The electrochemical deposition of Cu clusters in nanometer-sized holes on Au(111) was observed by in-situ scanning tunneling microscopy (STM). The holes were formed electrochemically by applying short negative voltage pulses to the STM tip prior to Cu deposition. The lateral extension of the clusters is confined by the width of the holes. Their equilibrium height depends on the applied overpotential rather than on the polarization time, reflecting a delicate energy balance between the electrochemical energy and the enlarged surface energy of the growing Cu cluster. We attributed this to the formation of steps at the size-confined Cu islands and derived a step formation energy of 0.4-0.5 eV/(step atom). This is in good agreement with expectations for the formation energy of kinky steps on metal surfaces.