Abstract: The development of pumped storage industry is closely related to the electricity price mechanism. In this paper, the main policies of pumped storage price mechanism in China was briefly reviewed, three main stages in the evolution of the pumped storage price mechanism was summarized and proposed, while the main characteristics of each stage of the price mechanism and its impact on industry development were analyzed. Based on the current situation and the development trend of the power market, this study designs a price mechanism of pumped storage power stations at different stages, namely the initial, transitional, and mature stages of the electricity market, through drawing experiences of other countries for reference. Through specific examples, the revenue composition and challenges faced by pumped storage power stations at different stages are compared and analyzed. Finally, the future development direction of pumped storage power stations in China is looked forward. It is suggested to motivate pumped storage to enter into the spot market and auxiliary service market gradually, to achieve stable, orderly and sustainable development of the industry.