Pumped hydro: the next wave of energy storage

By Rebecca Todesco, Assistant Editor, Pump Industry Magazine

Australia’s thermal power capacity is progressively retiring, with almost two thirds of the country’s coal-fired generation capacity expected to retire by 2040. This is propelling a move away from aging, emissions-heavy energy production towards greener energy production that utilises Australia’s natural environmental resources, including hydro power. Here, we look at some of the major hydro power projects underway or being investigated in Australia that could provide tender opportunities in the future.

It is becoming increasingly likely that this retirement goal might happen sooner than originally expected, following AGL’s surprise announcement earlier this year that it intends to shut down all coal-fired generation by the end of fiscal year 2035, reducing the company’s annual greenhouse gas emissions from 40 million tonnes to net zero.

Adding to this is the Western Australian Government’s announcement that all state-owned coal power stations will be closed by 2030.

Further driving this move is the passing of the nation’s first climate change legislation in a decade, cementing Australia’s commitment to cutting emissions by at least 43 per cent by 2030 (compared with 2005), reaching net zero emissions by 2050.

According to the 2021 Australian Energy Statistics, in 2019 renewable energy already delivered an average of 21 per cent of Australia’s electricity, and significantly more at certain times and in certain states.

Australia’s bounty of high-quality wind and solar resources is now widely acknowledged and greatly exceeds the amount required to meet domestic electricity demand.

However, full dependence on these kinds of intermittent energy sources may give rise to grid instability and uncertainty on days it is cloudy or still.

Energy storage is proving itself to be an increasingly important part of the electricity system, granting peace of mind that energy will always be available, even at times when the sun and wind are not.

As output from intermittent energy sources like solar and wind power increases, so too does the need to introduce power when wind and solar PV output fails to meet demand, and store excess when wind and solar PV output exceeds demand.

Pumped hydro acts like a giant battery for the electricity system, using surplus renewable energy to pump water up a hill to an upper dam when it is sunny and windy, and releasing the water back down the hill towards a smaller dam through giant turbines that create electricity when it is still and dark.

An energy storage system, such as pumped hydro, provides flexible, on-demand power while reusing the water in a closed loop, maximising the efficiency of renewables by using surplus solar and wind power to pump the water to the higher dam for future use.

The utilisation of pumped hydro means that dispatchable power can be added into the market to balance electricity supply and demand. Pumped hydro projects, including Battery of the Nation and Snowy 2.0, can help

deliver a more reliable energy system to Australians, reducing the risk of blackouts and electricity price volatility.

The Australian Government, recognising the significant potential that pumped hydro has to offer, is making targeted investments which will deliver additional electricity generation and energy storage to the National Electricity Market (NEM), with New South Wales playing host to the majority of them.

Australia has more than 100 operating hydroelectric power stations – both large and small – with the most well-known the Snowy Mountains Hydro-Electric Scheme.

In 2020 construction kicked off on the Snowy 2.0 project will link two existing dams in the Snowy region – Tantangara and Talbingo – with 27km of tunnels. Once complete, Snowy 2.0 will provide 2000MW of capacity and 350,000MWh of pumped hydro energy storage.

The Snowy 2.0 project is forecast to be able to power approximately three million homes over a week upon completion.

Not only will the project generate more power and lower electricity prices, it is also slated to generate around 4,000 direct jobs in the Snowy Mountains region throughout the project’s life, with thousands more in supply chain and service roles.

New South Wales has an ambitious target to build at least 2GW of new long duration storage by 2030, and the State Government has committed $97.5 million to accelerate pumped hydro projects that could meet that target.

This includes funding for private projects as well as funding to undertake site investigations for pumped hydro potential on existing WaterNSW dams.

The New South Wales Government has awarded $45 million in funding to five pumped hydro projects, which will deliver a combined capacity of almost 1.75GW of energy storage to the state.

New South Wales Treasurer and Minister for Energy, Matt Kean, said the state’s Pumped Hydro Recoverable Grants Program will assist pumped hydro developers to cover upfront costs and lower investment barriers for the private sector.

“Funding agreements are already in place with five applicants who have received a total of $44.8 million to support pre-investment activities, establish project feasibility and develop a strategic business case,” Mr Kean said. Lake Lynell pumped hydro project

EnergyAustralia is currently investigating a pumped hydro project on Wiradjuri Country at Lake Lyell near Lithgow. This project intends to use Lake Lyell as a lower reservoir with a new upper reservoir to be built on the southern side of the nearby Mt Walker.

EnergyAustralia estimates that this site could accommodate a facility capable of producing up to 335MW of electricity with around eight hours of storage, a sufficient amount to power 150,000 households during peak periods.

The proposed facility would use existing infrastructure, water, transmission lines and Energy Australiaowned land.

“New South Wales has the most ambitious renewable energy policy in the nation, which is needed to replace aging coal-fired power stations and build a clean energy future for the state,” Mr Kean said.

New England Renewable Energy Zone

In December 2021, the New South Wales Government formally declared the New England region around Armidale a Renewable Energy Zone (REZ) – the equivalent of modernday power stations, combining new renewable energy infrastructure, energy storage and high-voltage transmission infrastructure.

The New England region has been acknowledged as having some of the best natural gas resources in the country, including some of the best potential sites for pumped hydro development in the state.

This REZ is expected to deliver new network capacity to host up to 8GW of new generation, and it is on the eastern side of this REZ that the Oven Mountain project – declared Critical State Significant Infrastructure (CSSI) in October 2020 – is located.

The project will deliver local economic and community benefits, and it is anticipated that it will complement other local renewable energy sources, such as solar and wind, and will play a crucial role in ensuring the stability of the future network.

Construction is slated to span over four years, and will create as many as 1,000 jobs encompassing a broad range of skills and activities.

Upon completion, around 30 to 50 operational jobs will also be necessary to support the project over its 50-plus year lifespan.

Some of the works needed to bring this project to fruition include improved road access and the installation of high grade communications. Improved road access will provide ready access to the site as well as ensuring local road safety. Additionally, the roads and reservoirs have the potential to improve emergency services access and fire management in the region.

As part of the high grade communications required for the ongoing operations of the Oven Mountain facility, new fibre optic infrastructure will be installed, delivered as part of the proposed electricity transmission work and facilitating improvements to local mobile telecommunications.

The Central West Pumped Hydro Project – located between Bathurst and Lithgow, within 2.5 hours of Sydney – is in the early stages of project assessment and development.

When completed, the project will generate enough sufficient energy to power over 153,000 homes, creating some 200 jobs during construction and 30 jobs on an ongoing basis.

The project is set to deliver other benefits to the community, including upgrades to local infrastructure and

roads, and improvements to local telecommunications infrastructure which will improve coverage in the local area. Muswellbrook Pumped Hydro Project

The proposed 250MW Muswellbrook Pumped Hydro Project in the Hunter region has been awarded $9.45 million funding under the Pumped Hydro Recoverable Grants Program and is set to provide eight hours of storage when completed.

The Muswellbrook Project will test an innovative approach, whereby a preexisting mine void from Idemitsu’s Muswellbrook Coal mine will be utilised as the lower reservoir.

The grant funding will be used to complete a detailed design of the project, connection studies, contractor engagement and a targeted geotechnical due diligence program.

AGL and Idemitsu Australia Resources (IAR) announced a joint venture (JV) for the project – Muswellbrook Pumped Hydro Pty Ltd – and signed an agreement with Energy Corporation of NSW (EnergyCo), which will secure funding to expand on feasibility work already undertaken for the proposed project.

The JV will also undertake thorough Traditional Owner and community consultation to prepare the project for an investment decision.

AGL Chief Operating Officer, Markus Brokhof, welcomed the support of the New South Wales Government and said he was pleased to see the project progressing to the next stage.

“We’re announcing another step forward in planning for what could be a significant energy asset for the people of Australia and the Upper Hunter community,” Mr Brokhof said.

“As we transition to more renewable energy sources, pumped hydro provides a reliable on-demand generation source and acceleration of our development studies will help us understand how the project could be delivered.

“AGL has 2.9GW of wind, battery, pumped hydro and other low carbon and firming projects in active planning and development, and we will continue to look to invest in projects like Muswellbrook Pumped Hydro.”

A preliminary engineering study began in 2019 to determine whether the project is technically feasible, provide cost estimates for both construction and operation, and assess the required planning and approval processes.

Battery of the Nation is a Hydro Tasmania initiative to broaden Tasmania’s renewable electricity generation capacity to supply mainland Australia, including hydropower system improvements and new pumped hydro opportunities.

Through the Bilateral Energy and Emissions Reduction Agreement the Federal Government has provided $65 million to the upgrade of the Tarraleah hydropower scheme, which is a key component of Battery of the Nation.

Additionally, in October 2022, the Federal Government announced the availability of up to $1 billion of lowcost loans from Rewiring the Nation to eligible Tasmanian Battery of the Nation projects.

The Marinus Link is the proposed second interconnector that will utilise Tasmania’s extensive renewable energy resources to provide an additional 1500MW of capacity between Tasmania and mainland Australia.

When constructed, Marinus Link will provide the NEM with over 500MW of dispatchable generation, which is currently unavailable due to limited BassLink capacity. This would result in the powering of up to 500,000 homes and help mitigate the impact of variable wind and solar generation, unplanned outages and extreme weather events.

The link will also unlock additional renewable energy investment in Tasmania by expanding Tasmania’s hydro capacity through Battery of the Nation. Estimates show that Marinus Link will contribute savings of up to 70 million tonnes of CO² equivalent by 2050.

During its construction it is expected that Marinus Link will create up to 2,800 direct and indirect jobs, delivering up to $3.65 billion of economic stimulus to north-western Tasmania and regional Victoria.

The Federal and Tasmanian Governments signed the Bilateral Energy and Emissions Reduction Agreement in October 2020, in which the governments agreed to support the design and approvals phase of the Marinus Link project.

On 3 April 2022, the Australian Government announced it will invest a further $75 million, on top of the previous $56 million to the Tasmanian Government, to support the Marinus Link project through the next stages of planning, design and approvals.

Additionally, the Australian Government announced in October 2022 that it would provide access to low cost finance from Rewiring the Nation for Marinus Link and the associated North West Transmission Developments.

Alongside the Western Australian Government’s decision to close all state-owned coal power stations by 2030, came the announcement of an estimated $3.8 billion set to be invested into the South West Interconnected System (SWIS).

This investment commitment comes as the state’s electricity system is increasingly challenged by the overwhelming uptake of rooftop solar. These pressures have forced Synergy and Water Corporation to offload excess power generated during the day at a loss, and add additional maintenance and generation costs, which are ultimately borne by taxpayers.

Synergy is currently undertaking analysis to determine the feasibility of a pumped hydro project forming part of its storage needs, and also investigating the feasibility of using hydrogen to power its existing gas generation assets.

By phasing out coal-fired power, Synergy’s carbon emissions will be reduced by 80 per cent by 2030, including a 40 per cent emissions

reduction on the SWIS, compared to 2020-21 levels.

It is expected that additional industry demand for renewable energy will result in even greater emissions reductions on the SWIS.

Pumped hydro investigations in Queensland

The Australian Energy Market Operator has identified that Queensland will need significant energy storage as part of a diverse future energy system, with clean energy storage, including

Borumba Dam was selected as the first site for a detailed design and cost analysis. The State Government has also announced Pioneer-Burdekin as the second site for detailed analytical studies.

Both sites were selected after a statewide assessment of potential pumped hydro locations through the Queensland Hydro Study. Various engineering, geological, hydrological, environmental and social studies are currently under way at both sites.

pumped hydro, crucial to secure Queensland’s energy system in the long term.

As such, the State Government has committed to developing the world’s largest pumped hydro scheme, in its $62 billion Queensland Energy and Jobs Plan, which will see the construction of a new dam in the Pioneer Valley near Mackay, capable of supplying half of Queensland’s energy needs with clean, reliable and affordable renewable energy.

To develop and deliver the largescale pumped hydro assets that will be the cornerstone of the state’s energy system, the Queensland Government established a publicly-owned entity, Queensland Hydro.

Furthermore, to meet Queensland’s future energy demand, the State Government is also investigating pumped hydro as a technology to store energy over days, weeks or months.

A key element of the landmark Queensland Energy and Jobs Plan includes progressing the development of the largest pumped hydro energy storage project in the world – the Pioneer-Burdekin project.

Queensland will need a portfolio of large-scale, long-duration pumped hydro options to support additional renewable generation development (i.e. wind and solar) and deliver lowcost and reliable renewable electricity for Queensland.

Due to the long lead times for pumped hydro projects, extra sites need initial investigation to ensure Queensland has sufficient large-scale energy storage capacity in development.

Together, the Borumba Dam and Pioneer-Burdekin projects could have a combined generation capacity of up to 7GW.

The Pioneer-Burdekin project will be constructed well clear of protected areas, and also offers significant supply chain and economic opportunities for the greater Mackay region.

Queensland Hydro intends to conduct further studies, with a detailed assessment for the Pioneer-Burdekin project to be delivered to the State Government in 2024.

This assessment is slated to include consultation with Traditional Owners and the community, hydrological modelling and assessment of environmental and social impacts, as well as commercial and financial modelling.

Queensland Hydro will also continue to conduct investigations of other largescale, long-duration pumped hydro sites in the unlikely event the PioneerBurdekin project is unable to proceed.

Realising the potential of pumped hydro in Australia will have a number of benefits, including increasing the security and reliability of the grid.

As with most energy projects, pumped hydro projects have a tendency to be located away from urban areas, injecting investment and job opportunities into regional communities that may still be feeling the effects of COVID-19.

There is significant overlap between the types of the skilled workers needed for pumped hydro projects and those required for civil construction, including mining and road/rail tunnelling projects.

As well as having a lower environmental impact, pumped hydro will result in lower electricity prices and is a highly cost-effective solution for energy storage.

Researchers at Australian National University identified more than 22,000 potential pumped hydro locations across the country – approximately 1,000 times the storage capacity needed to transition to an 100 per cent renewable electricity system which meets 100 per cent of domestic electricity demand.

If Australia’s pumped hydro potential is properly embraced, it will allow Australia to emerge as a clean energy superpower, enabling a reliable, greener electricity supply system that distributes power at globally competitive prices.

Pumped hydro offers Australia an opportunity to utilise the fundamental and unique features of the country’s topography as a competitive advantage that will continue to serve the nation for generations to come.