Air storage pioneer inks first of its kind deal to keep lights on in Australia’s Silver City

Canadian company Hydrostor has locked in a deal to provide back-up power to the iconic mining town of Broken Hill, using the landmark compressed air long duration storage facility that will be built in a cavern in one of the region’s silver mines.

The deal between Hydrostor and transmission company Transgrid means that compressed air storage will replace ageing diesel generators to provide back up power to the so-called “Silver City”, as well as long duration storage to other customers.

Hydrostor is planning to build a 200 MW, eight hour (1600 MWh) storage facility within the Potosi mine, with up to 50 MW of this capacity, and up 250 MWh of storage, reserved in case of a planned or unplanned power outage.

It’s a landmark deal for Hydrostor, and will be its biggest project to date, although it is also planning to build a 500 MW, eight hour storage facility in California, which it reckons is its ideal size.

“Beyond the clear decarbonisation and economic benefits of the project, we are pleased to see that the Broken Hill community is excited to be part of a ground-breaking project which will keep the lights on,” says Jordan Cole, Hydrostor’s chief commercial officer.

“Advanced Compressed Air Energy Storage represents a scalable, cost-effective solution for the provision of long duration energy storage. We look forward to progressing this essential infrastructure project that ensures clean energy is accessible when needed”.

The deal for the Hydrostor project nearly didn’t happen. As the city’s dirty diesel generators approached the end of their life Transgrid cast around for alternatives, and came across Hydrostor’s Advanced Compressed Air Storage Technology.

But, as RenewEconomy wrote at the time, the initial proposal was rejected by regulators because the rules of the National Electricity Market meant that they were not allowed to factor in the environmental benefits of dumping diesel for a zero emissions storage facility.

Transgrid found a way around the problem and with the support of the Australian Renewable Energy Agency paved the way for a large renewable microgrid to be built that could support green industry and new mines.

Those rules that disallow environmental considerations of significant regulated investments have now been removed.

Broken Hill already boasts the 200 MW Silverton wind farm and the 53 MW Broken Hill solar farm, but they are often curtailed by grid limitations. The Hydrostor compressed air storage facility will help solve that problem.

It’s a timely announcement. Early last month, power was lost for eight hours in the region when the main transmission line to the rest of the grid were down for maintenance, and one of the two back up diesel generators tripped, unable to cope with the variable renewable power.

Hydrostor however, does not expect its project to get up and running until 2027. It can use existing shafts from the Polosi mine, which will reduce costs and help make the 250 MW facility viable, but it still needs to create a large cavern.

Hydrostor will seek other contracts and off-take agreements with other parties, potentially including energy utilities and local energy consumers, such as a mine or new manufacturing facility.

CEO Curtis VanWalleghem says the company has another half dozen or so 500 MW projects that are being discussed with third parties around Australia, including in WA’s Pilbara region, Victoria, South Australia, and another two in NSW.

VanWalleghem says the company is keeping a close eye on the progress of the newly expanded Capacity Investment  Scheme, which will be used to encourage more wind, solar and storage  and various state-based programs.

“The Silver City project will pave the way for more solar and more wind, and provide a significant amount of reliability,” VanWalleghem says.

The company expects financial close to be reached once its EIS is completed, planning approval obtained, and contracts signed. However, the company is backed by US investment bank Goldman Sachs and the Canadian Pension Plan, so “we got the capital,” he said.