Compressed air battery wins state approval for Silver City blackout fix in Broken Hill

Four years after archaic regulations sin-binned a groundbreaking compressed air energy storage project for Broken Hill, the technology has been approved for take off by the New South Wales (NSW) government. 

The 200 megawatt (MW), eight hour (1600 MWh) duration Silver City energy storage project by Canadian compressed air technology company Hydrostor won development approval late last week.

The underground project will be housed in a cavern inside Perilya’s Potosi silver mine on the north-east outskirts of the town, and which crosses over into Crown lands leased in November last year.

The technology uses renewable energy to compress air and store it underground. When electricity is needed, the air is released through a turbine.

But there’s still a very long road ahead for this project, with bureaucracy in Australia and the radical changes in US policy creating real obstacles for the Canadian company. 

Changing the rules

In Australia, the Silver City project is now waiting on an Australian Energy Market Commission (AEMC) rule change to allow “non-network” solutions to be properly reimbursed. 

In comments emailed to Renew Economy, the company says the AEMC rule change is expected to come through by the end of March.

After that, Hydrostor expects to reach a financial close and start construction by the end of the year, for commissioning in 2028.

This is not the first energy market rule to stand in the way of the Silver City project.

In 2021, strict Howard-era Australia Energy Regulator guidelines meant diesel generators should have been Transgrid’s winning option for a replacement local backup system, with net benefits of $302 million. 

The compressed air storage option, which Transgrid preferred as it could also participate in the grid as well as store power from the then-and-now curtailed wind and solar farms nearby, was only estimated to have net benefits of $278 million as no environmental consideration was allowed under the rules.

Transgrid got around problem by landing a grant from the Australian Renewable Energy Agency to even out the financial net benefits.

Blackout fix

Both government and network operator Transgrid are now in lockstep agreement that the project is critical. The project has also won a state government tender for long duration storage that will help underwrite its finances.

“Hydrostor’s Silver City Energy Storage Centre boosts the reliability of the NSW electricity grid and provides back-up for homes and businesses in the state’s far west in times of planned and unplanned outages,” NSW energy minister Penny Sharpe said in a statement.

“Energy storage solutions like this will go a long way to preventing blackouts like the ones the Far West experienced last year.”

The technology is designed specifically to do what the 50MW/50MWh Broken Hill battery couldn’t do during the two week blackout last year, when storms ripped up transmission lines.

The technology will be the backbone of a mini-grid which will be able to connect to the 200 MW Silverton wind farm and the 53 MW Broken Hill solar farm during outages, which the battery was originally deliberately not set up to do. 

The two week blackout last year followed an eight hour outage in 2023, when the two local diesel generators tripped after being unable to cope with the variable renewable power.  

Hydrostor promises its storage project will be able to supply some 80,000 homes for a day when fully charged. 

Broken Hill has about 10,000 homes, which the project could keep powered up for “days, if not weeks”, the company says.

Trump in the way

In the US, the Trump government’s freeze on Biden era green loans may cause problems for Hydrostor’s flagship Californian project, the massive 500 MW/4GWh Willow Rock project.

In January, the Canadian company locked in a $US1.76 billion ($A2.8 billion) loan guarantee to build the enormous project in the Mojave desert, with construction due to start this year.

But less than two weeks later, the US Department of Energy (DOE) put that loan on hold as the Trump administration swings funding away from renewable energy and into LNG and nuclear power. 

The company is still talking normally with the DOE, Hydrostor executive vice president Scott Bolton insisted to IEEE Spectrum earlier this month.

“We do believe these are obligated funds,” he told the publication at the start of February.

Hydrostor also raised a $US200 million investment last week from Canada Growth Fund, Goldman Sachs Alternatives, and Canada Pension Plan last week.