A new report from the National Hydropower Association suggests pumped storage hydropower could help meet part of that challenge. According to the group, more than 60 gigawatts of proposed pumped storage capacity is currently moving through the federal permitting process, representing one of the largest potential sources of long-duration energy storage in the U.S.
While most of these projects remain in early development stages, industry advocates say the technology could provide both grid stability and dispatchable power as electricity demand grows.
Pumped storage has been part of the U.S. electricity system for decades, historically used to store excess electricity generated during periods of low demand. The system moves water between two reservoirs at different elevations—pumping it uphill when electricity is abundant and releasing it through turbines to generate power when demand rises.
That basic concept has gained renewed relevance as the power system incorporates more variable renewable energy.
Wind and solar output can fluctuate with weather conditions, creating periods where electricity supply does not perfectly match demand. Pumped storage facilities can respond quickly by releasing stored energy, helping stabilize the grid and smooth out those variations.
The same flexibility is attracting attention from companies building AI data centers. These facilities require continuous electricity supply and often operate around the clock, making reliable generation and storage a growing priority as computing loads increase.
A large share of proposed pumped storage projects is concentrated in the western United States, where both renewable energy development and data center growth have accelerated. Roughly 85 percent of projects currently undergoing review by the Federal Energy Regulatory Commission are located in that region.
Developers are also exploring closed-loop pumped storage designs, which circulate water between two constructed reservoirs rather than relying on natural river systems. Because these systems operate independently from existing waterways, they may reduce environmental conflicts and expand siting options.
Research has identified more than 15,000 potential locations nationwide where closed-loop systems could theoretically be developed, pointing to a substantial long-term resource base.
Despite that potential, relatively few new pumped storage projects are currently being built. Industry groups point to several barriers that have slowed progress, including extended federal permitting timelines and market rules that do not always fully compensate long-duration storage resources for reliability services.
The report argues that policy changes could accelerate development. Proposals include modernizing hydropower licensing under the Federal Power Act, expanding federal financing tools such as Department of Energy loan guarantees, and adjusting electricity market rules to better account for the grid stability services long-duration storage provides.
With electricity demand from artificial intelligence, manufacturing and electrification expected to grow over the coming decade, pumped storage developers see a potential opportunity. Whether projects move forward at scale, however, will depend largely on regulatory timelines, financing conditions and how electricity markets value long-duration energy storage.
