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Seeking Consensus on the Externalized Costs of Hydro and Mature Energy Storage

What is meant by “externalized costs”?

Externalized costs are real costs that are not quantified within the levelized cost calculations presented in the internalized cost articles. These costs are directly or indirectly paid by various sectors of the economy in forms such as pollution-related health costs, grid integration costs of intermittent renewables, and a reduction in the free services rendered by the biosphere.

Externalized costs of hydro, pumped hydro and compressed air energy storage

These three technologies are lumped together into a single article because externalized costs are highly uncertain and probably relatively small. There are a number of peer-reviewed works on hydropower externalities, but none of them seem to return a clean $/MWh number. Potential externalities include destruction of natural habitats, methane emissions and aesthetic impacts.

The externality of pumped hydro should be similar to regular hydro assuming that the stored energy comes from completely clean sources. It also seems reasonable to assume that compressed air storage would have similar external costs.


Due to a lack of data on the subject, we will simply assume a value of $5/MWh for the externalities of the technologies under discussion in this post. For perspective, the internalized cost of hydropower amounted to $42/MWh and the required breakeven spread for pumped hydro and CAES amounted to $150/MWh.


If you have a number that differs significantly from the estimates given above, please add it in the comments section below together with an explanation and a reference. 

Content Discussion

Schalk Cloete's picture
Schalk Cloete on August 10, 2017

DATA: Externalized costs of hydro and mature energy storage technologies: $5/MWh.