In a pumped storage plant, water is pumped from a lower reservoir to a higher reservoir during off-peak times, using electricity from other types of generators. When the power is needed, it is released back into the lower reservoir through turbines. Inevitably, some power is lost, but pumped storage systems can be about 80 percent efficient. As of 1990, there was 75,000 MW of pumped storage capacity worldwide, with 25 percent of that in the United States. The ability to meet power demand fluctuations is an advantage of hydro plants with reservoirs.
Utilities save up the water, letting it loose only during peak times.
Hydro plants, especially the large older plants built from the 1930s to the 1950s, are the least-expensive source of electricity. The production cost of hydropower is typically less than a third that of coal or nuclear. Although hydropower is inexpensive and nonpolluting, the environmental impacts of hydropower can be serious. The most obvious effect is that fish are blocked from moving up and down the river, but there are many more problems. When a dam blocks a river, a river habitat is replaced by a lake habitat.