Energy Transition · Pumped hydro

What flows through a pumped-hydro scheme — and how it pays

A pumped-hydro scheme stores energy as water: it pumps water uphill to the upper reservoir when power is cheap, then releases it back down through turbines to generate when power is dear — long-duration arbitrage — plus contracted capacity-market and ancillary/inertia services. Watch it pump at the price troughs and generate at the peaks, and how the spread and services stack into EBITDA across a very long-life, capital-heavy asset.

1.0
£60
£40k
LIVE
Pumping (charge) buy power when cheap Generating (discharge) sell when dear Contracted services £ capacity + ancillary Operating cost civil & O&M
Flows — annualised from current assumptionsper year
Revenue p.a.
£0
£0 / hr
EBITDA p.a.
£0
0% margin
Revenue / MWh
£0
per MWh cycled
Energy cycled p.a.
0
1.0 cycles / day
Stocks — what the flows accumulate intolive
Upper reservoir now
0
live, of 4,000 MWh
EBITDA banked · session
£0
accumulating in real time
Implied enterprise value
£0
at 13× EBITDA
The revenue stack — contracted vs merchant Total £0 p.a.
Contracted
Merchant
Why investors watch the stack: contracted revenue (capacity market + frequency response) is relatively stable; merchant arbitrage rides volatile day-to-day price spreads — higher upside but far less predictable. The mix, the achievable spread and how hard it cycles are the core dials, and — unlike a generator — the scheme earns nothing of its own — it lives on price differences.
Revenue streams£0 p.a.
Operating costs£0 p.a.
Investment case — should you buy it?DCF returns

Year-1 financials flow live from the simulation above: revenue £0 and EBITDA £0 p.a. Set your deal terms below — the unlevered IRR (asset return) and levered IRR (return to equity, after debt) recompute instantly.

Operating

%
%
%
%
%
%

Valuation & hold

×
×
y

Financing

×
%
%
Unlevered IRR
—
asset / project return
Levered IRR
—
return to equity
Equity multiple
—
MOIC over hold
Equity gain
—
exit equity − invested
Equity cash-flow profile£m · ■ invested   ■ returned
Projection — £m per year

Illustrative model. Represents a ~400 MW / 4,000 MWh (10-hour) pumped-hydro scheme, ~75% round-trip efficiency and a 60–100 year life. Revenue = energy cycled × the captured price spread (arbitrage, net of pumping cost) + contracted capacity-market and ancillary/inertia services. Operating costs are largely fixed (civil & dam maintenance, turbine/pump O&M, network charges, insurance and rates), with little degradation. EBITDA = revenue − operating costs. The investment case is a simplified DCF: unlevered IRR discounts free cash flow to the firm (EBITDA − cash tax − capex) plus an exit on the EV/EBITDA multiple; levered IRR is the equity cash flow after debt. Storage revenues are volatile and depend on day-to-day price spreads. For illustration only — not investment advice, and not any specific asset.