# Pumped hydro storage: Correlation Prices it moves with, and why Source page: https://www.materialinsights.org/energy/e_pumped_hydro/correlation/ Pumped hydro stores power by pumping water uphill when power is cheap and releasing it when power is dear. Its cost is mostly civil works, tunnels and turbines, and its earnings depend on the gap between peak and off-peak prices. No public price Pumped hydro storage has no public monthly price series: Built as long-lived projects; value set by power prices. #### What its price moves with Commodity [Cem Cement](https://www.materialinsights.org/commodities/cement/)Construction input Dams, tunnels and powerhouses need huge volumes of concrete. Cement prices affect the build cost, though labour, geology and delays usually matter more for the final bill of a scheme. Not enough overlapping price history to measure. Commodity [St Steel](https://www.materialinsights.org/commodities/steel/)Construction input Penstocks, reinforcing bars and turbine parts use large amounts of steel. Steel prices raise the build cost, but civil works and financing dominate the economics of a scheme that lasts many decades. Not enough overlapping price history to measure. Energy [HyD Hydropower dams](https://www.materialinsights.org/energy/e_hydro_dams/)Shared technology Pumped schemes use reversible pump turbines and generators similar to those in conventional hydro plants. Both draw on the same few turbine makers and the same specialist engineering and tunnelling firms. Not enough overlapping price history to measure. Energy [PV Solar photovoltaics](https://www.materialinsights.org/energy/e_pv/)Profit source Cheap midday solar power widens the gap between low and high prices across the day, which is exactly what pumped hydro earns from. India is planning many schemes to firm its fast-growing solar capacity. No public price for solar photovoltaics, so the link is explained in words only. Energy [LFP Lithium iron phosphate batteries](https://www.materialinsights.org/energy/e_li_lfp/)Competitor Battery storage now competes for daily shifting of power. Batteries are faster to build, while pumped hydro lasts far longer and suits larger volumes, so falling battery prices squeeze the case for new pumped schemes. Not enough overlapping price history to measure. Chemical [Con Construction chemicals](https://www.materialinsights.org/chemicals/construction_chemicals/)Concrete additives Admixtures and grouts improve concrete for dams and tunnels and seal fractured rock. They are a small share of cost, but they are essential for long-lived structures that must hold back water. Not enough overlapping price history to measure. How to read these numbers **Correlation of monthly changes** (the number in the coloured pill) compares how much each price moved, month by month, since 2006 or the first month both series exist. It runs from −1 to +1: near +1 the two usually rise and fall in the same months, near 0 there is no link, and a negative number means they tend to move in opposite directions. Above 0.7 is strong, 0.4 to 0.7 moderate, 0.2 to 0.4 weak. **12-month changes** compare year-on-year moves, which shows whether two prices share the same cycles even when the month-to-month noise differs. **Price function** is a straight-line fit of the two prices on logarithmic scales: price ≈ k × (partner price)^β. β is how much this price moves, in per cent, for a 1% move in the partner over the whole period, and R² is the share of the variation the fit explains. Two prices that both drift up with inflation can fit well without any real link, so read it together with the monthly correlation. **Lead or lag** checks whether the monthly correlation is clearly higher when one price is shifted by 1 to 6 months. Correlation is not cause. The reasons on each card explain the economic link; the numbers show how strongly it has shown up in prices. Proxy series are US producer price indexes or related prices and can blur the real link. Data: World Bank Commodity Price Data (Pink Sheet), October 2026; US Bureau of Labor Statistics producer price indexes, IMF primary commodity prices and US EIA prices via FRED, Federal Reserve Bank of St. Louis, retrieved November 2026. Calculations by this site. ## Other sections - [Summary](https://www.materialinsights.org/energy/e_pumped_hydro/index.md) - [Overview](https://www.materialinsights.org/energy/e_pumped_hydro/overview/index.md) - [Science and technology](https://www.materialinsights.org/energy/e_pumped_hydro/sg-sci/index.md) - [Engineering and performance](https://www.materialinsights.org/energy/e_pumped_hydro/sg-eng/index.md) - [Economics](https://www.materialinsights.org/energy/e_pumped_hydro/sg-econ/index.md) - [Impact and additionality](https://www.materialinsights.org/energy/e_pumped_hydro/sg-impact/index.md) - [What to track](https://www.materialinsights.org/energy/e_pumped_hydro/tracking/index.md) - [Relationships](https://www.materialinsights.org/energy/e_pumped_hydro/links/index.md)