A Life Cycle Asset Management strategic approach to optimize the value of pumped storage plants

Hydropower continues to represent the foremost source of renewable energy generation on a global scale, maintaining a dominant position relative to other renewable technologies. Considering the increasing global demand for energy, Power generation companies are increasingly required not only to produce electricity efficiently but also to ensure its strategic availability during periods of peak demand and consumption. Within this study, Pumped Storage Plants (PSPs) have come out as a crucial technology for Hydropower projects, distinguished by their superior large-scale energy storage capabilities compared to other storage technologies. However, the realization of PSP projects involves substantial capital investments (CAPEX) and operational expenditures (OPEX), highlighting the need for comprehensive strategies to optimize Asset Value across their full operational lifespan. This research adopts a Life Cycle Asset Management (LAM) strategy to optimize the value of PSPs across all phases, from initial planning to final decommissioning. Through the identification of key performance indicators (KPIs) by using LAM activities for PSP, strategies were formulated to enhance the reliability, availability, efficiency, and operational lifespan of these assets. An economic and financial viability model for PSP is also developed, utilizing LAM principles to each life cycle stage. The model incorporates data drawn from peer-reviewed scientific literature, market analyses, and relevant case studies, and serves to evaluate key financial metrics such as NPV, IRR and Payback period. The outcome of this LAM study for PSPs provides a comprehensive set of KPIs and a framework intended to support investors and decision-makers, illustrating how the systematic application of LAM methodologies can significantly enhance both the Value and the Financial Performance of Pumped Storage Plants over the long term.