A conventional dam holds water in a man-made lake, or reservoir, behind it. When water is released through the dam, it spins a turbine connected to a generator that produces electricity. The water returns to the river on the downstream side of the dam.
The pumped storage plant uses two reservoirs, with one at a much higher elevation than the other. To produce power, water is released from the higher reservoir through a tunnel in the mountain to drive generators in an underground power plant.
When power demand drops at night and on weekends, the turbines reverse and pump water back to the upper reservoir where it can be released again when demand requires.