Powering the Nordics’ Clean Future: Why LongDuration Energy Storage Will Matter — and the Case for Underground Pumped Hydro

June 2026

The Nordic countries are already global leaders in decarbonisation. Abundant hydro, rapidly expanding wind power and high electrification rates put the region on track for deep emissions cuts. Yet as renewables scale, a new challenge emerges shifting energy not just across hours but across days and seasons. Longduration energy storage (LDES) is the missing piece. Among LDES options, underground pumped hydro storage (UPHS) stands out as a practical, lowfootprint way to deliver large, seasonal capacity that fits the Nordic context.

Why LDES matters in the Nordics Nordic systems today lean on reservoir hydro to move energy between seasons. But growing wind (especially offshore), faster electrification of heavy industry, and large inflexible loads like electrolyzers and data centres add variability that stretches beyond daily cycles. LDES captures surplus renewable energy when it’s abundant and releases it during prolonged deficits—reducing curtailment, firming supply for industry and easing pressure on thermal backup.

The Nordics’ strengths — Norway’s hydro and rugged topography, Denmark’s district heating and wind leadership, and Sweden and Finland’s industrial clusters — create fertile ground for diverse LDES solutions. Underground pumped hydro leverages local geology and brownfield opportunities to deliver bulk, seasonal storage with fewer surface impacts than traditional pumpedhydro.

What is Underground Pumped Hydro Storage (UPHS)? UPHS is a variation of conventional pumped hydro where one or both reservoirs, or the powerhouse itself, are sited underground — in natural caverns, abandoned mines or purposeexcavated rock caverns. During times of surplus electricity, water is pumped to an upper reservoir; when power is needed, water is released to flow back through turbines. Underground siting reduces visual and landuse impacts, can shorten water conveyance distances in mountainous terrain, and often benefits from excellent rock stability found across Nordic bedrock.

Why UPHS fits the Nordic profile

Low surface footprint: Nordic landscapes and communities are sensitive to visual and environmental impacts. UPHS keeps large infrastructure out of sight and preserves surface ecosystems and land uses.

Geology advantage: Scandinavian bedrock and a legacy of mining create many sites suitable for caverns or repurposing abandoned mines. Fjords and steep valleys also enable compact, highhead configurations.

Complement to reservoir hydro: UPHS can hybridize with existing hydro fleets—acting as flexing buffers to protect ecological flows and smooth reservoir operations without building new dams.

Seasonal scalability: UPHS is well suited to multiday and seasonal shifting, providing the bulk capacity needed to move spring/summer wind to winter demand peaks.

Co-location opportunities: Underground facilities can be near ports, industrial clusters or renewable generation sites, reducing transmission needs and supporting sector coupling (e.g., hydrogen production).

How UPHS compares with other LDES options

Versus surface pumped hydro: UPHS reduces land use and often faces lower public opposition but can have higher tunnelling costs depending on site complexity. Environmental permitting can be simpler without large reservoirs on the surface.

Versus batteries and flow systems: UPHS offers far greater energy capacity per site and much longer durations at lower levelized cost for multiday storage, though with slower response times and larger project scales.

Versus hydrogen and TES: Hydrogen provides sector coupling and long-term storage but at lower roundtrip efficiency. TES pairs well with district heating; UPHS is the bulk electric storage backbone to support both.

Practical opportunities in the Nordics

Brownfield mine repurposing: Old mines in Sweden and Finland could become lower reservoirs or cavern sites for UPHS, turning legacy industrial footprints into clean energy assets.

Fjord and valley projects in Norway: High heads available near fjords and steep terrain allow compact UPHS plants that deliver large energy volumes with modest surface impact.

Hybrid hydroUPHS projects: Pairing UPHS with existing reservoirs lets operators maintain environmental flow constraints while providing extra seasonal capacity for markets and industry.

Colocation with industrial clusters: Nearsite UPHS can provide firm power to electrifying steel, mining and chemical sites, increasing reliability and reducing exposure to volatile spot prices.

Barriers and how to address them

Upfront capital and geotechnical risk: Tunnelling and cavern excavation are capital intensive and sitespecific. Derisking through geological surveys, government cofunding for feasibility studies and pilot projects will be key.

Permitting and stakeholder acceptance: While UPHS reduces surface impacts, underground works still require robust environmental and safety assessments and community engagement. Clear permitting pathways and early consultation will smooth development.

Market design and revenue certainty: Longduration assets need market products that value seasonal capacity and longterm flexibility. Capacity contracts, seasonal balancing products and hybrid merchantcontract models help bankability.

Operational integration with hydro: TSOs must coordinate dispatch between reservoir hydro and UPHS to avoid value erosion; joint optimisation frameworks and crossborder coordination will help maximise system benefits.

Policy and market actions to accelerate UPHS

Fund and fasttrack prefeasibility studies and pilots on mine repurposing and fjord/valley caverns.

Create LDES and seasonal capacity procurement mechanisms that recognize multiday services UPHS provides.

Offer targeted derisking instruments (grants for Geotech, longterm offtake or capacity payments) to attract private capital.

Encourage hybrid projects that pair UPHS with existing hydro and industrial loads and harmonise crossborder dispatch rules in Nord Pool.

A pragmatic roadmap in the next 3–5 years, prioritise site identification, geological surveys and pilot UPHS conversions of abandoned mines and small brownfield sites. Through the 2030s, scale costeffective UPHS projects alongside TES, hydrogen and battery rollouts as market frameworks mature. By 2040, UPHS can be a central bulk storage technology supporting high renewables penetration and deep sector coupling across the Nordic region.