The economics of underground pumped hydroelectric storage (UPHS) were analyzed in two ways. First, the cost effects of a variety of machinery-related factors on a UPHS plant were estimated. Second, four actual turbomachinery options were evaluated in terms of those factors. Preliminary conclusions about UPHS costs are as follows: the use of advanced turbomachinery is more economical than the use of state-of-art turbomachinery; plant-construction cost and the cost of the turbomachinery itself decrease as the operating head increases (The lowest costs now occur at a head range of 1200 to 1500 m for a UPHS plant designed on the single-drop principle. A machine's high charge/discharge ratio also lowers construction cost.); and pump/turbine efficiencies and charge/discharge ratios represent very important design parameters for UPHS applications. One of the advanced options considered, a two-stage reversible pump/turbine engineered for Argonne by the Allis-Chalmers Hydro-Turbine Division, appears to have the most cost-effective design for high-head applications (1000 to 2000 m). Further development of the two-stage concept promises future heads greater than 1500 m.