Yes, but where would water come from? What you are describing is regular pumped-hydro storage. It uses two reservoirs with different elevations. It works well when there are two naturally occurring reservoirs with elevation differences. You are suggesting to create low-elevation reservoir artificially by digging a hole. It would be very expensive because hole would need to be either very deep or very large.

How is the Underwater Cavity different from Underground Cavity? I don't get it.

Underwater Cavity doesn't require digging a hole. It's just a concrete sphere that's lowered deep underwater.