Spatially resolved modeling of pumped storage and hydropower for China's carbon neutrality

Abstract

China's commitment to carbon neutrality by 2060 requires 5000--8000 GW integration of variable renewable energy, which may pose unprecedented grid stability challenges. Using spatial-temporally resolved modeling to co-optimize capacity expansion and system operation for hybrid wind-solar-hydro power, we quantify the flexibility requirements of pumped hydro storage (PHS) and cascaded hydropower in a decarbonized grid. We demonstrate that deploying 205 GW of open-loop PHS reduces system costs by 81 billion yuan (about 11.6 billion USD) annually while decreasing VRE curtailment by 11%. Through reservoir-level modeling of closed-loop PHS, we reveal that conventional approaches systematically overestimate capacity requirements by 30\% and inflate costs by 36 billion yuan (about 5.2 billion USD) annually by failing to capture operational flexibility. Crucially, price volatility in renewable-dominated markets generates arbitrage revenues sufficient to enable the commercial viability of PHS without subsidies—a finding with global implications for financing energy transitions. Optimizing hydropower cascade operations yields an additional 116 billion yuan (about 16.6 billion USD) in annual savings. Multi-year climate simulations confirm system resilience across diverse weather conditions. Sophisticated modeling of pumped storage and hydropower flexibility is essential for designing economically viable pathways to deep decarbonization in large-scale power systems.