Lazard’s well-known Levelized Cost of Storage analysis does not cover pumped hydro storage, and a pumped hydro cost estimate from the National Renewable Energy Laboratory is not expected until late this year, as a follow-up to an interim report.

Beating them to the punch is a report by UC San Diego professor David Victor and five co-authors, Pumped Energy Storage: Vital to California’s Renewable Energy Future. The report provides the following cost comparison between pumped hydro and battery storage:

The higher capital costs of pumped storage versus battery storage, says the report, are outweighed by the longer lifetime of pumped storage, giving it a lower levelized cost.

That projected lower levelized cost for pumped hydro storage, compared to battery storage, results largely from more favorable financing for pumped hydro.

For both technologies, the analysis assumes a 12% return on equity, but it models pumped hydro as being financed with a much greater portion of debt, and a much lower interest rate on its debt. Specifically, a pumped hydro project is modeled with 66% debt, versus 20% debt for battery storage; the pumped hydro interest rate is modeled at 5.52%, versus 8% interest for battery storage. The modeled interest rate is based on discussions with pumped storage developers.

As for battery costs, the report states that its analysis largely used Lazard’s assumptions, and that its battery results “correlate well” with the low end of Lazard’s results. Specifically, in the fourth bar of the graph above, showing “Lazard Li 20 year” battery storage costs, the low end of the range—$204 per MWh (for 2026)—matches the low end of Lazard’s range of cost estimates for batteries serving wholesale markets (based on 2018 product/component delivery). (Lazard also shows a significantly lower cost range—$108 to $140 per MWh—for storage used in utility-scale solar + storage.)

The report’s publisher, the San Diego County Water Authority, and the City of San Diego jointly hold a preliminary permit for a 500 MW (4000 MWh) pumped hydro storage project at the San Vincente Dam and Reservoir, owned by the City of San Diego. A fact sheet says that the project would involve a new upper reservoir above the existing San Vicente Reservoir, with a tunnel connecting the two reservoirs, plus an underground powerhouse.

The report calls for state-backed support for early pumped hydro storage projects “that would jump-start investment in this proven technology.” Such support, it adds, “can demonstrate viable business models and investment strategies that will pave the way for more private sector-led projects in the future.”

The methods and assumptions of the Pumped Energy Storage report are explained in an appendix to the report. Five co-authors joined Dr. David Victor in preparing the report: Kevin Davis and Scott Flake, both with Black & Veatch; independent consultant Thomas Haag; Gary Bousquet with the San Diego County Water Authority; and Lan Wiborg with the City of San Diego.