ARENA says it has chosen preferred pumped hydro project in South Australia

The Australian Renewable Energy Agency says it has chosen its preferred pumped hydro project in South Australia for a grant of up to $40 million, but won’t make an announcement on the choice until funding negotiations are completed.

ARENA announced last August that four pumped hydro projects had been shortlisted for the grant, designed to fast-track the roll-out of much needed storage as the state moves from more than 50 per cent wind and solar share to the state Liberal government’s target of “net 100 per cent” renewables by around 2030.

Those shortlisted projects were Sunset Power and Delta Energy’s 242MW/1,835MW Goat Hill project near Port Augusta, Rise Renewables and UPC’s 250MW/2,000MWh Baroota project,  EnergyAustralia’s  225MW/1800MWh Cultana sea-water project  north of Whyalla, and AGL’s 250MW, 2000MWh Kanmantoo project

However, the contenders are down to three because the Kanmantoo project has been pulled after AGL and the owner of the mine and the pits it wanted to use, Hillgrove Resources, failed to agree on how to use those pits – a matter complicated by the fact that drilling by Hillgrove had led it to rethink the planned closure of the mine.

ARENA said in August last year that a winner would be chosen by the end of the year. In response to queries by RenewEconomy this week, a spokesperson said in an emailed statement:

“ARENA has selected a preferred South Australian PHES project as part of our funding process. We are in the process of negotiating a development framework to support the project to proceed to financial close.

“At present, the details of this are still commercial-in-confidence while these negotiations are finalised. We expect to make an announcement once the process is complete before mid year.”

The pumped hydro support program, deemed essential by ARENA to support the transition to renewables in South Australia, is likely to be one of its last funding commitments it will make because it is running out of fund – unless the federal government reboots its coffers as part of its “technology solutions” plan it may unveil in coming weeks.

The ARENA funding is not the only program that could support pumped hydro projects in South Australia.

Two of the projects shortlisted by ARENA – Goat Hill and Baroota – are also among 12 projects shortlisted in the first stage of the federal government’s slow-moving Underwriting New generation Investment Scheme. Another South Australia pumped hydro proposal – from Sanjeev Gupta for his steel plant near Whyalla, is also on the UNGI shortlist.

Analysts say the South Australia market is likely to support one, or possibly two pumped hydro projects in the short to medium term, but the proposed new interconnector to NSW – Project Connect – could weaken the case for more pumped hydro schemes.

However, there are at least half a dozen big batteries combined with new wind and solar projects proposed for the state, along with some hydrogen storage proposals, a compress air project, and numerous “virtual power plants” that can combine the capacity of household batteries and provide energy and grid services.