The decades-long reign of pumped hydro storage as the dominant force in global energy storage has come to an end. At the close of , battery systems surpassed 250 gigawatts (GW) of installed capacity, exceeding the approximately 202 GW of pumped hydro storage, according to an analysis by Rystad Energy and data from the International Hydropower Association. This shift marks a significant acceleration in the energy transition, driven by the rapid deployment and modularity of battery technology.
Just five years ago, in , batteries represented a comparatively small fraction of the energy storage landscape, holding a mere 17.6 GW compared to 159.5 GW in pumped hydro. That ratio has dramatically reversed, with battery capacity jumping to 89.2 GW in , 156.6 GW in , and exceeding 100 GW of new capacity added in .
Exponential Growth Versus Concrete
This rapid expansion contrasts sharply with the development of pumped hydro storage, which requires extensive construction projects spanning decades and incremental annual increases in capacity. While batteries benefit from scalable production, pumped hydro is constrained by geographical limitations, complex permitting processes, and substantial upfront investment. The trend is also visible in the Czech Republic, though it faces unique challenges related to legislation and permitting, with distribution system operators reporting significant interest in connecting new battery capacities.
Sprinters and Marathon Runners
Interpreting these figures requires a crucial distinction: power (measured in gigawatts) and energy storage capacity (measured in gigawatt-hours). Batteries currently excel in delivering immediate power, but pumped hydro retains a substantial advantage in overall energy storage capacity. The current state of global batteries can be likened to a parking lot filled with thousands of sports cars – capable of immense instantaneous power, but with relatively limited “fuel tanks.” Conversely, pumped hydro storage resembles a fleet of giant tankers, with limited flow rates but enormous storage volumes.
While batteries are often configured to deliver their maximum power for 2-4 hours, pumped hydro plants are designed for operation over periods of several hours or even days. The International Hydropower Association estimates total pumped hydro storage capacity at approximately 9,000 GWh, while the combined capacity of all grid-scale batteries is estimated to be between 500-600 GWh. So that, even today, water reservoirs hold roughly 15-18 times more stored energy than all lithium-ion batteries combined.
However, this disparity is unlikely to persist for long. Extrapolating data from BloombergNEF suggests that the two technologies will reach parity in terms of total stored energy around . Batteries are winning the race for immediate response, but water will likely maintain its role as the endurance athlete for some time to come.
Batteries “Eat” the Middle
For years, energy strategists envisioned a clear division of labor: batteries handling short-term fluctuations of minutes to an hour, pumped hydro providing long-duration reserves, and specialized technologies filling the gap of 4-12 hours of storage. Technologies like gravity towers, compressed air energy storage, and flow batteries were expected to dominate this middle ground. However, the dramatic decline in lithium-ion battery prices has upended this expectation.
The economic viability of lithium-ion has encroached upon segments previously considered beyond its reach. This “technological Darwinism” has seen cheaper lithium displace competing technologies. Companies that bet on alternative technologies have found themselves in a difficult position, as the cost of lithium fell before they could bring their products to market. The recent collapse of Redflow, a zinc-bromine battery developer, and the strategic shift of Energy Vault, which initially focused on gravity-based storage, exemplify this trend.
The issue isn’t a technical limitation of batteries to store energy for weeks or months – a charged phone in a drawer demonstrates that capability. The problem is economic return. Batteries are expensive assets that generate revenue by charging when electricity is cheap and discharging when it’s expensive. Leaving such a costly technology idle with stored energy over the winter is economically illogical. Batteries have largely occupied the domain of short-term, daily cycles, while long-duration storage remains the domain of older, more robust technologies.
Indispensable, But Slow
Does the rise of chemical batteries signal the end of the need for pumped hydro storage? Not necessarily. While chemical batteries degrade with each charge cycle and have a lifespan of 10-15 years in demanding grid applications, a well-constructed dam and turbine can operate for 80-100 years. From a lifecycle perspective, pumped hydro remains a highly efficient technology.
However, its construction is a major hurdle. Building a new pumped hydro plant is an engineering and construction project comparable to building a nuclear power plant or a large tunnel. It requires specific geography, complex permitting, and substantial upfront investment with a return on investment spanning decades. In contrast, a battery storage facility of hundreds of megawatts can be built on open land in a year. This difference in deployment speed is a key factor in the shift towards batteries.
China is the only country that hasn’t been deterred by these limitations, with 91 GW of new pumped hydro capacity currently under construction, according to the International Hydropower Association. The rest of the world is lagging in developing this technology, relying on facilities built in the second half of the 20th century.
While battery manufacturing resembles automobile production – with serial production in factories and installation taking months – building a dam remains a decade-long undertaking. Chemistry is now outpacing water in terms of deployment speed, a pace that water is unlikely to match.
