| Summary: | Pumped hydro storage (PHS) is one of the more suitable energy storage technologies to provide bulk storage of intermittent renewable energy sources (RES) such as wind. Since the main limiting factors to the expansion of this mature technology are environmental and financial concerns, the use of an existing reservoir can help mitigate both types of impacts. In addition, the high number of reservoirs for municipal and irrigation supply in many areas of the world makes the idea of using PHS as a relatively diffuse, open-market, technology for RES management attractive. These arguments in favor of PHS must, however, be convincing for investors and regulators from an economic standpoint. To this end, this paper presents a methodological tool to screen the feasibility of a PHS facility around an existing reservoir based on the principles of cost⁻benefit analysis, calibrated with data from Sicily, Italy. Each potential plant is characterized by two locational and two plant-specific parameters. Costs and benefits are assessed through a simulation model of the storage⁻release process on an hourly basis. Costs include both investment, and operation and maintenance expenditures, while the benefits considered include the opportunity cost of the current energy mix substituted by the stored energy, and the avoided CO<sub>2</sub> emissions. The evaluation exercise is carried out parametrically, i.e., looking at a large number of combinations of the four parameters, in order to explore a wide range of possible plant configurations and to identify optimal ones under different locational conditions. A sensitivity analysis performed on models’ parameters points out the sensitivity of results to benefit, rather than cost-related, input parameters, such as the efficiency of the generating and pumping system and the opportunity cost of energy.
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