Five pumped hydro projects promising a combined energy storage capacity of up to 60 hours have been given a financial leg-up by the New South Wales government, as the state races to replace its ageing coal fleet and shift to renewables.
NSW energy minister Matt Kean said on Friday that five proposed pumped hydro projects, with a combined capacity of almost 1.75GW, had been awarded funding under the state’s Pumped Hydro Recoverable Grants Program.
The funding, just under $50 million in total, aims to help pumped hydro developers to cover upfront costs and encourage investment from the private sector to back the state’s target of at least 2GW of new long duration storage by 2030.
The Australian Energy Market Operator has forecast Australia’s national grid will need at least another 45GW of long duration storage by 2050.
Pumped hydro, a well established long duration energy storage technology, acts like a giant battery by using surplus renewable energy to pump water up a hill, and releasing it back down the hill through giant turbines that create electricity on demand.
But building new pumped hydro capacity is not cheap. A 2018 study by Entura determined that project costs in NSW regions, based on data for 6 hour storage duration, would range from $1.4m/MW to $1.6m/MW.
NSW’s biggest pumped hydro project, the 350GWh Snowy 2.0 – which is not factored in to Entura’s modelling – is reported to be running more than $2 billion over its already inflated budget of $5.1 billion and delayed by up to 18 months.
“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,” Kean said.
“If these pumped hydro projects proceed to construction, they are expected to create more than 2,300 jobs and attract $4.4 billion of private investment, which will help grow the economy and support the regions.”
The list of projects to receive the grant funding – see full list below – include the 600MW Oven Mountain pumped hydro energy storage project, promising 12 hours of storage duration, and EnergyAustralia’s Lake Lyell project (335MW, 8 hours).
It also includes Origin Energy’s Shoalhaven hydro expansion (235MW, 24 hours), which had previously been shelved by the company because of increased costs.
“This is a win for NSW as these grants will be repaid to the government if a project reaches financial close, meaning that these same funds could be used to support even more projects in future,” Kean said.
All up, the NSW government has committed $97.5 million to accelerate pumped hydro projects, including funding for private projects as well as funding to undertake site investigations for pumped hydro potential on existing WaterNSW dams.
See RenewEconomy’s Pumped Hydro Energy Storage Map of Australia