Land deal signed for deep storage to create Broken Hill mini grid, but network rules still stand in the way

The NSW state government has signed a key land deal near Broken Hill that will help pave the way for a groundbreaking underground energy storage facility that will replace the city’s ageing diesel generators and create a renewable-based mini grid for the region.

State energy minister Penny Sharpe hopes that the first of its kind 200 MW, eight hour (1,600 MWh) advanced compressed air storage facility will ensure that the outages at Broken Hill are not repeated.

The Crown Lands agreement announced on Friday comes little over a week after the region was re-connected to the main grid, ending two weeks of frustrating blackouts and the ongoing outages after storms tore down seven transmission towers and isolated the area from the rest of the grid.

The diesel generators failed, and the Broken Hill battery – that could have provided back-up and helped draw power from the region’s big wind and solar farms – was deliberately not configured to provide that service. That meant that the 200 MW Silverton wind farm and the 53 MW Broken Hill solar farm also could not be used.

Changes were made to alter the settings and allow the battery to support the one diesel generator that eventually did manage to work and provide stability to the grid, but the long term future of the area will now depend on advanced compressed air storage facility.

That project – to be built by Canada’s Hydrostor – will be sited in a cavern that is part of Perilya’s Potosi silver mine on the north-east outskirts of the town, and crosses over into Crown lands, hence the need for the land deal with the government.

Hydrostor plans to have the project up and running in 2028, although it still has to receive planning approval, and is waiting on a rule change from the Australian Energy Market Commission that would allow such “non-network” solutions to be properly reimbursed. That will then allow it to reach financial close.

It’s part of the myriad challenges – in technology, engineering and in the regulatory process – in making the green energy transition. While the naysayers insists that the Broken Hill issues were proof that renewables and storage cannot do the job, the problem lies more in rules an regulations that have failed to keep up with the technology.

Hydrostor’s Jon Norman says the Silver City storage project will provide long duration storage to the NSW grid as part of an underwriting deal secured with the state government, and will also provide system security services under a contract with Transgrid to keep the lights on in Broken Hill.

“The current Broken Hill battery has capacity of 50 MW and one hour of storage,” Norman told Renew Economy. “This is an order of magnitude greater, 200MW, 8 hour capability that can store the local wind and solar and rooftop solar, compress that into the system, and provide grid stability.”

He says that the facility will be able to provide much longer storage – up to 32 hours – at lower outputs and will allow for the facility to connect and store the output of the wind and solar farms if a similar situation should occur.

The events at Broken Hill are now subject to investigations from the state-based Ipart, and the Australian Energy Regulator, with hearings to be held next week, according to sources.

Sharpe, who flew out to Broken Hill during the outages and again this week to announce the lands deal, says the new project will help prevent similar outages in the future.

“Recent events in the Far West region of NSW have demonstrated the need for long duration storage to secure energy supply for Broken Hill and the Far West,” Sharpe said in a statement.

“This Silver City Energy Storage Facility is a solution that will make Broken Hill a renewable energy leader. The city will be generating, storing and distributing cleaner and more affordable energy to the Far West region and the rest of the state.

“This project will replace the older large-scale back-up diesel generator, preventing a repeat of the recent energy emergency in the Far West region of NSW.”

Norman says that Hydrostor is looking at multiple other sites for its advanced compressed air technology, and plans to bid into future long duration storage tenders and other government initiatives to lock in deep storage to support wind and solar and replace the state’s ageing coal fired power generators.