Probably a stupid car question...

[Kevin]

You'd be better off storing the electricity in batteries than doing this. There's a reason why power companies have specially designed plants called "peakers" for when the power requirements peak. These power plants are typically gas turbines (basically a large scale jet engine designed to make power instead of produce propulsion).

Batteries, and converters are a pretty substantial capital investment that require replacement and upkeep, while a lake, some pipes, turbine generator, and a pump are lower tech and more resilient. If you do have times where capacity exceeds demand, this is a way to use the excess off-peak power to charge the potential (if nature doesn't help with rain). I could see where this would be useful where you have excess wind, solar, etc. It's hard to compare to the North American grid, since there are so many generation sources and more variability in generation capacity.

It also reduces the environmental impact with the recycling of the water. It may actually have more to do with that, than efficiency in power generation.