The European Alps are well positioned to contribute significantly to the energy transition. In addition to sites with above-average potential for wind and solar power, the “water towers” of Europe provide flexible, low-carbon power generation as well as energy storage. In the future, hydropower systems are expected to become more than mere electricity generators, serving a key role as flexible complements to intermittent power generators and as providers of large-scale seasonal and daily energy storage. Energy transition on national and European scales can be facilitated by expanding the capacity of pumped storage hydropower (PSHP) plants. Yet the extension of hydropower production, in particular PSHP, remains controversial, primarily due to environmental concerns. Focusing on 2 Alpine countries, Austria and Switzerland, this paper provides a system view of hydropower production and energy storage in the Alps. It discusses advantages and drawbacks of various assessment tools and identifies gaps and needs for the integrated assessment of PSHP plants. It concludes that instruments that evaluate the impacts and sustainability of PSHP projects need to be developed, elaborated, and applied in a participatory manner, in order to promote public dialogue, increase social acceptance, and, ideally, encourage energy consumers to become advocates of a sustainable energy future.