ScottishPower is planning a two-fold expansion of the 440MW Cruachan pumped storage hydro plant near Oban in Scotland.
The decision to expand the hydro-electric power station is based upon a two-year feasibility study.
According to the study's findings, the facility that generates and stores energy can be further expanded with up to 600MW additional capacity.
The project expansion will require an investment ranging between £300m and £400m. During the main civil construction works, the project is expected to create around 800 jobs.
ScottishPower is currently considering all options and next possible next steps, which include discussions with the government on potential support mechanisms.
A new cavern would need to be excavated within Ben Cruachan and new dams could be constructed to increase the upper reservoir's capacity, the firm said.
The potential Cruachan expansion project would also include an eight to ten-year build programme for the extension. In addition, there would be two to three years to secure Section 36 planning consent and other consents, as well as six to seven years for construction and commissioning.
ScottishPower generation director Hugh Finlay said: "A new generation of pumped storage hydro would be a major asset for electricity systems worldwide as more renewable electricity continues to come on line.
"As well as being able to further support peak demand, expanded pumped storage would also be able to effectively store greater levels of electricity at times when renewable energy output is high but demand is low.
"Pumped storage hydro is the most cost-effective and well-developed large-scale electricity storage technology in existence."
The firm said that it will now move ahead with the Cruachan findings with government and regulators.
Image: The Cruachan hydro plant in Scotland. Photo: courtesy of Scottish Power Ltd.