Carbon-Pros Analyst Blog

Pumped-hydro converts electricity into potential energy in the form of water stored at a high elevation. During “charging,” low-cost off-peak power is used to pump water from a lower elevation reservoir to a higher elevation. During discharging the elevated and stored water is released through turbines to convert the stored energy back into electricity. The turbines are reversible so they can be driven by falling water to generate electricity and then be used in reverse to pump the water back up. Although there are efficiency losses in the pumping process, the system pays for itself by selling electricity during periods of peak demand, when electricity prices are highest. Pumped storage is the largest-capacity form of grid energy storage now available.

Pumped Hydroelectric Storage
Sources: Wikipedia, Tennessee Valley Authority (TVA)
http://www.tva.gov/power/pumpstorart.htm