A new optimization framework for long-term power system planning reveals that allowing pumped-storage hydropower (PSH) projects to compete across multiple discharge durations yields significantly lower system costs and better renewable energy integration than assuming fixed storage durations.
Researchers applied a rolling-horizon, two-stage stochastic model to Brazil's grid expansion through 2050, when electricity demand is projected to double and variable renewable energy will dominate new capacity additions. The model tested two scenarios: one allowing PSH candidates with durations ranging from 4 to 144 hours to compete alongside four-hour battery storage systems, and a second relying on batteries alone.
With flexible PSH duration options, the optimization selected 31.2 GW of PSH capacity (755 GWh total energy) with a mixed portfolio emphasizing 12-hour discharge times, supplemented by smaller 72-hour reservoirs. The PSH-inclusive case eliminated the need for new battery systems entirely. By contrast, the battery-only scenario required 38 GW of battery capacity (152 GWh) plus an additional 7.8 GW of gas-fired peaking plants to handle longer duration shortfalls.
The economic and operational benefits were substantial. The PSH scenario reduced annualized system costs by $5.0 billion annually (6.8% savings) and lowered operating expenses by 23.5%. Thermal generation fell by 34 TWh/year, and variable renewable curtailment dropped from 8.4% to 3.2% by 2035. Long-run marginal costs declined 20%, reflecting more efficient energy storage and reduced peak-capacity margins.
The study illustrates a critical planning principle: traditional expansion models that lock storage duration before optimization underestimate actual energy storage requirements and overstate residual thermal generation needs. By treating duration as an endogenous variable competing on annualized cost, planners can better balance short and long-duration storage, reducing system-wide expenses and fossil fuel dependency. While magnitudes vary by region, this framework applies broadly to power systems with high renewable penetration.
