*3.4. Design Considerations of UPSH Plants*

The proper dimensioning of a UPSH plant is highly important for optimizing its economic feasibility. The net head and the amount of water moved must be maximized for increasing the storable amount of energy and the economic feasibility. Although the amount of energy remains constant, different dimensioning of UPSH could be carried out depending on the DTC. When the DTC increases, the output power of the FT decreases, consequently reducing the investment costs. DTCs greater than 7 h would be suitable for UPSH plants. The profitability also depends on the lifetime considered. Therefore, the profitability analysis was carried out considering lifetimes of 50 and 75 years. In addition, when the lifetime is increased, the amortization costs decrease and the EBIT increase.

Table 5 shows the NPVs, IRRs and PBs for HPS 1, HPS 2 and HPS 3 when considering the construction of new tunnels or caverns as a lower reservoir. The NPVs and IRRs of HPS 1, HPS 2 and HPS 3 increase with respect to the scenario that considers a lifetime of 35 years. However, IRRs lower than 5% and NPVs lower than 167.88 M€ are reached for 75 years, and therefore the projects are not economically feasible.

**Table 5.** Profitability analysis of HPS 1, HPS 2 and HPS 3, considering the construction of new tunnels, DTCs of 8 h and lifetimes of 50 and 75 years.


Table 6 shows the profitability analysis for lifetimes of 50 and 75 years in UPSH plants where the existing infrastructure is used as a lower reservoir. The NPV and the IRR reach 471.89 M€ and 8.13% when the lifetime of the UPSH increases to 75 years. The NPVs of HPS 3 for a lifetime of 75 years are increased by 284% and 108% in comparison with the values obtained for HPS 1 and HPS 2, respectively. Finally, the PB remains constant in each HPS. *Appl. Sci.* **2020**, *10*, x FOR PEER REVIEW 12 of 16

**Table 6.** Profitability analysis of HPS 1, HPS 2 and HPS 3, making use of existing infrastructure and considering DTCs of 8 h and lifetimes of 50 and 75 years. **Table 6.** Profitability analysis of HPS 1, HPS 2 and HPS 3, making use of existing infrastructure and considering DTCs of 8 h and lifetimes of 50 and 75 years.


### *3.5. Comparison with Other Storage Technologies 3.5. Comparison with Other Storage Technologies*

The installation cost of energy storage technologies (€ kWh−<sup>1</sup> ) has been compared with UPSH plants. Figure 7 shows the planned installation cost of a number of energy storage types for 2030 and highlights the low cost of conventional PSH (19 € kWh−<sup>1</sup> ), followed by CAES systems (38.26 € kWh−<sup>1</sup> ) [2,34]. Electrochemical storage like lithium-ion is still more expensive to install, but it is more efficient at storing and releasing energy, opening it up to a wider range of potential applications [34]. The installation cost of UPSH plants using the existing infrastructure reaches 20.90 € kWh−<sup>1</sup> , while the cost of UPSH considering the excavation of new tunnels increases to 38 € kWh−<sup>1</sup> . The installation cost of energy storage technologies (€ kWh−1) has been compared with UPSH plants. Figure 7 shows the planned installation cost of a number of energy storage types for 2030 and highlights the low cost of conventional PSH (19 € kWh−1), followed by CAES systems (38.26 € kWh−1) [2,34]. Electrochemical storage like lithium-ion is still more expensive to install, but it is more efficient at storing and releasing energy, opening it up to a wider range of potential applications [34]. The installation cost of UPSH plants using the existing infrastructure reaches 20.90 € kWh−1, while the cost of UPSH considering the excavation of new tunnels increases to 38 € kWh−1.

### **4. Conclusions 4. Conclusions**

The economic feasibility of UPSH plants participating in the day-ahead and ancillary services markets in the Iberian electricity system is presented for three HPSs. A deterministic model has been applied in order to maximize the income and minimize the costs for purchasing electricity. Different DTCs between 4 and 10 h have been considered in order to evaluate the economic feasibility of UPSH plants. In addition, the investment costs when making use of existing underground infrastructure and when excavating new tunnels or caverns as a lower reservoir have been estimated in order to evaluate the profitability of the investment. The economic feasibility of UPSH plants participating in the day-ahead and ancillary services markets in the Iberian electricity system is presented for three HPSs. A deterministic model has been applied in order to maximize the income and minimize the costs for purchasing electricity. Different DTCs between 4 and 10 h have been considered in order to evaluate the economic feasibility of UPSH plants. In addition, the investment costs when making use of existing underground infrastructure and when excavating new tunnels or caverns as a lower reservoir have been estimated in order to evaluate the profitability of the investment.

model, IRRs greater than or equal to 6% are reached when the investment costs are lower than 2000 € kW−1 and the DTC is greater than 5 h. In general, it can be concluded that the IRR increases when

the investment costs decrease and the DTC increases.

The results obtained show that the number of annual production cycles and the amount of electricity generated decrease when the DTC increases. The maximum number of annual production

The results obtained show that the number of annual production cycles and the amount of electricity generated decrease when the DTC increases. The maximum number of annual production cycles is 360 when the DTC is 4 h and decreases to 323 when the DTC increases to 10 h. Although the spread between the income from selling electricity and the costs for purchasing energy decreases when the DTC increases, the operating margin increases due to investment costs. In the profitability model, IRRs greater than or equal to 6% are reached when the investment costs are lower than 2000 € kW−<sup>1</sup> and the DTC is greater than 5 h. In general, it can be concluded that the IRR increases when the investment costs decrease and the DTC increases.

A UPSH plant is not economically feasible when new infrastructure has to be built. Maximum IRRs of 2.43%, 2.61% and 2.75% have been obtained for HPS 1, HPS 2 and HPS 3, respectively, with a minimum PB of around 24 years. On the contrary, the investment cost of a UPSH plant is reduced by 46.6% (1675 € kW−<sup>1</sup> ) when the existing underground infrastructure is used as a lower reservoir. Under these conditions, a UPSH plant could be economically feasible (IRRs greater than 6% and PBs lower than 15 years) when participating in the ancillary services markets, dimensioning DTCs greater than 6 h and using the existing underground infrastructure as a lower reservoir.

**Author Contributions:** Conceptualization, J.M.; investigation, J.M., J.M.F.-O. and J.L.; methodology, J.M.; software, J.M. and J.M.F.-O.; validation, J.M. and J.M.F.-O.; writing—original draft, J.M.; writing—review and editing, J.M. and J.M.F.-O.; supervision, J.L. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Conflicts of Interest:** The authors declare no conflict of interest.
