Yes. But this cost is passed on to customers ultimately. Utilities have to build new power plants, and if the plants are for peak generation, they are ridiculously expensive (they turn on quickly).
Peak demand can be met in several ways, one of the best - and cheapest - to pump water up from one lake to another when demand is low, reverse the flow when demand is high. One example is in Scotland, Loch Cruachan aka the hollow mountain.
to pump water up from one lake to another when demand is low, reverse the flow when demand is high
I can't imagine that being an efficient way to store electrical energy... sure, it's cheaper than huge batteries, but what's the % of the energy retained?
That's the whole point right, the efficiency is much larger than any other (known) storage device. Shutting down or variying the power output of a nuke or some other thermal generator is an expensive and time consuming operation, if you can use that power to pump water up a hill that's essentially 'free'.
The actual conversion ratio is much less interesting than the speed with which you can bring that power online when you need it, in this case from 'spinning reserve' to 50% in less than 30 seconds and full load in under 3 minutes. Very few other power generating plants can make such enormous jumps in power output in such a short time.
Typically such installations are about 70% efficient, 80% on the 'up' leg and 90% on the down leg, and though that may not sound very efficient the picture changes if you realize that this is essentially energy that would otherwise be wasted.
