# Economic Feasibility of Underground Pumped Storage Hydropower Plants Providing Ancillary Services
## 1 Introduction
[22] estimated the income of different ESSs (PSH, CAES and gravity energy storage) that participate in the day-ahead market, the real-time energy market and the regulation market of the New York Independent System Operator (NYISO). The results obtained showed that PSH and CAES may be economically feasible when operating in the regulation market. Chazarra et al. [23] studied the economic viability of twelve PSH plants participating in the secondary regulation of the Iberian electricity system. The PSH plants were equipped with different fixed-speed and variable-speed units and with and without considering hydraulic short-circuit operation. They concluded that PSH plants equipped with variable speed technology, along with full converters with and without the possibility to operate in hydraulic short-circuit mode, and the PSH plants with ternary units obtain the lowest payback periods. Recently, Maciejowska et al. [24] developed a model that is able to predict the price spread between the day-ahead prices and the corresponding volume-weighted average intraday markets in the German electricity system. The research concluded that the sign of the price spread can be successfully predicted with econometric models, such as ARX and probit. Ekman and Jensen [25] conducted a study of a generic ESS with a global energy efficiency of 0.7 participating in the day-ahead market and some balancing markets in Denmark. They concluded that only UPSH might be profitable as long as it participates both in the day-ahead and ancillary services markets. The contribution of a variable speed PSH to increasing the revenue has been assessed for participation in the day-ahead and secondary regulation reserve markets in the Iberian electricity system [26]. Chazarra et al. [27] developed a stochastic model for the weekly scheduling of a hydropower system to optimize the revenue in the Spanish electricity system. The obtained solution protects a multireservoir system against risk of water and storage unavailability. The effect of the complementarity between the variable renewable energy sources and the load on the flexibility of the power system was examined in the Korean electricity system [28]. They examined an optimal mix ratio between the wind and solar PV and concluded that the ratios of the wind and solar PV to the total variable generation resource were 1.3% and 93.4%, respectively. Lago et al. [29] proposed a deep neural network by using Bayesian optimization and functional analysis of variance to improve the predictive accuracy in a day-ahead energy market. Chazarra et al. [30] estimated the maximum theoretical income of a PSH plant participating as a price-taker in the day-ahead and the secondary regulation reserve markets while considering different configurations of power plants in the Iberian electricity system. The results obtained demonstrate that the operation with the variable speed technology could be of considerable help in enlarging the income of the hydropower plant. In this work, the economic feasibility of three UPSH plants is analyzed considering DTCs between 4 and 10 h. The generation and consumption of electricity and the number of annual generation cycles have been estimated assuming a round trip energy efficiency of 0.77. The day-ahead and ancillary services markets in the Iberian electricity system are analyzed for optimizing the profitability of investment. Secondary regulation, deviation management and tertiary regulation services have been considered to maximize the income from selling energy and minimize the cost for purchasing energy. The capital costs of UPSH plants have also been calculated for the first time, considering the case of using the existing infrastructure and the case of excavating new tunnels or caverns as a lower water reservoir. Finally, a profitability analysis has been carried out using the net present value (NPV), internal rate of return (IRR) and payback period (PB).