Pumped hydro projects left high and dry, still waiting for funding news | RenewEconomy

Pumped hydro projects left high and dry, still waiting for funding news

Pumped hydro proponents in South Australia still waiting for news of federal funding.

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Proposed pumped hydro storage in Queensland.

It’s been nearly three years since South Australia rolled out the first of its large scale pumped hydro project proposals, and more than 12 months since the Australian Renewable Energy Agency announced it would fast-track the first of these projects. But still nothing has happened.

Around half a dozen different pumped hydro projects have been suggested by various parties for South Australia, where the need for added storage is considered greatest at it jumps from its already world leading share of 55 per cent wind and solar to the state Liberal government’s target of “net 100 per cent renewables” by 2030.

Last August, ARENA said it would allocate $40 million to fast-track the first of these pumped hydro storage proposals and drew up a short list of four candidates.

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.

AGL then withdrew because its partner found more ore at the mine they were going to use, and decided against closing the mine and filling its pits with water. In February this year, ARENA said it had selected its preferred option, and would make an announcement before the middle of the year once funding discussions were complete. We’re still waiting for the news.

An ARENA spokesperson told RenewEconomy by email that the organisation continues to work with the sponsor of the preferred project.

“Due to the impact of Covid-19 and given this is a large, complex infrastructure project, it has taken longer than initially expected to finalise the key project commercial terms and documentation, including financing terms required to achieve financial close,” the spokesperson said.

“ARENA is working with the preferred project to ensure all board conditions can be satisfied in the coming months. Further announcements will be made in due course.”

ARENA is not the only avenue for potential funding for 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, and some would say completely stalled 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 – as are two other pumped hydro projects – the Tasmanian “battery of the nation” project and another in NSW.

But UNGI has stalled, and even the two gas projects identified as priorities late last year have not moved forward.The energy industry cites this delay and uncertainty it causes as one of the major reasons why commitments are not being made to other projects.

See: Welcome to Taylor-ball: How the game has changed in Australia’s energy markets

The commitment to any projects in South Australia are also likely to be affected by the proposed new Project EnergyConnect transmission line to NSW, which could make pumped hydro projects less attractive in financial terms as it could reduce price volatility. It is thought that they may not be room for more than two pumped hydro projects in any case.

Pumped hydro costs have also been rising, leading to Origin Energy to decide against an expansion of its Shoalhaven pumped hydro facility in NSW. Snowy Hydro, however, is ploughing ahead with its multi-billion Snowy 2.0 scheme, despite questions over its environment and economic credentials, but it has the unwavering support of its shareholder, the federal government.

In north Queensland, Genex is moving to put together the final pieces of its funding jigsaw for the go-ahead of its 250MW, 2000MWh Kidston pumped hydro project in an old gold mine. It has landed debt funding from the North Australian Infrastructure facility, an offtake agreement with Energy Australia and support from Japanese company J-Power.

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