View to the east from the proposed pumphouse location, with the now-shuttered Northern Power Station (left) and Sundrop Farms (right).
William Gibson, founder of the ‘cyberpunk’ genre, famously noted that “the future is already here — it’s just not very evenly distributed.” He could easily have been referring to South Australia.
While the confected debate in the political and media sphere rages on — shall we follow Western Australia and blow $310m of taxpayers’ funds to extend the life of a coal power station for just two years extra generation? — the often derided state of South Australia is just getting on with it.
If you haven’t noticed that South Australia is a global leader in the energy transition, consider this:
The misinformed and the ideologues will continue to make snide comments about blackouts and high prices — for sport, ask them how many blackouts SA has experienced, why they occurred and why SA’s wholesale prices are higher than elsewhere — but those with eyes wide open can see the state’s clear leadership.
Only last week we heard that British billionaire Sanjay Gupta has bought a majority stake in Adelaide-based Zen Energy and will harness the local expertise for his ambitious plan to use renewable energy for a significant portion of the energy required to run his Whyalla steelworks.
This week EnergyAustralia published the first-stage feasibility report for yet another world leading project — the Cultana Pumped Hydro Energy Storage Project.
The proposed 225 MW seawater pumped hydro energy storage (PHES) project would be sited on the Spencer Gulf, not far from former coal town Port Augusta, and will have a capacity of 1770 MWh, holding almost 14 times more than Elon Musk’s ‘megabattery’.
Look across the bay and you can just make out the former Northern Power Station — a reminder of days gone by.
Look to your right and you’ll see the glow of Sundrop Farms, the innovative solar thermal ‘farm of the future’ where 23,000 mirrors and a 115m-tall tower desalinate seawater and power a farm that hydroponically grows 100 million truss tomatoes annually for Coles supermarkets.
The feasibility study, partly funded through a $453,000 grant from the Australian Renewable Energy Agency (ARENA), was undertaken by a team from Energy Australia, University of Melbourne and Arup.
The initial concept for the project was put forward by Professor Peter Seligman — incidentally the leader electronic engineer for the bionic ear — in a 2010 Melbourne Energy Institute treatise on Australia’s renewable energy potential.
Professor Seligman was aware of (and later visited) the Yanbaru sea-water pumped hydro system in Okinawa, Japan and of the existence similar conditions and power system challenges along the southern coast of Australia.
Pumped Hydro Energy Storage (PHES) is not new — many such projects were built worldwide in the nuclear power boom of the 1970s to balance inflexible nuclear generation.
Water is pumped uphill at times of excess supply, with the energy recaptured through conventional hydroelectric technology later on when demand exceeds supply.
Australia has extensive experience in freshwater PHES, with three plants in operation: Tumut 3 (1500 MW), Shoalhaven (two schemes totalling 240 MW) and the under-utilised Wivenhoe (2 x 250 MW).
While we haven’t built any pumped hydro projects in Australia for 40 years, we are witnessing a renaissance of interest, such as the NAIF-shortlisted 250 MW Genex Kidston project, an investigation into utilising the disused mine system underlying Bendigo , Snowy2.0, Tassie2.0 and the 22,000 potential PHES sites identified by Andrew Blakers team at ANU.
Unlike freshwater systems, seawater PHES systems don’t need a bottom reservoir, instead making use of the ocean.
While there are some potential challenges — such as marine biofouling, corrosion and environmental, tidal and storm protection measures — these have proven to be straightforward to solve though appropriate materials selection and the significant marine engineering experience gained through the construction of Australia’s desalination plants.
Added complexity and cost related to seawater are offset by reduced civil works (only one reservoir) and the abundant access of water, a significant issue for power projects in arid regions.
The Cultana project site is well situated on non-arable land near ElectraNet’s 275kV Davenport substation, has excellent local geological conditions and presents no significant environmental or social impacts. (Incidentally, Indian giant Adani received the green light for its nearby 140 MW Whyalla Solar Farm earlier this week.)
A 37 hectare ‘turkey nest’ reservoir holding 3.2 GL is proposed to be constructed near the edge of a 260m plateau on Department of Defence land. Three 3.5m (outside diameter) lined steel pipes would descend down the face of a hill to the flat where they will be buried underground.
The pipework, totalling 3.1 km, will feed up to 110m3 of water per second into a powerhouse descending six stories underground and two above on Crown land.
The bunker-style powerhouse will contain three reversible Francis pump-turbines, each weighing 140 tonnes and capable of generating 75 MW or consuming 83 MW when pumping. Synchronous, fixed speed generators have been chosen for their ability to provide actual, rather than synthetic inertia.
Modelling indicates that the plant will be 72% efficient, a little lower than the rule-of-thumb of 80% attributed to PHES due to the relatively long penstock pipes. Any analysis of energy efficiency needs to consider that Cultana will reduce the wasteful curtailment of wind energy elsewhere in the state.
Like the Tesla megabattery, the plant is not intended to ‘power the state’ — cue asinine comment from Chris Kenny and Alan Jones about the system providing only three minutes ‘backup’ for Eastern Australia — but instead would play a very important role in shifting supply from periods of the day when energy is cheap to the times of day when prices can spike to double, five times and even 200 times the overnight average.
Energy market arbitrage is not the only source of income. As well as providing much needed inertia (680MWs) to the SA grid — helping to maintain system frequency — the entire station will be able to transition from a standstill to full load in 150 seconds, allowing it provide market ‘caps’ and firming services which help to control risk for retailers.
The project will be well placed to participate in the various ancillary services markets, bringing in revenue for helping to shore up the grid’s reliability and security.
The system will be able to provide voltage control as it can run as a synchronous condenser, or in more basic terms, it will be one of the largest power factor correction devices in the state.
The Cultana PHES project is well placed to help South Australia more easily integrate even more variable renewable energy and reduce the state’s reliance on expensive gas generation.
All arbitrage eats its own lunch. That is, the entry of significant new arbitrage capability will tend to reduce price the very price spread and volatility that drove the original business case.
Selecting the right size for the project is a tricky optimisation challenge and deserves an article of its own. Suffice to say that the project has been sized so that it can make a significant difference in the market and recover its own costs, but not so big as to erase the financial opportunity.
The other optimisation challenge is determining the volume of storage. Modelling by Dylan McConnell of the Energy Transition Hub at Melbourne University has shown that the marginal value of storage decreases significantly beyond about eight hours.
After optimising capital cost and predicted revenues, a design was selected and estimated at a total construction cost of $477 million, or about $2.1 million per megawatt installed capacity.
Based on the identified revenue streams and the capital and operating cost assumptions, the feasibility study expects the project will be economically viable with a post- tax nominal rate of return of 8–12%.
According to EnergyAustralia, the return “is broadly comparable to a benchmark project hurdle rate commensurate with technology and market risks of a private sector investment in a project of this nature.”
Naturally, those paying attention are keen to understand how this project stacks up against batteries.
The charts above show that this PHES project compares favourably with lithium ion batteries on a capital cost basis when built at this scale and as storage capacity increases.
The comparison is not like-for-like, however, as the PHES system will incur greater operational costs (estimated at $11.9m per annum for Cultana) but enjoy much lower degradation over its 30 year design life.
Batteries have other capabilities (such as Fast Frequency Response) while PHES can provide system restart and inertia. As such it is fair to say that both batteries and PHES can play complementary roles in Australia’s energy transition.
As a next step the project must secure land access agreements and the necessary approvals, engage with the community and complete Front End Engineering Design. On an aggressive schedule the project could be ready for Final Investment Decision by the end of 2018. Once approved, the plant could be operational by 2023.
The feasibility project is great example of collaboration between academia (Melbourne Energy Institute) and industy (Energy Australia and Arup) and a shining example of the role of ARENA to significantly de-risk a feasibility study for a technology that otherwise would likely have been passed over.
In keeping with ARENA’s charter, the project has shared a detailed summary in the form of a Knowledge Sharing Report which includes a detailed discussion of the project’s revenue model.
At the launch of the feasibility study’s report on Wednesday evening, EnergyAustralia’s Managing Director Catherine Tanna commented that Prime Minister Malcolm Turnbull showed palpable excitement when briefed on the project earlier this year.
The Cultana project is certainly much more in line with Turnbull’s 2015 Innovation Agenda (remember that?) than slapping Band-Aids on the decrepit Liddell coal power station.
Simon Holmes à Court is senior advisor to the Energy Transition Hub at Melbourne University and can be found on twitter @simonahac
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