Against the background of the dual-carbon goals and sustainable development, renewable energy, as a substitute for traditional energy, accounts for an increasing proportion in the new power system. With the advantages of sustainability, low-carbon and environmentally friendly characteristics, it has become an important branch of the new power system. However, new energy power generation has caused a large waste of energy and electricity due to geographical, climatic, demographic, and economic factors. More seriously, extreme changes in climate are extremely detrimental to the stability of the power grid and the safety of generators. Based on domestic and foreign literature, this article reviews the role and application prospects of pumped storage technology in peak regulation in new power systems. Research shows that pumped storage technology can use water, a clean energy source, to store and release the electricity generated by new energy as a “natural battery” in a timely manner, so as to play the role of storing electricity during low-load periods and supplying electricity during peak-load periods. This research can provide theoretical reference for the study of solving the problem of power grid instability in new power systems.