Vital electricity storage capacity needed to help the UK meet its net-zero target should be supported by an innovative funding mechanism, new research from Scottish Renewables has found.
The study, carried out in partnership with the British Hydropower Association and five leading hydropower developers recommends introducing a "price floor".
This would allow more long-duration storage projects, including pumped-storage hydropower, to be built.
Long-duration storage means electricity produced by renewables such as wind farms can be stored for use when it is needed by consumers.
It will increasingly be needed as the UK transitions to a low-carbon energy system based on renewable power rather than burning fossil fuels.
Scottish Renewables policy manager Cara Dalziel said: "Phasing out fossil fuel electricity generation is essential if we are to have any chance of tackling climate change.
"It is no secret that wind turbines only generate power when the wind is blowing and that solar only works in daylight, so new types of flexibility are going to be required as we increase the amount of variable renewable electricity generation on the grid.
"There is no silver bullet here: everything needs to be on the table.
"While batteries provide tremendous flexibility over short time periods, we also need to be able to store large amounts of electricity for hours and even days.
"Pumped storage hydropower is a mature and trusted technology which is available now and gives us the ability to do that, but the current, fragmented design of the electricity market does not offer sufficient confidence to investors.
"A new price stabilisation mechanism is needed, and this report sets out that a new market to derive an income floor for the provision of long-duration flexibility services should fill the gap."
The report was produced ahead of a refresh of a Smart Systems and Flexibility Plan by the UK Government’s Department of Business, Energy and Industrial Strategy and energy market regulator Ofgem.
It was funded by Scottish Renewables, the British Hydropower Association (BHA), Buccleuch, CCSQ, Drax Group, Intelligent Land Investments Group and SSE Renewables.
British Hydropower Association Chief Executive Simon Hamlyn said: "The publication of this report demonstrates just how important pumped storage hydro is to the UK energy mix.
"Securing flexibility to achieve a net-zero future is critical, especially as we move out of the COVID-19 pandemic, when large infrastructure projects such as pumped storage hydro are desperately needed.
"Not only will these projects deliver thousands of very-much-needed jobs, often in rural local communities with associated local supply chains, but they will also help support the government’s ambition to ‘level up the country’.
"Ultimately this is a major opportunity for government to grasp the pumped storage message and help deliver new jobs, new infrastructure opportunity, ensure future flexibility and reduce consumer bills."
