Financial risks

Pumped storage employs the same technology and construction techniques used in conventional hydropower projects and the risks are similar. These fall into three groups: geological, hydrological and technical risks.

Geological risk will depend on the site for the project. This will have to be capable of providing two reservoirs and room for a power station. In some cases the sea can be used as the lower reservoir, simplifying the design. As with all hydropower schemes, a thorough feasibility study is vital to assess the geological conditions. Faults within the underlying rock structure could cause construction problems, leading to major cost overruns if not identified early. Risk of seismic shock must also be considered.

The hydrological risk associated with a pumped storage hydropower plant should be slight since the station will not normally depend on a supply of water from a river which may be unpredictable. However any problems with water loss from evaporation or through leakage from the reservoirs will affect plant economics. Technical risk is minimal too. Hydro turbine technology is well established and should not lead to any problems.

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