Wind and solar power plants are gaining increasing attention due to low green house gas emissions associated with electricity generation. The installed capacity of these resources is rapidly growing, while it is argued that the stability of the grid is threatened since these resources depend on actual weather conditions and their output cannot be easily adjusted to follow instantenous electricity demand. Another reliable low carbon power supply such as nuclear power plants cannot help in stabilizing the grid, due to long time constant of the control system. Eventhough, nuclear power is easy to predict, it needs external grid stabilizing utilities itself.If electricity could be stored in a sufficient amount during the periouds of favourable conditions for renewable energy sources and during periods of low demand for electricity and utilized again when it is demanded, the stability of the grid would be improved and no extra installed capacity of more carbon intensive power plants would be necessary. Therefore, an increasing focus is currently given on large scale energy storage. One of the most promising options for large scale energy storage which is already operating due to its fast response to electricity demand is a pumped storage power station. Before an extensive installation, it is important to evaluate this technology from the environmental perspective in order to avoid shifting environmental problems, to assess its potential to decrease dependency of electrical grids on fossil fuels and to estimate its potential in climate change mitigation/greenhouse gas reduction.