Hydrodynamic, computational fluid dynamics, and finite-element modeling were performed for a novel floating membrane reservoir system design for closed-loop pumped storage hydropower application. The conceptual design, which is now protected under an invention disclosure with a patent pending, offers a potential low-cost, low-impact solution to address the high costs, long investment return periods, and environmental disruptions encountered with traditional pumped storage development while offering modularity to enable replication at many locations. Prior to physical tests on a prototype, this paper documents the response analysis and modeling completed to simulate hydraulic and structural performance under different reservoir deployment and alignment arrangements, evaluate system stability, and refine the conceptual design. The results indicate that the excitation frequency from vortex shedding is at least an order of magnitude lower than the water sloshing frequencies in the reservoir, the structural natural frequency of the entire reservoir, and the vibrational frequencies of the side membranes, although excitation frequencies from other sources could cause mechanical resonance under certain conditions. To control destabilizing effects and prevent rocking motion and vibration, the authors conclude that the design could be improved by including a support structure around the floating reservoir, which could also provide floating-membrane containment, improve safety, and facilitate vertical reservoir movement. These conclusions, based on hydrodynamic and structural response modeling, help define specifications for upcoming full-scale prototype construction, deployment, and testing. This study demonstrates standard modeling technique application to an innovative design for which similar applications have not been previously evaluated. The refined design is capable of improving the scalability and feasibility of pumped storage hydropower in the United States and will be considered for commercialization following prototype testing.