Optimizing pumped hydro and hydrogen storage for water-dependent renewable systems

Abstract

Brazil’s electricity sector is undergoing a profound transformation as the share of intermittent renewables, such as wind and solar, continues to grow. While the country benefits from abundant renewable resources and a historically hydro-dominated grid, this configuration is increasingly challenged by seasonal water variability, rising curtailments, and the need to phase out fossil-based backup generation. Addressing these challenges requires the deployment of long-duration energy storage technologies that can provide reliability, flexibility, and resilience at the system level.

For the first time in the Brazilian context, this study proposes a long-term optimization framework to assess the role of Pumped Hydro Storage (PHS) and Hydrogen (H₂) in enabling a cost-effective and sustainable expansion of Brazil’s power system. The framework simultaneously co-optimizes PHS siting—based on a geospatial inventory of 337 potential sites—together with modular H₂ deployment, renewable expansion, and hydrogen exports within a unified objective function. The model spans a 25-year planning horizon (2026–2050) with monthly resolution, explicitly integrating hydrological cycles and water-dependent dispatch, which is crucial for a hydro-dominated system like Brazil’s. It captures renewable expansion, storage deployment, hydrogen exports, and fossil imports. Decision variables include renewable capacity additions, the siting and adoption of PHS plants, and modular deployment of H₂ electrolysis and re-electrification units. The formulation incorporates round-trip efficiencies, investment and operating costs, CO₂ emissions with a carbon price, and penalties for curtailment, thereby ensuring an integrated assessment of technical, economic, and environmental trade-offs.

The results highlight distinct but complementary contributions of PHS and H₂. PHS consistently delivers higher round-trip efficiency and cost-effectiveness, confirming its role as a mature and reliable backbone for renewable integration. Hydrogen, in turn, provides strategic systemic flexibility, particularly under high-renewable penetration, enabling surplus absorption and export opportunities. In the optimal configuration (Scenario 7), the model deploys 101 PHS plants and 75 H₂ modules, and the system transitions from a negative net balance in the baseline to a positive economic outcome. While the baseline operates in a net cost position, the optimized configuration not only fully offsets this deficit but also generates additional revenues equivalent to 28 % of the original system costs, underscoring the economic superiority of the PHS–H₂ hybrid solution. Complementarily, the Fossil-Free scenario, which enforces the complete elimination of fossil-based imports in the final five years of the horizon, demonstrates the system’s ability to sustain a fully renewable and storage-backed operation, while maintaining overall system costs reduction within 4 % of the optimal configuration.

Overall, this research shows that Brazil’s unique renewable potential, when strategically combined with PHS and H₂, can support a resilient, low-carbon, and economically viable power system. The framework and findings provide actionable insights for policymakers and system operators, highlighting the necessity of integrated planning that balances economic competitiveness, energy security, and climate credibility in the transition toward a fossil-free future.