day told Utility Dive.

Dive Insight:

The Navajo Energy Storage Station (NESS), as proposed, will rely on solar and wind energy to pump water from Lake Powell into an upper reservoir, and then allow the water to fall over turbines to generate around 10 hours of renewable energy on a daily basis, according to Daybreak. The power will be routed to California, Arizona and Nevada to manage evening and night-time peaks in demand.

Pumped hydro has provided 95% of energy storage in the U.S. and has the potential to store massive amounts of energy, Day said — a characteristic that can give the technology an edge over lithium-ion batteries, which dominate current projects in the energy storage market.

"We're talking about soaking up huge volumes of renewable energy out in the Southwest, and then releasing it basically through the night," he said. "There's a lot of good applications for lithium-ion batteries, but that really big bulk storage over pretty long durations is … not a good fit."

The proposed project is in very early stages. The application will have to go through a public comment period, after which FERC will decide whether to award it a preliminary permit —​ a three-year term during which Daybreak would hold first priority for the site, according to Day. The company will then have to begin the process of getting a full license, as well as obtaining a lease of power privilege from the Bureau of Reclamation​.

The storage facility has also been designed to take advantage of pre-existing infrastructure —​ as configured, it would connect to power-lines that were used by the Navajo coal facility, which ended operations in November. The lines are "extremely valuable assets" that are currently under-utilized, Day said​.

"Right now, there really isn't a need for ten hours of energy storage in that area. Ten years from now, I think there's absolutely going to be a need for [it]," Daniel Finn-Foley, head of energy storage at Wood Mackenzie Power & Renewables, told Utility Dive. Looking to 2030 and beyond, states plan to be closing in on renewable energy targets and will start needing long durations of storage, he added. Pumped storage facilities also have the advantage of a relatively long lifetime, compared to some other battery technologies.

The NESS proposal "is effectively banking on long-duration storage in the next decade, and I would say that's a trend we've seen across the energy industry," he said.

At the same time, the pumped hydro sector still faces challenges. Because there hasn't been a lot of demand for this kind of bulk storage until now, there also hasn't been a lot of demand for power purchase agreements (PPAs) or other mechanisms to support financing. Day sees two possible paths for the NESS project —​ either going the traditional route with PPAs, or engaging with grid operators to explore the potential of storage as a transmission asset.

"There are mechanisms under review in California and other places to make either of those pathways more viable for bulk storage, because they recognize out there that they're going to need a lot of storage," he said.

Another potential challenge for pumped hydro is finding places to site projects, according to Finn-Foley. The NESS proposal had to check a lot of boxes —​ for instance, not damming any rivers, not affecting any sacred places and not depleting groundwater.

"The biggest challenge for the pumped hydro industry is going to be finding areas where they can tick all of those boxes and actually build a facility that's going to be economical. How many sites like that exist in the U.S.?" he asked.